Government denies news stories which appeared in the Business Times
View(s):The Ministry of National Planning and Economic Affairs has issued a statement rejecting some newspaper reports most of which deal with reports in the Business Times. The statement was not sent to the paper but taken from a private TV station website.
Here are the contents with our response.
1) The Cabinet Committee on Economic Management (CCEM) decided to engage the services of Mr. Yuvanjan Wijeyatilake, former Attorney General to draft new laws and to revise existing laws relating to the proposed Financial City.
2) The services of Baker and McKenzie one of the leading global law firms specialising in financial-commercial Tax laws have been retained to advise the Government in the regard to the legal implications of the different financial models. i.e. Ireland, UK, Channel Islands, Dubai and Hong Kong.
3) The firm is also advising the Government on the Indonesian tax laws and other similar laws. They have not been assigned any other work. This task will be handled by Baker & McKenzie office in Hong Kong.
4) The media reports have deliberately mentioned that Baker & McKenzie is having an office in Colombo and they are practicing in Sri Lanka. This is false. Baker & McKenzie has not set up an office in Sri Lanka as a legal firm and they are not entitled to do so under the Rules of the Supreme Court.
5) Another project undertaken by the Government is the establishment of a Central Programme Management Unit based on the PEMANDU (Performance and Management Delivery Unit) in the Malaysian Prime Minister’s Office. For this purpose, the Government has entered into an agreement with McKinsey and Company (Malaysian Office) the well-known global Management Consultancy firm. This Malaysian Office team which has firsthand knowledge of the PEMANDU will assist the Government in setting up of the Central Programme Management Unit in Colombo. McKinsey is not a legal firm and it has no connection with Baker & McKenzie.
6) We would like to draw the attention of the readers to another false and malicious report which says that the professionals have walked out from the discussions on Economic and Technological Cooperation Agreement (ETCA). The Government is having discussions with all legally recognised professional associations, business associations and trade unions. No one has boycotted or left discussions.
7) Furthermore, the news reports that Revenue proposals have been dropped from the National Development Plan is also false. The Macro-Economic Stabilisation Programme is one of the key elements of the National Development Plan.
The Government is negotiating with India, China and Singapore to enter into economic and trade agreements. Further, the Government is negotiating to obtain the GSP+ concessions to re-enter the Single European Market. The Government will also hold discussions on Free Trade Agreements with Indonesia, Malaysia, Thailand and number of other countries next year. The Government is also discussing an Economic Cooperation programme with Japan. The Government’s policy is to make Sri Lanka the Hub of the Indian Ocean and seek to exploit the synergies of the Indian Act East Policy for the region and the Chinese One-Belt One-Road initiative. The aim of these efforts is to expand the market for the Sri Lankan products to create one million jobs for the Sri Lankans, expand the middle class and revive the rural economy.
9) The newspaper reports referred to above were aimed deliberately at sabotaging the economic development strategy of the Government. The Ministry of National Policy and Economic Affairs wish to deny these misleading news reports, specifically the news reports appearing in the newspaper of 21st August 2016.
Business Editor’s response:
Firstly we wish to thank the Ministry for having the courtesy not to mention the Business Times by name in the rebuttal of our stories and instead referred to “specifically the news reports appearing in the newspaper of 21st August 2016” without naming the media. In the interest of transparency and good governance, the corner-stones of the Government, we wish to own up that the entire denial is a reference to stories that appeared on the front page of the BusinessTimes of August 21, 2016 and on the presumption that the references are to our report, we respond with the following: On point 1 to 3, the news items on Baker & McKenzie and McKinsey and Co were based on the minutes of the Cabinet Committee on Economic Management Committee (CCEM) meeting held during the last week of August with additional inputs from reliable official sources.
The CCEM minutes relating to our story on Sri Lanka to spend over US$ 2 million for McKenzie’s three month legal expertise were as follows. “In order to support the ongoing economic development efforts in Sri Lanka it has been proposed to establish a central programme management unit by McKenzie for the purpose of guiding the implementation of the government’s economic transformation programme and to ensure that more projects/initiatives are completed on time and under budget with fever resources. The proposed professional fee for 12 weeks work is USD2.3 million which is a reasonable offer. The CCEM approval was granted to recommend to the cabinet to approve the Engagement of McKenzie for the above mention period and the rate above”.
In a previous CCEM minute and which we wrote about in February 2016 (see http://www.sundaytimes.lk/160221/business-times/hong-kong-based-law-firm-to-draft-and-revise-sri-lankas-fiscal-and-monetary-laws-183485.html) stated thus: “McKenzie is to draft new laws as well as to revise existing laws relating to fiscal and the monetary sector, restructuring insolvency, real estate, assets, residency and property, intellectual property and tax. The law firm will be entrusted with the task of also drafting new laws for the establishment of the Colombo International Financial Centre (CIFC)”. Is the government denying the contents of the CCEM minutes or did they bungle the two institutions (note the two names are similar in the minutes)?
In February there was no denial of our story even though the first para read as, “Sri Lanka is to assign Hong Kong-based law firm, Baker & McKenzie to draft new laws as well as to revise existing laws relating to fiscal and the monetary sector, restructuring insolvency, real estate, assets, residency and property, intellectual property and tax. The company will be entrusted with the task of also drafting new laws for the establishment of the Colombo International Financial Centre (CIFC) before April this year.” On the point that “Baker & McKenzie has not set up an office in Sri Lanka as a legal firm and they are not entitled to do so under the Rules of the Supreme Court”, we are aware that the law firm works out of an office in the World Trade Centre.
Furthermore the contention that “… they are not entitled to do so under the rules of the Supreme Court” is far from the truth. We never said they “practice” in Sri Lanka. The Ministry seems to have got carried away. Yes, no one, including those who have a law degree but not passed out from Law College, can appear in courts and that applies to foreigners too. However there are legal firms which are operating as KPO (Knowledge Process Outsourcing) in Sri Lanka, one example being WNS Sri Lanka which provides legal advice to overseas clients. The Government also may be unaware that many years ago the Bar Association under the chairmanship of Shibly Aziz and the Sri Lanka Association of Software and Service Companies chaired by Sujiva Dewaraja signed a MoU aimed at “developing the capacity of the legal outsourcing industry in Sri Lanka and to promote Sri Lanka as an outsourcing destination for outsourced legal services”.
With reference to our story on professionals walking out of the ETCA discussions, the government statement says: “The Government is having discussions with all legally recognised professional associations, business associations and trade unions. No one has boycotted or left discussions”. This is quibbling over semantics – as to whether the United Professionals Movement (UPM) is a recognized body or not. The UPM is part of the Organisation of Professional Association (OPA) which has legal bodies governing accountants, lawyers, architects and engineers among others. The UPM was set up last year to engage in a discourse with the government on many development issues and has been discussing with the government on ETCA on many occasions.
Having said that, UPM President Palitha Abeywardena has confirmed this week to the Business Times that he along with Ananda Ranasinghe and Arjuna Manamperi walked out of the meeting on July 25. A subsequent meeting two days later was also not attended by the UPM.
With reference to point 7 in the news report on Sri Lanka’s tax reforms take the back seat in the NEDP, our report did not refer to “Revenue proposals have been dropped from the National Development Plan”. Our report headlined “Sri Lanka’s tax reforms take a back seat in national development plan” said “Sri Lanka’s tax reforms aimed at raising state revenue is to take a back seat under latest changes made to the proposed National Economic Development Plan (NEDP).”
This report is also based on the CCEM minutes on Draft National plan for Economic Development which recommended following changes and we quote: “Not to include tax reform at the very beginning in the report and to have more positive matters such as assistance to SME sector, upgrading Human Capital which can be listed in the beginning of the report’’. On the claim that “The newspaper reports referred to above were aimed deliberately at sabotaging the economic development strategy of the Government”, our readers are a better judge of whether the newspaper is involved in sabotage or providing information without rancour and in the public interest.