Can of worms
View(s):
The (telephone) conversation went like this:
Me – Hi, I’m trying to unravel the mystery of this mysterious gazette on bond issues that was raised before the Commission of Inquiry on the controversial bonds.
‘Friendly’ economist (FE) – So, what about it? It’s clear as daylight that there has been a mess-up about the issuance of this gazette.
Me – It seems so. However, even though the gazette is dated January 1, 2015 under the signature of the then Minister of Finance (Mahinda Rajapaksa), the practice seems to be to print the gazette only at the end of the year (i.e. December 2015).
FE – True, but in this case it was printed and ordered to be printed by the authorities only in November 2016.
Me – So they delayed this particular gazette by another 12 months, right? Still if the gazette is printed a year later from its listed date (date of gazette is January while actual issuance is 11 months later in December), they could have issued two gazettes – one for the period in which the then minister’s term ended (January 8, 2015, when the Presidential Elections were held) and another gazette thereafter. There seems to be some funny business here.
FE – Agreed. An alert official raising this at the Commission has opened a can of worms. Not only that, the Commission has stirred up public curiosity in only the first week of sittings, whereas probes pertaining to the bond – the UNP-led committee, COPE and the internal Central Bank investigation, didn’t trigger that much interest in their early days for the simple reason that the current probe is opened to the public and the media.
Me – What a ….???? At this point, while talking over the phone, I am interrupted by busybody Kussi Amma Sera, as usual, not minding her business, “Mahattaya eka vishala vanchavak neda?”
Annoyed at first, it didn’t strike me what she meant. Asking further, I find that what she was, in her own strange kitchen economics kind of understanding, trying to say was that it was strange for an institution to backdate a gazette without the public being made aware about this practice. And it took an alert state counsel to bring to light, and trigger, what we realized later (after further digging and research) a host of problems, issues and dilemmas.
Every year, on the first day of the first month, January 1, – at least since 2013 – a gazette number titled ‘Central Bank of Sri Lanka – Order under the Registered Stock & Securities Ordinance to raise of loan (exact wording) in Sri Lanka by the creation & issue of Treasury Bonds (S&E only)’ is registered with the Government Printer. It is for the purpose, as we found out, to book the gazette number for that period. This is for the simple reason that if the registration is made in December then the gazette gets a December registration number and cannot be backdated.
Unclear? “Ehema nevai Mahattaya,” interjects KAS again and explains her ‘kitchen economics’ scenario while cooking an aromatic chicken curry (temporarily distracting my attention as the delightful smell fills the room). While the gazette (the language is the same every year except for the amounts) states, “The sum of money to be raised shall be ….. and it shall be raised by way of …year loan with the remaining maturity of … year loan”, at the end of the year the amounts raised through bonds and other securities and the interest rates vary so much that central bankers seem to have opted to issue the gazette only at the end of the year. In 2015, if you access the Government Printer’s website (http://documents.gov.lk/en/exgazette.php), you find this entry — 1895/19 2015-01-01: Central Bank of Sri Lanka – Treasury Bonds issued in Year 2015.
Every year for 11 months, there is an entry on January 1 with a gazette number and a line saying, “Reserved for the Central Bank of Sri Lanka” in this website. Thereafter the order to print it comes only in December of that year after money has been raised with actual amounts and actual interest rates. These figures, we believe, are then entered in the entry (actual amounts) though the wording in the gazette implies that this ‘is to happen’ and has not happened as yet (read the words ‘to be raised’ and ‘shall be’). What ‘blew the lid’ of a practice on an unsuspecting public was the issue raised at the Commission where it emerged that the gazette had been published nearly 23 months after its actual date when the practice should have been 11 months after the listed date, which still was a practice that the public was unaware about.
While I had virtually burnt my fingers in the past trying to keep track of KAS’s brand of economics, this time I sensed something amiss and began to probe.
Annual government borrowings are made by this January 1 announcement by the Minister of Finance under Section 4 of the Registered Stock and Securities Ordinance No. 07 of 1937 (and amendments thereafter). It permits the minister to specify the amount ‘to be raised’ and at what interest rate. The issues arising out of a gazette is for all public purposes – and in KAS’s words is a ‘vanchavak’ (deception) – when it is actually issued in December, but retaining the ‘to be issued’ words when for all purposes, the amounts have already been raised. The authorities need to amend the law, if necessary, to provide for the issue of two gazettes per year – in January setting out the intended amounts and in December listing the actual amount raised.
If this had been followed in the latest drama, a gazette under the Minister of Finance (appointed after the January 8, 2015 poll) would have been issued and in 2016 two gazettes, on the lines suggested, issued.
Delving deeper into the Government Printer’s website and tracking this particular gazette notice, one finds that in 2011 or 2012 no such gazettes were issued (or if there were, they are unavailable on the website). In 2013, this gazette is registered as number No. 1791/13 and can be downloaded, while in 2014 there is no entry. In 2015, the disputed one is listed as No. 1895/19 and can be downloaded. In 2016 January the entry reads as “1947/44 2016-01-01: Central Bank of Sri Lanka – Order under the Registered Stock & Securities Ordinance to raise of loan in Sri Lanka by the creation & issue of Treasury Bonds (S & E only)” but this cannot be downloaded because the authorities were at that time still grappling with the 2015 gazette which was eventually printed in November 2016. This year, ironically there are several entries under the heading ‘Reserved by the Central Bank of Sri Lanka’ with a gazette number but no downloading option because there is simply no file. In 2017 there are entries with this heading dated January 1, January 31 and February 28 with gazette numbers. There is also a similar entry with gazette number 1999/39 dated December 29, 2016. In the absence of clarification from the Central Bank, these entries could either be for the issuance of securities for the year or some other notice.
Complicated stuff, to me it was! But to Kussi Amma Sera it’s a ‘vanchavak’. Now, hold your horses, here is another news flash. It appears that the Registered Stock and Securities Ordinance doesn’t come either under the Ministry of Finance or the Minister of National Policies and Economic Affairs (under whose purview the Central Bank functions) and which is Prime Minister Ranil Wickremesinghe’s portfolio.
Me: Are you serious?
FE: Yes, check the extra ordinary gazette issued by the President No. 1933/13 dated Monday, September 21, 2015, assigning subjects, functions and laws that come under various ministries and issued soon after the August parliamentary elections.
I put the phone down, perplexed. To satisfy myself, I trawl through several dates and come across this particular gazette to find that this particular law is not listed in either of the two ministries. The Monetary Board Act is listed under the PM but not this particular law. So who has authority under this Act and who has the power to issue such a gazette notification when it has not, by law or regulation, been assigned to a particular minister? Raises many questions and may be an issue for the Commission to consider and set the record straight.
Unwittingly, the Treasury Secretary’s denial of any knowledge of the January 1, 2015 gazette notification printed 22 months later has opened a can of worms and a lot of doubts. Even if these were bona fide errors, and only a proper investigation will establish that, there is an urgency to put things right – whoever is responsible.