Editorial

This newspaper’s page 1 story last week that President Maithripala Sirisena had submitted a Cabinet paper seeking approval for Rs. 4.4 billion to settle unpaid bills of the previous Government seems to have passed by as if a regular, everyday matter in the affairs of the Sri Lankan State. Yes, Rs. 4.4 billion (4,400,000,000).

No doubt, the Treasury has been asked to go into all of this, but one might ask what it was doing all this while, and why the President is moving for this only now, when he is bending backwards to strike a political deal with the former President.

It is hardly a month since a Commission of Inquiry appointed by this same President into the national carrier, SriLankan Airlines, found more billions squandered during the past period, and even thereafter under his own watch. Nobody seems accountable for the leasing of aircraft on uneconomic routes (later paying penalties for rescinding those contracts), extension of leases and redelivery delays among a host of findings, all being ignored.

Is it time to ask those who spent this money from the public purse to literally, and metaphorically “pay for it”, or should ordinary citizens stay silent in muttering resignation and keep “paying” for the follies of their leaders by way of direct and indirect taxes?

For some time now, huge amounts have been frittered away by a combination of sheer incompetence, mismanagement and corruption. Soon after the Central Bank bombing by the LTTE in 1996, the Chandrika Kumaratunga government hired an American company to redevelop the Colombo Fort area. The government ended up paying compensation in millions of US dollars to the company for not pursuing the contract. Similarly, US dollars 650 million was paid in 2012 for the Krrish Square project also in the Colombo Fort area under the Mahinda Rajapaksa government in fines and delayed payments. There’s no Krrish Square to be seen.

These colossal sums going down the tube also come in the form of dubious contracts entered into under a cloud of secrecy, and then falling through. The citizens have to pick up the pieces. Take the case of the Hyatt Hotel project. The Rajapaksa government high-ups had the temerity to sign an agreement – the day before the 2015 Presidential election, with an Italian company for the interior work on behalf of its virtual owners viz., Sri Lanka Insurance, Litro Gas and the Employees Provident Fund (EPF), with the Treasury having a golden share.

After the election and President Rajapaksa’s defeat, the new government’s boards of these state (public) funded entities terminated the contract and the then Finance Minister gave a directive to re-tender. The Italian firm sued, and won an award of Euro 7 million in arbitration proceedings in Singapore. The Singapore High Court dismissed an appeal as it was proved that it was a political decision that knocked out the Italian firm. Today, the Sri Lanka Government has to fork out almost Euro 10 million (Rs. 2 billion) on accumulated costs for this still unsettled award, with Rs. 75,000 a day being added to the total amount – each day it delays.  It was a textbook case of one set of VIPs trying to make a buck even at the last minute of a previous government, and a new set of VIPs avariciously trying to cash-in on the same pie.

Take the case of other arbitral awards of a similar nature against the Government. The Buildings Department owed Rs. 8 million to a private company that provided heavy machinery for a project in Jaffna. The Attorney General advised that the figure be challenged. Ten years later, after litigation, the government department was ordered to pay Rs. 350 million as damages accrued over the years, and in delayed payments. Lanka Tractors sued the Government over the non-transfer of lands in an MoU with the Treasury way back in 1994. The Commercial High Court awarded Rs. 175 million in 2001 to the company, and the AG appealed. The Supreme Court dismissed the case in 2008 and the Government has ended up having to pay Rs. 800 million. This amount is yet to be settled and the resultant amount has now swelled to Rs. 1.4 billion.

Past misdeeds have gone by the board; The Greek bonds loss (Rs. 3.5 billion) and the CEB purchasing Treasury Bonds through a primary dealer (Rs. 6 billion loss); the hedging fiasco by the CPC (Rs. 10 billion). Today, the bungling, deliberate or otherwise, by the FCID has known suspects showing off acquittal orders by court like character certificates. No one seems accountable.

The country could lose US$ 146 million, part of the money China Merchants Port Holdings Company Ltd (CMPort) paid for the Hambantota port, if the Sri Lanka Ports Authority (SLPA) does not float a proposal to spend it. CMPort agreed to buy 85 percent of the shares of Hambantota International Port Group Company Ltd (HIPG) for a consideration of about US$ 974 million. It agreed to deposit US$146 million into a bank account under its name in Sri Lanka to be used “for port and marine-related activities in Hambantota as may be agreed upon with the Government of Sri Lanka”. If, within one year, no agreement is reached for the use of such funds, CMPort would take them out. The deadline was extended twice and the SLPA still hasn’t come up with a proposal.

Another substantive waste in the ports sectors has been the non-utilisation (through sheer political lethargy, inefficiency and lack of direction) of the East Container Terminal (ECT) in the Port of Colombo. When the Government took over, it cancelled outstanding orders for cranes which would have allowed SLPA to put the terminal to use. After then squandering months on an effort to seal a public-private partnership for ECT management, it then rescinded the bidding process. Now, it has agreed on an India-Japan joint venture to operate the terminal. The ECT has been ready since mid-2015 when its first phase was completed with a commercial loan of US$ 80 million from the Bank of Ceylon.

The list goes on: The Central Expressway Stage III (a three year delay due to a delay in negotiations with Japan for a US 1 billion commercial loan); Stage II (delay with the Chinese over a USD 1.1 billion loan – the original project deadline was 2020); the new terminal at BIA (delayed); In the Port City project, the Chinese demanded additional land in lieu of the delay in implementation; Lotus Tower (a loss of Rs. 5.4 billion due to delays) and the waste in the unused white elephant that is the Mattala airport.

We have a Cabinet of minister, a Parliament, an Oversight committee in COPE, an Auditor General, an Attorney General and a Treasury. And still it happens. What aspiring Presidential candidates hope to do about all of this, no one knows. The monumental wastage of public funds – in the billions is stupendous, if not criminal. These figures will make anyone dizzy. But who cares?