COPE report: Parliament accountable to people

21 November 2016 12:01 am - 0     - {{hitsCtrl.values.hits}}

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On 17 November the Organisation of Professional Associations organised a seminar on ‘COPE- RESPONSIBILITY OF PARLIAMENT’ at its auditorium with the presence of Sunil Handunetti, Chairman of the Committee On Public Enterprises (COPE) and S.C Mayadunne, the former Auditor General. The event highlighted the bond scam and explained the role of the COPE committee, evidencing reports from the committee as well as the Central Bank of Sri Lanka. The independence of the Auditor General as well as the major role the public have to play, especially due to the accountability owed to them by Government was explained. The glaring question that remained was the solution to this issue that affects the entire country.    


Hon. Sunil Handunetti

“We learnt that money given to the government can be misused only when it was revealed in Parliament after the work of this Committee. Revealing that was not a victory for us but a victory for democracy in this country.”
“The motive of this seminar is about the COPE committee and its success. The COPE committee was brought to the attention of the country after the issue of bonds involving the Central Bank. When we went to school we were taught about bonds but all we learnt was just the single sentence that it was an instrument for the Government to obtain loans. That’s all. However details about the system, how they work and even that there is a method to use them to commit fraud was never taught to us. We learnt that money given to the government can be misused only when it was revealed in Parliament after the work of this Committee. Revealing that was not a victory for us but a victory for democracy in this country. The reason for this was that over the last few years the impression of Parliament was that it consisted of thieves and that nothing productive could be done in it. A mere talk shop which serves no purpose. Through this COPE report the message the society got was that these two ideas were changed through the process of the report. Admittedly the larger impression of Parliament won’t be changed but the fact that it is a place of central power within the country was an idea that was projected. Much like a drizzle during a drought, this is the biggest victory we achieved.   
A report was given to Parliament on August 9 and it was debated on August 25. If you look at it you may see that 19 institutions have been listed in it including Sri Lankan Airlines, the Electricity Board, Rakna Lanka, SPC. For a year almost Rs. 1 billion worth of medicine is wasted and thrown. A billion of the tax-payers money is used to bring down medicine and then waste them.    
Parliament and the COPE committee are not courts of law. However we can show officials what should be done by a court. As a summary, what we have shown is what should be done about the bond issue. Accepting or rejecting it is up to the officials.   
The most important thing here is that our report is upon the observances and findings of the Auditor General. Therefore even though it is true this report has been made by us as ministers the foundation of it is on a base of professional aspects. You may remember I had to leave the COPE committee once. The reason is based on professionalism. If there is an influence on the Auditor General’s decisions then it becomes an issue to this entire report.   
This entire report of 1900 pages will be given to Parliament next week and after that all aspects of this indoor discussion can be seen by all. The population of this country should know about this because this is a problem regarding the maintenance of the country’s treasury. This problem is a problem of the Central Bank. Therefore it is a problem regarding the taxes of the public.   
Now the result of this can be seen clearly. Due to the bond transaction those who made money have once again been put back into institutions. Yesterday (16) I went to the event organised by Business Today for the top 30 institutions of Sri Lanka but the truth is that the top should have consisted of those that were involved in this bond scam. Nobody else can earn money like this. Their income is 300 million. Their profit is 500 million. There are 20 people who work there. The only activity of theirs is supplying money to the Central Bank. What some institutions do is that they get their loans from the Central Bank and then give loans to the Central Bank. After that they sell these bonds to organisations under the Central Bank itself for a higher place. Who can transact like this?   
The issue is not paying these taxes, the issue is that they are used for proper purposes so that they return a benefit to society. The best example for this is this Central Bank report of 2016 given to Parliament. On page 93 the Government debt is detailed. From the end of 2015, a debt of Rs. 8053 billion has risen to a debt of Rs. 9382 billion in July 2016. It has been explained that during the first 7 months of 2016 due to the rupee being devalued, loans that were taken on the dollar, were paid back at a higher rate since the dollars strength had increased. The second reason is that Government securities have been issued for a higher price. That is the bond problem. The Central Bank reports that loss from bonds is Rs. 70 billion. When Perpetual Treasuries Ltd. says that they make a profit of Rs. 5 million that is correct then. Their profit is Rs. 5 million the loss of the Central Bank is Rs. 70 million and the remainder would have got divided up among the others.   
The Government’s debt has increased to Rs. 70 billion due to this bond issue. Who is responsible? If this happened in another country there will be people who are responsible. Even till today, in those that supply loans to the Central Bank, this Perpetual Treasuries organisation is there. We should be ashamed of this. At the least after this report was released a decision should have been made to remove this organisation at least until the inquiry is finished. Until today they still continue their activities. We know they are using these profits they accrued, they are even starting media organisations. That is what someone will do normally after receiving profits. They can claim that they are in the process of doing business. The problem is that we have not looked at it that way. What we say is that through this process the officials of the Central Bank should have worked in a proper manner. That is where the past Central Bank Governor gets involved in this. He should take decisions in a way that benefits the Government. Not in a way that benefits others. This is why the Central Bank had to report a loss.   
Therefore the decision we took as the COPE committee has been proved to be right by the Central Bank reports themselves. We are sure that justice will be done about this. Some try to use these reports to erase past wrongs. Some politicians have said in the media that the fraud that was done in their time is nothing compared to these. What I say is that both frauds are listed in all these reports. All fraud is fraud. We cannot right a wrong with a wrong. What we expect from Yahapalanaya is not that. What the public expect from Yahapalanaya is not this. This is just the tip of the iceberg. If justice is not served, not only the COPE committee, but the entire Parliament will become a joke. Therefore I am still hopeful that the present Parliamentarians will take decision not based on the power that have but using their brains.    


S. C Mayadunne

“This bond scam is merely the tip of the iceberg. The major portion is not in a position to be analysed unless the Auditor General is provided with sufficient strength.”
“I think society is still not shocked by the misuse of state funds. Please let’s understand how problematic this is. The increase in Government debt is not due to the lack of resources but due to improper management. Management of State finances is done on the whims and fancies of politicians over a long period of time. The potential capacity from international transactions was not gained by us. Today, of every problem we face, I think the root is that the public have not heeded their duties. The knowledgeable group of the country have shirked their duties and have taken a back seat. A big responsibility of this is vested with Parliament and the Auditor General. During my tenure this problem about the Auditor General’s Department’s strength was seen. As such I started activities, working with the Netherlands, the UK and the World Bank. The findings we made were accepted by Parliament in 2005 but at that instance the criticism that was made was that it needed to be strengthened more. In addition the need for an Auditing Act was not addressed during the 100 day period following the Presidential elections.   
Those subject to auditing have worked to destroy or postpone this Act and in the process have harmed the right of the citizens to know the true picture of things. As such the process of auditing the Government  become very poor. The capacity of the Auditor General depends on the financial and administrative independence he has. If it is not provided, then his performance level gets curtailed automatically and he cannot produce meaningful reports.    
Mayadunne went on to explain constitutional provisions regarding the accountability of peoples’ representatives at the National level. He observed that anyone who was entrusted with authority should be accountable to the body from which the authority derived.   
 “So, the Agent is accountable to the Principal (Stakeholder) in respect of the responsibility conferred to that agent.”   
 Several articles of the Constitution were used, including Art. 3 and 4, to prove that this authority has been in fact entrusted by the people of the country to their officials.   
“It is the sovereignty of the People to demand the accountability from the representatives of the People to whom the responsibility is conferred to serve the people. Parliament shall have full control over public finance. ....” (Article 148). This is not only an Authority, Power and Privilege, but also a great Responsibility, and Duty which is Binding. Therefore, if public finance control is poor or corrupted, Parliament and its members are the prime body accountable to people as per our Constitution.”   

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