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Learning from the lessons of recent events

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Reflections on a statement made 40 years ago in Parliament by a Former Finance Minister. 

 

  • The people of our land are empowered to discuss and debate on any matter, in any fora, at any time
  • Our responsibilities also include, enhancing the awareness of those whom we work with, and doing so proactively
  • We need to help build a better nation, not overnight, but incrementally and progressively
  • I remain positive, that each small contribution, by like-minded people, will collectively help
  • If the social media used to showcase all what is undesirable, they can also consider showcasing examples of the good we do
  • We can have a possible Government Media and Communication strategy on the ‘The Role of Public Officials and Government Nominees

 

 

Flashback 2005: 


“My question to all people’s representatives in the legislature and key public officials is this. Was the legislation, referred to by the former Minister, brought to Parliament? Was it passed? If not what statutory measures exist through either the existing codes or specific statutes-, which will act as a deterrent to the type of actions and resultant risks to the country? In lighter vein, the money wasted on this project could have funded millions of bags of free fertilizer and millions upon millions of glasses of free milk! However on a serious note, if that money, was ploughed into rural roads, buses, access to safe drinking water, electricity, rural schools and hospitals-almost 30 years ago - which was even before we “Opened the Economy” or knew what “Privatization” meant, even to bash the bad ones around, we could have bridged income as well as digital divides and reduced the regional disparities about which there is so much natural concern today. Then the pledges of today’s political parties, about fertilizer or milk would have been relatively redundant.  

We invest considerable time and money and rightfully so to sustain the environment we live in and the enterprises we work with. However, I submit, that we should be investing far greater time and mind, to address the challenges to what I will phrase ‘Enhancing and Sustaining Good Governance’. 

 
We have a challenge   


Ours is a challenge of formidable proportions. A challenge to individuals and institutions whether in corporate governance or in state owned enterprise governance, in the governance of self as public officials, professionals, nominees in supervisory or regulatory bodies in banking, securities, insurance, health, education, utilities, accounting & auditing standards, product and service, quality and safety standards, or as individuals engaged in enterprise or philanthropy, in advisory bodies, religious or social societies or charities and much more.   


People are empowered   


The challenge I refer to is now taking centre stage and will gain further momentum. The people of our land are empowered to discuss and debate on any matter, in any fora, at any time, at any place and in any medium. I therefore chose to share my reminiscences about a cautionary thought I articulated almost 12 years ago, in a 2005 publication in the print media. It was based on a real life example of 40 years ago, just as the country began its journey as an open or market economy. The value of that thought and the time I invested then, in researching and writing it, will, I hope, be appreciated at least now.   


Our responsibility   


Our collective purpose should be to help build, rather than to break.   


I have a purpose in investing time to search my e-archives and to request the print media to republish the article. While reflecting upon the repeated news in the print and electronic media, about those who have been found wanting, and while being only human to empathize with their families, my purpose is to highlight the need for us all, to be conscious of our responsibilities, in whatever roles we play. Our responsibilities also include, enhancing the awareness of those whom we work with, and doing so proactively. We need to help build a better nation, not overnight, but incrementally and progressively. We can’t be irresponsible in contributing to the break up of a nations fabric, by design or by default. I remain positive, that each small contribution, by like-minded people, will collectively help. If the social media used to showcase all what is undesirable, they can also consider showcasing examples of the good we do, or can do in a positive tone so as to give life more meaning.   

 

I don’t think we need to consult Saatchi and Saatchi of London, BCG of Berlin, McKinsey of New York or the now defamed Bell Pottinger. There are local agencies and also representatives of global agencies, with indigenous, homegrown, creative talent and capability


We can have a possible Government Media and Communication strategy on the ‘The Role of Public Officials and Government Nominees in enhancing and sustaining good governance   


The above should be placed on the national agenda and there clearly is a role for the eminently capable Minister of Finance and Media, Mangala Samaraweera, to consider conceptualizing content for media and communication on what I will term “ The Role of Public Officials and Government Nominees in Enhancing and Sustaining Good Governance.” This is a specific project for an overall media unit. Key Public Officials and Government Nominees, who are performing their roles well, can be interviewed, showcased and invited to share thoughts with others.   


Ideas are a dime a dozen. Those who implement them are priceless   
I don’t think we need to consult Saatchi and Saatchi of London, BCG of Berlin,

McKinsey of New York or the now defamed Bell Pottinger. There are local agencies and also representatives of global agencies, with indigenous, homegrown, creative talent and capability. That talent should be leveraged. I hope this thought will be considered and implemented. I believe it’s necessary that I reflect briefly on the following, which will provide any reader with a basis for my readily apparent, but justifiable, anxiousness.   


Strategy Workshops and a Robust Media Unit   


I will reminisce, but not in detail, about my suggestions for a proactive Media Unit, going back to the 1994 General Elections. I had a healthy debate with Dr. Wickrema Weerasooriya when I was requested to see him with content I had developed. I wont also elaborate on the repeat of the suggestion for a robust media unit, at the workshops I conducted in 1996, as an independent honorary consultant at the invitation of Ranil Wickremesinghe and Karu Jayasuriya, at Srikotha and the JSS auditorium. All this was gratis time. Almost 10 years later in 2006, I proposed, the “Restructuring and Repositioning of a Robust Media unit” in a series of interactive workshops I conducted, again as an independent, and once again, on a gratis basis. On this occasion, it was to develop the Panditharatne Commission Report with a team of handpicked individuals. 

 
Learning outcomes   


As I invest time once again, to search and locate my 2005 article, I do so because I believe that this example of 4 decades ago, yet has learning outcomes and thoughts and indeed, possible next steps, for all of us-whether we are law makers-the peoples representatives, public officials, professionals in public institutions, in private practice, or in private enterprise. The article of November 30, 2005, is reproduced in full, below:   
Reproduction of an Article of Wednesday, November 30, 2005   


Political will, courage and commitment to close a hole in the Nation’s Balance Sheet   
The following are extracts of the address made in Parliament, on the Urea Fertilizer Project, by the then Minister of Finance and Planning Ronnie De Mel, on December 21, 1977.   

 

We propose to introduce legislation very soon to make Chairmen and Directors of Corporations personally liable for their actions in those Corporations. Their property will be sequestered if they do this type of thing. I do not think most of the present Chairmen and Directors would like to continue if they know what they are in for

 


“I decided to intervene at this stage of the committee discussion on the Votes of the Ministry of Industries and Scientific Affairs, to draw the attention of this House and through this House of the country to a matter with far reaching financial and economic consequences, not only to this Ministry, but to the entire country and also to the generations still unborn and on which we have to take immediate action. I refer to the Urea Fertilizer Project.”… “I am not bringing this to the notice of the House merely in a spirit of criticism of the last Government, but as I want this to be a lesson for the future, a lesson and a warning to our Chairmen and Directors of Corporations not to repeat this mistake, a lesson for the General Managers of our Corporations not to make this mistake again.   


“We propose to introduce legislation very soon to make Chairmen and Directors of Corporations personally liable for their actions in those Corporations. Their property will be sequestered if they do this type of thing. I do not think most of the present Chairmen and Directors would like to continue if they know what they are in for. They will make it a point to study their projects a little more carefully when they know that they will be personally held liable and that they will be charged and surcharged for any losses or lapses on their part.”   


“Every worthwhile financial and technical consultant advised them not to go ahead with this project. Several countries, to which the Government approached, in order to obtain aid, including Iraq, advised them not to touch this project even with a barge pole because it wont be feasible.   

 

But the last Government went ahead with this, notwithstanding all the advice given by the technical and financial consultants. The World Bank told them not to go ahead with this project. Several Aid Group countries, whom they appealed to, refused to give them aid because the project could never be made a worthwhile one in this country


“But the last Government went ahead with this, notwithstanding all the advice given by the technical and financial consultants who would have given them advice. The World Bank told them not to go ahead with this project. Several Aid Group countries, whom they appealed to, refused to give them aid because the project could never be made a worthwhile one in this country. But they went ahead regardless of all this advice.” 

 
The following summary extracted from the detailed address to Parliament of then Minister Ronnie De Mel in December 1977, with direct quotations made by him on specific aspects of the fertilizer project, will provide further clarity on why this State Owned Enterprise (SOE) had to be closed down:-   

 

  • The original proposal to start a fertilizer factory in the country would have cost Rs.90 million. Due to a tug-o-war between several Ministers, that project was shelved.   
  • The project was revived during the late Dudley Senanayake’s Government (1965-70). The then Minister of Industries, Philip Gunawardena, was to complete the project at a total cost of Rs.346 Million.   

 

  • That Government fell and the United Front Government which took office in 1970 abandoned the project after what they called a detailed inquiry by a committee which was headed by the then Minister of Posts and Telecommunications, C. Kumarasuriar. The reason given was that the costs were too high –viz Rs 346 million.   

 

  • However “they revived the project and called for tenders again – the usual game. By that time it was only the S.L.F.P. that formed the Government because the other partners of the United Front had left the Government. They accepted a tender at a total cost of Rs.1,168 million.   

 

  • “They entered into a contract with a successful tenderer. Today, with further inflation the costs have been revised, and the present revised estimate is Rs.2,000 million. What was Rs.90 million in my time, what became Rs.340 million and was considered too expensive in Phillip Gunawardena’s time in Dudley Senanayake’s Government, has now become Rs.2,000 million.   

 

  •  “Now we will go into the project itself. That is the most shocking story of all. The project is based on naphtha as the feedstock, not on natural gas, which is the normal feedstock for any worthwhile fertilizer project. We have no natural gas here. “So, actually we should never have started this type of project. Naphtha is a by-product of the Petroleum Corporation based on crude oil – something that is imported. Being an oil by-product, the, cost of naphtha has been increasing steeply from Rs.797 per metric ton in 1975 to Rs.1,600 at pre-budget prices. It will be nearly double at 

post-budget prices.”   

 

  •  “At the same time, the international price of urea fertilizer has dropped considerably because all over the world the oil-producing countries are having their own fertilizer factories fed with their own natural gas or naphtha as a by-product of their own oil.   

• “Fertilizer factories are springing up all over – Pakistan, Saudi Arabia, Qatar, Kuwait, the United Arab Emirates, and Bahrain – because they have the raw material in their own countries, their own oil and their own natural gas. And the price of urea fertilizer, which stood at 330 dollars in 1974, steadily dropped and now stands at 110 dollars c.i.f., Colombo. So, you will see that the raw material has gone up four times in price. The finished product has gone down by 70 per cent – it has become one-third of its previous price”   

 

  • “What is the position today? The installed capacity of our so-called Urea Plant is 310,000 metric tons. What is the total annual requirement of urea in this country? Only 100,000 metric tons. In other words, the plant is geared to produce three times the annual requirement of this country.   

 

  •  “Where were they going to sell this urea? Were they going to eat this urea? This was pointed out to the last Government, but they brushed aside all these things. I understand the commission was in the region of Rs.50 million – apart from the commission on the import of crude oil, which was going to be an annually recurrent commission. As I said, the entire capacity of the plant is 310,000 metric tons while the domestic consumption is only 100,000 metric tons. Even the projected consumption in 1985 is supposed to be 150,000 tons. Thus, this plant will not work at more than 50 percent capacity even if it supplies all the requirements of Sri Lanka”   

 

  •  “I will now give you the projected figures on this factory prepared by my Ministry of Finance and Planning. The annual loss is going to be Rs.400 million in the first year. It will rise to Rs.500 million in three years’ time. It will go up to Rs.600 million in … if you commit yourselves to this factory. …… What a tragic waste of money, what a reckless way to spend hard-earned foreign exchange resources of this land!   

 

 

  •  “I would request the Minister of Industries and Scientific Affairs to immediately go into the question of cancelling the contract, because even if you pay a penalty of Rs.100 million it is still worthwhile. Pay a penalty of Rs.100 million and cancel this contract because you will be saddled with a loss of Rs.500 million every year, if you do not do so. I wish that my friend the Minister of Industries and Scientific Affairs would go into this matter very carefully – I am prepared to give him all assistance – and get out of this contract which is a dead loss to this country, a dead loss for all time”-End of Extracts from the Hansard.   


What I like in particular, is Minister De Mel’s message to public servants- “I am calling upon all Chairmen of Corporations, all Directors, all General Managers to note this: Please do not think you can get away with this type of nonsense in the future because we are going to make you personally responsible. We will sequester your property and your assets if you do this type of thing in the future. That is all I have to say, Sir”–end of quote.   


I thought it useful to share the above with readers, given that the CPD seminar on the “Open Economy & Privatization”- Myths, Realities, Risks and safeguards, (scheduled for 3rd November, 2005 at 5.30 pm, at the Auditorium of the Institute of Chartered Accountants of Sri Lanka, with over 150 registrants), was abruptly cancelled. That was a great pity since several aspects of this case would also have been discussed from a multi-stakeholder perspective.   


Just as the State Timber Corporation of Sri Lanka, a Harvard case study of many years ago used in Asian Business Schools until mid nineties, this and several other Sri Lankan cases, are good “learning” tools, for European Business Schools to which I have been invited to contribute Sri Lankan cases some years ago or to Harvard Business School, Asian, Latin American, or any Business School anywhere.   

 

Several countries, to which the Government approached, in order to obtain aid, including Iraq, advised them not to touch this project even with a barge pole because it wont be feasible

 


My preference however, would be to see how politicians of all political parties in my own country, professionals who advise politicians, consultants who advise Big, Medium or Small Private Sector enterprises, can enhance their awareness through writings or presentations such as these.   


We can then build a more aware political, business, chamber and corporate leadership as well as a strong public sector working in harmony with a vibrant private sector. Then, we might just be able to transform our dreams to deeds and rhetoric of all quarters, to tangible reality, for the benefit of society.   


However, what is uncertain today is whether our people will be deprived of that “Learning Experience” through “Selective Intervention” of the State as we witnessed on November 2, 2005, a Black Wednesday for the Institute of Chartered Accountants of Sri-Lanka.   

 

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