-This is the second part of the article titled ‘honesty is a way of life’ which was published on Friday, July 10.
Tenders were not the only field that was ripe for corruption and in need of reform. I appointed a committee within the Finance Ministry to study the privatization of State owned enterprises and examine the corrupt and inefficient running of 39 enterprises by the previous government. We found that there were innumerable irregularities and bad practices followed in the privatization process while another glaring fact and the enterprises had been handed over to cronies, who often had absolutely no experience or skill to manage the enterprises given to them. Before we came into government, a large number of those enterprises were closed down after making huge losses withing a few years. With this knowledge, I was determined to regularize government privatization and squash the corrupt practices.
"The largest privatization of state owned enterprises took place under my government. Sri Lanka Telecom (SLT), Sri Lankan Airlines (SLA), the National Insurance Corporation, a part of Colombo Port, some of the Power Generation projects, and several other small enterprises. The policy we adopted was that the State would own majority shares, while 40% of ownership was privatized together with 100% of management rights."
Spearheading this change was the Public Enterprises Reforms Commission (PERC), which we set up with the objective of eliminating corruption and rendering government more efficient. Its main function was to regularize all privatization of public enterprises by formulating policies, systems, and procedures for privatization and implementing privatization processes. The World Bank and a few other international organizations assisted us in setting up PERC, which was brought under the authority of the Ministry of Finance.
My Governments policy on the economy was “Capitalism with a human face”
The largest privatization of state owned enterprises took place under my government. Sri Lanka Telecom (SLT), Sri Lankan Airlines (SLA), the National Insurance Corporation, a part of Colombo Port, some of the Power Generation projects, and several other small enterprises. The policy we adopted was that the State would own majority shares, while 40% of ownership was privatized together with 100% of management rights. Thus the Government had final authority of all decisions, while the management of enterprises was handed over to top foreign companies with excellent track records in enterprise management. I decided on this course of action, because it was evident through experience that public servants were incapable of efficiently managing enterprises that were required to make profits.
We also ensured that we invited big International players into the tender process while insisting on receiving good sums of money for the sale of shares of the enterprises. We succeeded in getting the world largest Telecom company at the time, NTT of Japan to come to a public/private partnership with the government on SLT, the Emirates Airways (UL) one of the world’s largest and best managed airline companies to enter into a partnership with the Government to manage Sri Lankan Airlines, P&O Company of the UK and Australia to come into the first ever Development of the Colombo Port since Independence, and several major European companies were brought into partnering the government in various power projects.
We received many accolades from international organizations such as the WB, ADB, and donor countries on the establishment of transparent process by PERC and the success of its work. Unlike the privatization attempts of the past, we had a proud record of all our semi-privatized enterprises making huge profits from almost the first year onwards.
The concept of “Good Governance” includes not only honest governance, but also efficiency in Government. Both concepts are required for a government to fulfill its duty to the people. During my two terms, we undertook several actions to render important operations of government efficient and productive. For this, a clear Vision and Policies were required. Then these have to be translated into workable Action Plans. Firm action was essential to ensure that all of the different and disparate arms of government were acting in an efficient and responsible manner. Within a few weeks of assuming the Presidency, I formulated new systems for creating Action Plans in each Ministry and for every subject. I personally worked with the Officials of the Ministry of Planning and drew up formats to be used by Ministries when scheduling development work. Each development project was broken down into work items and each item had target dates for commencement and completion.
Then, I personally sat once a month with each Ministry - the Minister, Deputy Minister, Secretary, Heads of every department, and other relevant officers and reviewed the progress as per the Action Plans. Solutions were formulated for any problems and obstacles that had arisen. Free and extensive discussions were the order of the day. I continued this review of ministry work monthly, for the first two years in government.
Once I felt that ministers and senior officials were able to carry out the reviews themselves, I participated in the monthly reviews only twice a year. Quite a few Ministers disliked this process and made excuses to absent themselves from my monthly reviews. I carried on with the ministry officials ensuring that development work happened, despite some of the Ministers reluctance to abide by the rules.I let the ministers take the credit for successful projects. Unlike certain other Presidents, I did not desire publicity and to apportion all credit for good things done, to myself. I was only interested that development work was carried on effectively. Advertising myself was something I strongly detested.
Despite the fact that the end of my final term was approaching, I wanted to institute durable action in the fight against corruption as well as efficient administration. In the last two years of my government, we further streamlined government practices by creating some new institutions to formulate and review development work.
The National Council for Economic Development (NCED). This institution actually conducted the function I, as Head of State, personally carried out with regard to the formulation of a Vision, Action Plans and review of implementation. For the first time, we brought in the private sector professionals, academics, and government officials together into the process of government. Each major subject had a unit led by private sector leaders with the Secretary of the relevant subject ministry serving as secretary to that unit. There were ten to fifteen members in each unit. Policies and Action Plans were formed in discussion between the NCED and the Ministry and sent for approval to the relevant minister and then for final approval to the cabinet. The other task of the NCED was to closely review implementation and ensure that it happened effectively. The NCED reported directly to the Head of State.
When my government came into power the state banks had run up huge losses, and were very close to going under. The Bank of Ceylon (BoC) and the Peoples Bank (PB) had run up massive debts. This was mainly due to the politically directed loans which were not covered and never paid back. The BoC had bad loans amounting to Rs. 10 billion, while in the PB they amounted to Rs. 11 billion. I personally supervised the restructuring of the two banks, bringing in foreign and Sri Lankan experts and successfully brought the Banks out of the red. They were making profits at the time I retired from government. I learn that this situation too changed under the Rajapakse regime and both Banks were making losses.
I believe that because of these policies of my government we were able to successfully achieve considerable economic victories.
I am truly saddened to know that all these institutions, painstakingly built over twelve years, that effectively guaranteed good governance in Sri Lanka, are no more today. Most them have been scrapped, and those that still exist are mere shadows of their former iterations, not functioning as they once did.
One of the most important results of rendering government efficient and reducing corruption considerably, was that it left us sufficient funds to spend large amounts of money on development, as well as to increase considerably, Public Service salaries, while making massive military expenditure for the ongoing war. Despite undertaking expenditures in order to improve the lives of the average citizen, my Government was the first since Independence in 1948 to be able to reduce sovereign debt, using part of the monies earned from our effective privatizations. Thanks to our insistence on Good Governance, my government was one of the two most economically successful in Sri Lankan history. We saved a number of failing Sri Lankan institutions from the brink of extinction and laid the foundation for what we hoped to be some of Sri Lanka’s most successful development projects.
The third and final part of this article will be published on July 21