Comments /5674 Views / Thursday, 3 November 2016 00:00
The Committee on Public Enterprise (COPE), a body of parliamentary oversight into the performance and fiscal discipline of corporations that are fully state-owned or in which the Government has a financial stake, has conducted its sittings in-camera since its establishment in 1979. In other words, traditionally and by law its hearings and deliberations must occur behind closed doors. Its members, comprising parliamentarians from parties represented in the legislature, and especially the Chairman of the Committee are expected to protect that confidence. COPE has quasi-judicial powers and is empowered to summon officials and documentation, hear testimony and obtain expert opinion to aid their inquiries. Once the Committee concludes deliberations and officially presents its findings to Parliament, the recommendations contained in its reports are considered directives to the public sector enterprise concerned, for compliance.
Over the past two weeks, the COPE has dominated the news cycle, as the committee set about its most controversial business since it was reconstituted following the August 2015 parliamentary election. Remarkably, representing a major break with tradition, very little about its latest proceedings and deliberations on the Central Bank Treasury bond scandal could be considered ‘in-camera’.
Scandal erupted in the financial sector only weeks after President Maithripala Sirisena and his Prime Minister, Ranil Wickremesinghe were sworn into office. Arjuna Mahendran’s appointment as Central Bank Governor was one of the first points of tension between the pair. Red flags were raised over the appointment due to Mahendran’s relationship to a director at Perpetual Holdings, a controversial firm widely associated with the Rajapaksa Government and its dubious Central Bank Governor Ajith Nivaard Cabraal. In Opposition, the UNP highlighted several stock dumping transactions, especially involving the Employees Provident Fund, a private pension fund, and campaigned heavily against Perpetual Holdings and subsidiary Perpetual Treasuries. Then Governor Cabraal’s sister, Siromi Wickremasinghe was a director at Perpetual Treasuries, a manifest conflict of interest since the company was a primary dealer transacting in treasury bonds issued by the Central Bank.
With Mahendran’s appointment, fears were raised about a similar conflict of interest developing, again involving the same controversial firm. Arjun Aloysius, a Director at Perpetual Holdings, a company his family owns, was son-in-law to the new Governor of the Central Bank who was appointed in February 2015. Within two weeks of Mahendran’s appointment, Perpetual Treasuries was alleged to have profited unduly from insider information in a public auction of Government securities. News of the scandal broke in early March 2015, first highlighted by the JVP, a party that had informally endorsed the Sirisena candidacy in the January election. In early 2015, the ‘bond scam’ plunged a new Government finding its feet into its very first crisis. Nearly two years later, it remains the single most devastating corruption scandal eroding the legitimacy of the Yahapalanaya Government in general and the United National Party in particular.
In May 2015, two months after the bond scandal erupted, Parliament tasked COPE with investigating the transaction after a numerically superior Opposition refused to accept the findings of a three-member committee of lawyers appointed by the Prime Minister Wickremesinghe. The Prime Minister’s committee concluded that Governor Mahendran had not played a direct role in the controversial bond transaction. At the time, COPE was chaired by Communist Party Leader and former Minister in the Rajapaksa cabinet, D. E. W. Gunesekera. The committee summoned officials and heard testimony, but before it could present its findings to Parliament, an election intervened. Breaching protocol, the Gunsekera-led committee exposed its interim report in the media, a move that was strongly opposed by Prime Minister Wickremesinghe. The Premier accused Gunsekera of violating the Parliamentary Powers and Privileges Act by releasing the interim report and claimed he was using his position as COPE Chairman to gain political advantage ahead of an election.
When COPE was reconstituted in September 2015, new Chairman Sunil Handunetti decided to reopen an inquiry into the controversial bond transaction.
Established practice with parliamentary committees set up to scrutinise the activities of the executive branch is that they are chaired by members of the opposition. The norm is considered to be particularly important in governance systems where the executive branch – in Sri Lanka’s case the presidency and the cabinet of ministers – is also represented in the legislature. Parliament is intended to perform vital checks and balances on the executive, with scrutiny of public finance being one of its fundamental constitutional obligations. Watchdog committees like COPE play a crucial role in executing this parliamentary obligation. When Cabinet ministers and ruling party members head these committees it turns the principle of oversight and checks and balances on its head, with the representatives of the executive then responsible for holding the executive branch to account.
With a few exceptions, this is exactly what has transpired ever since COPE was first set up in 1979.
In March 2001, Opposition MP John Amaratunga won the Chairmanship in a surprise election, with Government members opposing the appointment tooth and nail. When the UNP won parliamentary elections in December 2001, it attempted to strengthen oversight procedures by appointing Opposition MP Jeyaraj Fernandopulle to head COPE. Fernandopulle held the position for two years, until the UNP was defeated in the 2004 elections. A feeble attempt was made to carry on the tradition of an opposition Chair by the UPFA, with the UNP’s Rohitha Bogollagama elected COPE chairman in 2004. Within months, Bogollagama had broken ranks with the UNP and joined the SLFP. Once President Mahinda Rajapaksa took office in November 2005, these brief experiments ended, and from then on, cabinet ministers would hold the COPE chair. One such minister was Wijedasa Rajapaksa, presently Minister of Justice, whose explosive report when he chaired COPE in 2007 severely eroded his popularity in the Rajapaksa administration, forcing him to cross over and join the UNP several months later.
Handunetti’s COPE set about its business in a markedly different age. For nine years in opposition, the UNP had for fought hard for more rigid parliamentary oversight over public finance. When President Rajapaksa held office, UNP MPs with technical expertise were nominated as members of oversight committees like COPE and the Public Accounts Committee (PAC), where they would wage solitary battles to keep public officials and institutions accountable. Deputy Foreign Minister Dr. Harsha De Silva, who has been in the eye of the storm this past fortnight as a UNP Member of COPE, recalled how he had attempted to summon Central Bank officials over a controversial EPF transaction for three years while serving as a member of the PAC during the term of the previous Government, to no avail. Weak parliamentary oversight systems had allowed excesses by the executive to go unchecked and reduced the legislature to an appendage of the President and the ruling party. The common opposition that backed President Sirisena’s candidature in 2015, made the strengthening of Parliament one of its key campaign pledges to try and remedy that situation. That an opposition MP would lead COPE and other major oversight committees of Parliament was a given. Handunetti’s election was fully endorsed by Government members. In August this year, Handunetti’s COPE had already presented an interim report on investigations the committee had conducted into several public sector enterprises. The 26-member, multi-party committee had managed to avoid divisions along party lines on any of the enterprises under investigation, a positive factor that has been common in many oversight committees and sectoral oversight committees operating in the new Parliament that was elected in August 2015, authoritative sources told Daily FT.
But that non-partisan approach changed once COPE concluded its investigation into the controversial Central Bank bond transaction and started deliberations on drafting its final report. More than 18 months had passed since the treasury bond scandal first broke. By October 2016, when COPE started drafting its report on the alleged scam, the issue had become patently political. Nearly every political party represented in COPE had gone public with their opinions and accusations. The JVP, which had a significant presence inside COPE had never minced their words about the scandal. UNP members, some of them represented in COPE, had also made public remarks, often defending the role of the former Central Bank Governor. The Joint Opposition conveniently forgot its own links to Perpetual Treasuries as it called out the UNP’s hypocrisy on the bond scandal despite its lofty pledges to battle corruption. A private television channel openly hostile to the Prime Minister ran special segments on the alleged bond scam. As days wore down to the release of the COPE report on the controversy, this media network turned the bond issue into a referendum on Prime Minister Wickremesinghe. The pro-Rajapaksa factions of the SLFP pounced on the opportunity to do further damage to the Prime Minister’s credibility by consistently linking his name to the Governor and the crisis the dubious transaction had precipitated.
Storm clouds gathered the very first time COPE convened to finalise the draft report on 20 October. The report included the findings of the Auditor General, who had been mandated by COPE to conduct a comprehensive audit of the controversial bond auction in February 2015. In his findings, the Auditor General estimated that the state suffered a loss of Rs. 1.6 b from the controversial auction.
UNP MPs in the committee took issue with sections of the report and noted discrepancies on technical details in the Auditor General’s report. They insisted on dissecting the report paragraph by paragraph. On Thursday 20 October, COPE sat for seven hours, discussing eleven pages of the 55 page report. The following day (21), pandemonium reigned inside the COPE meeting room for 11 hours when the UNP attempted to resume discussions on page 12. On the second day, the JVP and Joint Opposition members would have none of it. Joining ranks, JVP MP Bimal Ratnayake and Joint Opposition Member Mahindananda Aluthgamage railed against the UNP MPs, accusing them of attempting to influence the Auditor General’s report and ‘whitewash’ the former Governor. Aluthgamage and others stormed out of the meeting in protest at one point, but returned a few minutes later to continue deliberations. The JVP and the Joint Opposition members were insistent that the report be tabled in Parliament without amendments. Friday’s meeting ended with most JVP, Joint Opposition and SLFP members claiming that as far as they were concerned, the report had been finalised and there was no further discussion necessary on the draft. Many of these MPs endorsed the report with their signatures before leaving the meeting. The following Monday, the UNP MPs were still pushing its amendments through at a COPE meeting that was only attended by Chairman Handunetti, officials of the COPE Secretariat and Auditor General Gamini Wijesinghe. At around 5PM on Monday (24) Handunetti decided he had had enough. He walked out of the COPE meeting with UNP members claiming that ruling party MPs were attempting to intimidate the Auditor General and influence him to change his report. Minutes after he had walked out of the meeting, Handunetti was speaking to a private television network. The COPE Chairman took an unprecedented public position against UNP members who he claimed were engaged in an attempt to absolve the former Central Bank Governor. Handunetti said he was refusing to be part of the process if the UNP was going to insist on a report based on their preferences. “I told them to appoint anyone they liked as an interim Chairman, and I walked out,” he told the television channel soon afterwards. Speaking confidentially, UNP MPs said they had been surprised by Handunetti’s sudden walkout, since the Chairman had been relatively accommodating of the amendments and recommendations the UNP was proposing up to that point. “It seemed he was under some pressure by his party to take a stand,” one UNP COPE Member told Daily FT.
In Parliament the following day, UNP COPE member Dr. De Silva would reveal how he pursued the COPE Chairman down the corridor, begging him to come back. During his speech on Tuesday (25), De Silva also apologised to the COPE Chairman if he had been wronged by any of the UNP members and insisted the slights were not intentional. Amid the drama in Parliament last Tuesday that was dominated by claims and counter-claims about the COPE saga, something seemed to snap back into place. On Wednesday (26), COPE convened again for a marathon session lasting more than seven hours. About 80% of the membership was represented at this final meeting, that multiple sources said had been amicable. Tamil National Alliance MPs who had not participated in the latest COPE meetings until last Wednesday (26), led by Jaffna District Parliamentarian M. A. Sumanthiran, played a role in brokering a compromise. The day ended with consensus on the report, and ‘footnotes’ to reflect the UNP members dissenting positions on some sections of the report, and a few technical clarifications.
Against all odds, Handunetti and the opposition prevailed. COPE found Governor Mahendran “directly responsible” for the controversial transaction and recommended legal action against the ex-CBSL Governor and other officials. That COPE would find Mahendran guilty was a foregone conclusion, given the political twist the controversy had taken; and a completely legitimate conclusion given the blatant conflict of interest and the former Governor’s failure to exercise due diligence in the controversial transaction. COPE does not claim to prove that Mahendran was guilty of passing insider information to his son-in-law’s company, a far more serious charge that is difficult to prove without undertaking a forensic audit and a comprehensive investigation reaching deep into the recesses of the Central Bank.
The unanimous decision of UNP MPs in COPE to stand against their party position on the issue and endorse the recommendation finding Mahendran ‘directly responsible’ tells an interesting story about how important public perception has become in the current political ethos. But the UNP’s silence amid growing allegations that its members were attempting to sabotage the COPE report had also cost the party dearly during the 10 day saga.
On the question of the Governor the UNP got the ‘optics’ wrong from the very outset. Over the past 18 months, the UNP and the Prime Minister have wasted an unprecedented amount of political capital on safeguarding Arjuna Mahendran. Weeks after the bond scandal broke; the UNP’s options were crystal clear: Arjuna Mahendran had to go. Had the UNP leadership permitted his departure in the wake of the scandal, the party could have claimed the moral high ground and a zero-tolerance approach to suspected corruption even within its own ranks. Instead, the party fell victim to status-quo cronyism and staked its very political survival on the fortunes of one man.
In the end, in spite of the ruling party shenanigans, COPE released an explosive report on the biggest corruption scandal since the Sirisena-Wickremesinghe Government took office last year. Efforts made to strengthen parliamentary oversight procedures have already put a system of checks and balances in place that ruling party members themselves are finding difficult to navigate. The fact that the Committee was headed by a principled opposition Parliamentarian who has consistently advocated transparency in oversight proceedings and reform of archaic laws that dictate these meetings take place in-camera, made all the difference. His fearlessness to go public made the nation sit up and take notice of an otherwise technical parliamentary procedure. Intense public and media scrutiny of COPE proceedings in the drafting stages may have put pressure on the UNP and forced its members to unanimously endorse the committee’s recommendations against the former Governor.
For the first time in a long time, Parliamentary oversight mechanisms are actually working. While this was best exposed during the drama surrounding the COPE report on the bond scandal, there have been other gains that have largely escaped notice. In December 2015, a few months after it was elected to Office, the Government took steps to revise Parliamentary Standing Orders to set up Sectoral Oversight Committees tasked with scrutinising draft legislation, treaties and other legislative reports within their jurisdiction. The Sectoral Oversight Committee on Legal Affairs has already won a small victory, forcing the Government to retract proposed amendments to the Criminal Procedure Code last month, following heated debates between Committee members and Justice Minister Wijedasa Rajapaksa. The amendments were widely denounced by Sri Lanka’s own Human Rights Commission, the Bar Association and civil society because of provisions to deprive a suspect legal counsel before a first statement is provided to the Police. Following major opposition in the Sectoral Oversight Committee, the Government decided to abandon the amendments for the time being. Opposition Parliamentarians are gearing up for a similar battle in the committee when the new Counter Terrorism legislation comes up for scrutiny. The new draft has already been denounced by human rights activists as being more draconian than the existing Prevention of Terrorism Act. The parliamentary oversight committee will seek to amend the proposed counter terror legislation to reduce the military imprint on the current draft. It will be a fight, opposition parliamentarians say, but they are confident that with sufficient pressure and constructive inputs, the draft can be brought more in line with international best practices.
These are testing times for the new administration that swept to power on the promise of governance accountability and pledges to root out corruption in the body politic. For millions of voters who trusted in that promise, this is an age of disillusionment and despair. Between President Sirisena’s wild speeches promoting impunity for certain classes of society and the UNP machinations in the COPE-CBSL saga, there is a sinking feeling taking hold in the public consciousness. For the constituencies that backed this regime’s rise to power, the desire to throw in the towel is growing.
But amid all the political angst and despair, there are also tiny glimmers of hope.
The resilience of COPE and its chairman Handunetti is a powerful testament to the importance of rebuilding structures in a process of re-democratisation. The Government response in the aftermath of the Jaffna University student killings in Kankesanthurai two weeks ago is another. The fact that five police officers were immediately arrested and interdicted and the Government dispatched a special team of CID sleuths to investigate the alleged shooting while roundly denouncing the tragedy were heartening signs. But more important were reports that an attempted cover up of the shooting by the patrolling officers was discovered by a senior police official, who alerted Headquarters in Colombo. This speaks to small, but systemic changes in the law enforcement machinery, where impunity for such crimes were once the norm.
This week, the Human Rights Commission of Sri Lanka released a damning report of systemic torture in Government custody, saying the independent commission had received complaints that indicated that torture was being used around the country. The findings are part of a HRCSL report to the UN Committee Against Torture, accepting human rights failures of its own Government and suggesting remedies before an international committee; an unthinkable intervention by a Sri Lankan Government institution in the past and a tangible result of the 19th Amendment which restored independence to this and other commissions.
It is the kind of intervention, the kind of resistance that should have come from the Bribery Commission against the President’s speech accusing the independent body of political motivations. A strongly worded statement from the Commissioners expressing confidence in the Director General, warning politicians not to interfere in their business and reiterating their independent position guaranteed by the constitution, may have reinforced public confidence in the Bribery Commission and convinced its executive officer, whose departure is considered a major loss, to remain in office.
Perhaps some institutions, unlike others, need more time to feel empowered and impervious to political machinations. Several years down the line, if a culture of resistance builds and takes greater hold in the political system, the Bribery Commission may react very differently.
Salvage what is possible
Undoubtedly things are going terribly wrong with this Government. But there is no denying some incremental progress in the right direction. It is much less than what was expected, but it is still many leagues more progressive than what went before.
Slave though he is to party politics and the desire to pander to the nationalist constituency, President Sirisena seems steadfastly committed to the constitutional reform process, and the commitment is shared by his Prime Minister. Prime Minister Wickremesinghe may be hostage to an ancient political status quo in which cronyism reigns, but aides say he remains fully committed to structural reform and believes in strengthening democratic institutions that will stand the test of all kinds of political leadership in the future. He will make this choice even when it means he weakens his own capacity to politically influence the process as showcased during the COPE drama last month.
When institutions and accountability mechanisms are strengthened, they have the capacity to outwit and outmanoeuvre the very politicians that put them in place. They are the ultimate safeguards in a democracy that protects the people from fickle politicians obsessed with personal gain. Once institutions are strong and beyond the scope of political influence, the damage politicians can wreak is minimal.
The current Government is no better and no worse than its predecessor. Made up of equally flawed and unscrupulous politicians, its only redeeming quality may be its less brutal character and a vague commitment to putting structures in place to restore the institutions of a tattered democracy. And though it may be faltering, as long as this commitment exists, as long as the Government is still responding to pressure, reformists must seize the day and change what can still be changed.
This is democracy, in all its glorious messiness and imperfection. It doesn’t guarantee perfect politicians and utopian states. It’s a constant struggle towards a more perfect republic that requires sustained public engagement. Throughout democratic history, rights and freedoms were not handed over on a platter through the goodwill of politicians. They were fought for and won. The COPE struggle and countless other battles being waged against Government excesses prove that two years since the fall of the Rajapaksa regime, the space to struggle is still wide open. For the moment, that remains the fundamental difference between then and now.
In this age of despondency, perhaps the answer lies in holding fast to that which can still be salvaged.
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