The anatomy of a bid

Tuesday, 29 November 2011 00:43 -     - {{hitsCtrl.values.hits}}

After the recent Commonwealth Games in New Delhi, India, critics found three new words for the acronym ‘CWG’ – Corruption, Waste and lack of Governance.

The Chairman of the Indian National Olympic Committee, who was Chairman of the Organising Committee, is presently in Tihar Jail, in Delhi with many of his acolytes, on charges regarding procurement of equipment for the games. The Controller and Auditor General of India issued a scathing report on the various misdeeds and acts of corruption by the organisers.

The Government of India had to take over the organisation of the Games from the organising committee and put the Secretary to the Cabinet, India’s top bureaucrat, in charge, in order to ensure that the facilities were ready on time, after dire warnings from inspectors from the Commonwealth Games Federation.

The Indian Army stepped in to complete facilities, which contractors could not complete on time. The games village was inhabited by stray canines days before the games were to be inaugurated.

Lankan bid

Sri Lanka has just lost out to the Gold Coast in Australia, in its bid to win the 2018 games for Hambantota. The bid was promoted as an attempt to rebuild this tsunami-devastated town, building a completely new International Sports City, international class hotels and an international airport, on a green field site, in seven years, using taxpayers’ money through State revenue and private donations from business.

Most of the Gold Coast locations were already completed on ground. It is estimated that Sri Lanka has spent between Rs. 300 million and Rs. 400 million on Sri Lanka’s bid process. The Times of India reported a figure of US$ 2.3 million. Another news report put the figure at between US$ 7 to 8 million.

Sri Lanka also had to play catch up, after the bid committee reportedly failed to turn up at New Delhi last year for a meeting with the Commonwealth Games governing body. It is reported that a British public relations firm Pmp Legacy were hired and tasked with creating and promoting the Hambantota bid.

Representatives from Commonwealth country sports organisations the world over were invited to Sri Lanka, extensively and expensively entertained, all State agencies, the armed forces, non State institutions, etc., threw their weight behind the promotional extravaganza.

The Government had underwritten the total cost estimate, saying it would fill the shortfall if necessary. This whole escapade was marketed as a recovery effort from the tsunami devastation.

Large donations

It is reported that large donations have been received from Sri Lanka financial institutions towards meeting the expenses of the Bid Committee and the preparation of the proposal.

One member justified the financial institutions as being arm twisted to contribute, by accusing Sri Lankan financial houses of ‘ripping off depositors and ripping off the State’! He should know, he is alleged to be a member of the Monetary Board of Sri Lanka.

Of course, it helps a great deal to have a financial regulator managing the bid, and other members of the country’s monetary affairs regulator also on the Bid Committee. With State captive funds controlling many financial houses and nominees/advisors of politicians chairing these financial institutions and being on the delegation to St. Kitts, donations from the private financial sector were bound to be lavish.

An amount of Rs. 700 million was referred to by one big shot. This, since it is depositors’ and other stakeholders’ money, will undoubtedly ensure that there will be full accountability and transparency on the expenses incurred for this process.

The Government’s Auditor General will have to express an opinion on the accounts. These are essential steps for legitimacy of future bids for international sporting events for the proposed Hambantota Sports City, as the Bid Committee has stated that that they have not given up on bringing a major international sporting event to Hambantota at some time down the road.

Depositors’ funds

Much has been made of the limited amount of taxpayers’ money being actually used and that the larger amounts are from private sector donations. It must be mentioned that private financial institutions, although they may be controlled by State nominees, deal with depositors’ funds.

Any donations, charitable or otherwise made by these financial institutions, means that the depositors funds are being used. All depositors in such financial institutions, without exception, are taxpayers, either directly or indirectly. So it all collects backs on to the same plate.

The plus factor is that all these financial institutions have to comply with good governance regulatory norms, their annual reports and accounts for the relevant financial year will have to disclose such donations and expenses, and their stakeholders would also be entitled to know how the funds were spent.

This is why accountability and transparency are essential especially when the country’s chief financial regulator and many of his acolytes were the leaders of the bid process. They have to set a standard of governance which is higher than that of the fabled Caesar’s wife.

Delegation to St. Kitts

The Sri Lankan delegation to St. Kitts to support the bid is reported to have consisted of a band of financial regulators, public servants, politicians, stock market investors, advisors to high-ups, business tycoons, over-the-hill sport persons, retired and current beauty queens and starlets of various hues. It was reported to be 160 strong.

They flew in by a chartered SriLankan Airlines plane to the Robert L .Bradshaw International Airport. It is reported that Australia had a much smaller delegation (20), which arrived at St. Kitts Airport by a commercial flight.

Altogether there were representatives of around 70 sports federations from Commonwealth countries, 160 Sri Lankans and 20 Aussies, the total number of visitors to St. Kitts for the event was around 400.

Our Bid Committee set themselves up at the Marriot Resort & Royal Beach Casino, the Ocean Terrace Inn and Frigate Bay Resort. The Sri Lankan delegation canvassed for votes by organising parties in their suites.

Just two days before the voting took place, an Australian website reported that ‘Sri Lanka is partying like it has already won the right to host the 2018 Commonwealth Games, despite the fact that the decision is two days away’.

The response to that is that Sri Lankans are optimists by nature! No lesser person than the renowned Cambridge economist, Dr. Joan Robinson, after studying Sri Lanka’s economic policies and development over some time, reportedly stated that ‘Sri Lankans want to enjoy the fruit, well before they have even planted a tree!’

Only saving grace

The only saving grace on the Sri Lanka delegation would have been the Kulasiri Budawatta dance ensemble, reportedly consisting of 18 (one boss claimed it was 50) performers, who would have mesmerised the fun-loving people of calypso land and the other Commonwealth delegates.

Kulasiri Budawatta of Kegalle, of the august Budawatta Paramparawa of Kandyan dancers, cut his teeth as a choreographer with the National Youth Dance Ensemble in the early 1980s and has since never looked back.

His father Budawatta Gurunanse inaugurated his Kalayathanaya, with the help of the then member of the State Council for Mawanella, Dissawe H.L. Ratwatte, later Diyawadana Nilame.

Local newspapers carried many photos of the Sri Lanka Bid Committee being escorted by the Budawatta ensemble performers. Fortunately, they were not featured in the iconic picture of a Conga line, which appeared in the local newspapers, consisting of politicians, financial regulators and stock market traders, which once has to surmise was an attempt to assimilate the Caribbean culture and garner voters, not some demonstration of Sri Lankan culture. A whole shoot of chefs from the Cinnamon Grand in Colombo, plus ingredients and condiments were also taken to cook up a grand banquet. There was also a Sri Lankan village tavern – serving toddy and arrack! A local music group provided music for dancing.

Not enough votes

But at the end of the day, Sri Lanka just did not have the votes. The final score was Gold Coast 43, Hambantota 27. Voting was reportedly secret and electronic. Therefore, the normal electoral tactics which south Asian politicians are famous for – booth capturing, stuffing ballots, impersonation, intimidation, etc. – could not be brought into play.

Pity, it is reported that there were some reputed ‘serial’ past masters at those activities present and available at the location. Treating, also an election offense, however, was generously indulged in.

The Sri Lankan team hosted a dinner extravaganza, of which one delegate was quoted as saying, ‘Tonight could have not gone better, we proved that not only could Sri Lanka host the Games – but that we could also do it in style.’ A cynic would no doubt add, ‘With other people’s money!’

Sri Lanka was going to win because the message the bid team had spread about the importance of the event for the rebuilding of Hambantota. The Sri Lankan bid made much of the fact that a seven-year lead up for the decision was provided that a games-ready host city was not essential.

The Gold Coast on the other hand spoke of existing, operating sports facilities. The difference was stark. Shades of the controversial ‘Helping Hambantota’ fund. Cynics recalled the flood of rehabilitation and reconstructions fund which flowed in after the devastating tsunami as post-tsunami golden waves.

It is strange that Sri Lanka had not pre-organised an event to greet the result of the voting. Australia had done so. Maybe more knowing analysts had seen the writing on the wall and cautioned against it?

Pity they did not do so before all the funds on the bid were busted up. The organisers said that they put Sri Lanka on the international map. What is the dividend? Will we have more tourists and investors from the Caribbean or other Commonwealth countries? We certainly hope so. But surely there are more economical and less lavish ways of achieving this?

In all probability comments by Moody and Fitch on the new Appropriation and Revival law rushed through Parliament as an urgent bill to take over around three dozen enterprises would also have put us on the same maps at the same time, with much more impact. The proposed takeover of a further 37,000 hectares of plantation land, referred to in the Budget, would have added fuel to this fire.

How much per vote?

To garner 27 votes, Sri Lanka convinced 27 Commonwealth nations on the suitability of the Hambantota bid. This was made much of by the Sri Lanka bid committee. Wonderful – but how much per vote? It would be interesting to calculate the total population of those 27 countries.

The Commonwealth has many mini and micro states; how the voting of the big players, such Britain, South Africa, Kenya, Canada, Australia, Malaysia and India, etc., would have gone would be interesting. One bid committee member, holding an executive office on the committee and the financial regulator, went public on television on allegations on various inducements for votes offered by the rival country.

Fortunately, that story seemed to have been killed very early, by more sensible people. Sometimes, rarely, saner counsel prevails. Another delegate referred to the negative Canada’s comments on the fiasco in New Delhi.

Laudable attempt

This attempt to use the concept of an international sports city to attract international sporting events to develop the much-neglected south of Sri Lanka is indeed laudable. The decline of the south really began after the Colombo Harbour breakwater was completed and commercial shipping moved away from the Galle Harbour.

The commercial hub of Galle and its hinterland went into decline after the main export-import business activity shifted to Colombo. The development of the Hambantota Harbour, notwithstanding the small issue of sundry rocks which are a hazard to shipping, and that the competitors are Dubai and Singapore, can be seen as an attempt to win back commercial activity to the Deep South.

The 2018 Commonwealth Games were pitched to be the crown of this revitalising the south campaign, including a high-speed motorway, a new train line and an international airport.

Lagging regions, some development experts say, need an injection of this type, shock therapy, to pull them up by the boot straps to catch up with the rest of the country. But it is arguable that the donor-funded Integrated Rural Development Programme (IRDP), implemented in Hambantota in the late 1980s would have had a more sustainable developmental effect rather than a one-off international sporting event or for that matter, even a series of such events.

Has any impact assessment been done on the economic impact, so far, of playing international cricket at Suriyawewa? In a more centrally-located location at Dambulla, the positive impact of international cricket being played there on the local economy is clearly discernible. But the Dambulla infrastructure and central accessibility is far superior.

Analogy with Malaysia

Much was made of the analogy with Malaysia. In 1998 it is supposed to have had the identical socioeconomic indicators just before hosting the 1998 CWG. How the Malaysian economy really took off after they hosted the CWG was the justification for the Hambantota CWG.

But the comparison is flawed; Malaysia is a resource rich country, with oil, gas, rubber, oil palm, tin, tea, timber and uncultivated land, exporting to the world. It had a small population, with a hardworking entrepreneurial Chinese minority with an excellent work ethic and an effective economic crutch for the majority Malay Bhumiputhra and other indigenous people.

There was an extraordinary person called Mahathir Mohamed in charge. A huge hinterland in SE Asia to trade with. The Malaysian public service was British trained and autonomous and not riddled by political interference.

Foreign Direct Investment was welcome in Malaysia with lavish concessions, there were no urgent bills to expropriate and revive dozens of underperforming and underutilised businesses or take over uncultivated plantation land. Further, at that time the world economy was different, then in a globalising boom, not in the middle of an economic crisis.

A more relevant comparison would be with Brisbane, Australia and Greece. Greece’s economic decline took place after the huge expense lavished on the Olympic Games preparation in 2004. Huge cost overruns on grandiose facilities, never utilised properly since the games were over. It never recovered.

Populist politicians ran up huge deficits, hiding the true facts from the Greek voters. Finally today, the politicians have been fired and a technocrat has been tasked with sorting out Greece’s economy.

Brisbane hosted the CWG earlier, its former Mayor Jim Soortey said: “Municipality spent millions of dollars propping up and maintaining old, depreciating Commonwealth Games facilities.”

The experience of South Africa and the recently-concluded Football World Cup is the same. Like New Delhi’s CWG facilities, huge stadia massively underutilised and costing huge amounts to maintain, a burden on the revenue.

Government undaunted

An editorial in a local newspaper thanked the Gold Coast for saving Sri Lanka from disaster. If the Commonwealth nations wanted to ruin Sri Lanka, the Editor wrote, all they had to do was to allow us to take up the massive cost of the games.

The Sri Lankan Government seems undaunted by the defeat. It has gone on record saying that the Hambantota International Sports City and other related facilities will be built on schedule. Hambantota will be made the leading sports destination in the world. An F1 Grand Prix event will be staged at Hambantota in 2017.

The chairman of the bid committee is reported to have said that “at the last minute Canada made a critical observation about the Delhi Games and this created a certain amount of fear among the voting delegates who associated India closely with Sri Lanka, as a result would have hurt our chances to some extent”.

One wonders why all the tamashas, partying and extravaganzas at St. Kitts and before could not have countered this by establishing Sri Lanka as an independent separate nation state with a proud history of corruption free, on time and transparent construction delivery without delays and cost overruns?

Final analysis

In the final analysis, it may be argued that probably more would have been done for the upliftment of the residents of Hambantota by exemplary institutions like the Women’s Development Federation’s Jana Shakthi Banku Sangamaya and the Hambantota Chamber of Commerce or the District Integrated Rural Development Programme, when looking at bang for buck, rather than all the hoopla unleashed at St. Kitts, including the prelude tamashas, by the bid committee.

As a part of the promotion, it is reported that 15 of our delegates travelled to watch the Rugby World Cup at New Zealand! At the other end of the world.

What is really needed is an objective impact assessment and a study of the cost effectiveness and a full and fair accounting and an independent audit. An effort has been made.

As has been said by one delegate, showing a maturity which unfortunately is not always evident, there cannot be two winners. Only one. With that, there is no argument. But was the strategy correct? Was the whole process undertaken in a rational and cost effective manner?

There are going to be future similar bids made, we are told; we need lessons learnt to be documented and internalised. A full accounting for all the expenses by all institutions, State agencies, the armed forces, the national airline and expenses met from private donations would be essential.

Otherwise we will surely earn the acronym CWG – without even hosting the games, only for Corruption, Waste and lack of Governance in the bid process. That would not be a satisfactory result.

(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)