SOE management

Management of State-owned enterprises (SOEs) has always been tricky in Sri Lanka with respective political parties preferring to appoint their loyalists to the posts with little or no oversight. The details emerging from the Presidential Commission on SriLankan and Mihin Lanka are perfect examples of how corruption, mismanagement, and wastage can run rampant within SOEs when questionable appointments are made.

It is not just the Rajapaksa administration that has been guilty of loyalist and family appointments that have resulted in colossal losses to the State, which are usually settled with taxpayer funds. Successive governments from both the United National Party (UNP) and the Sri Lanka Freedom Party (SLFP) as well as smaller parties that form coalition governments have shown this deplorable trait. However, there is almost no accountability for these actions, and a staggering number of loss-making SOEs are allowed to operate without their heads experiencing any consequences.      

This week, President Maithripala Sirisena issued a directive to follow a circular from his Secretariat in making appointments. Those presently serving have been asked to step down so that each case could be examined by an official committee headed by former Presidential Secretary W. J. S. Karunaratne.

Among the other main criteria are an age barrier of 70 years and the requirement that the Chairperson or the Chief Executive Officer (CEO) serve full time. However, the CEO will not be eligible to be a Director. Age restrictions will not apply for distinguished professionals or managers, according to weekend reports.

Directors of public enterprises will have a term of three years and will only be eligible if they are on the Boards of not more than three companies in the private sector. The Presidential Secretariat circular also makes provision for annual evaluation of appointees. Those considered to have a conflict of interest in their areas of activity will be debarred from serving. Also debarred are persons declared by courts as insolvent or a person found guilty by court for moral turpitude, corruption or any other serious crime.

For Directors, the number of terms has been fixed at three, with each term lasting three years. Respective subject Ministers, under whom various State-owned corporations, authorities and trustees come, can only nominate individuals to the positions, but the final decision will be taken by the Review Committee.

This is a marked deviation from the earlier practice, which was that the subject Minister can name whoever they please to the positions. Even after 2015, this resulted in brothers and other kin being appointed to key positions with no effort made to check their validity. These appointees also enjoy attractive remuneration packages and perks that are also funded by taxpayers.

Even though the effort to create a procedure for appointments may stem from the tension between President Sirisena and the United National Front (UNF), it could be seen as a positive development for those keen to see better governance procedures. Both the President and the UNF could use this as an opportunity to implement the ‘Yahapalanaya’ they promised, and especially the latter, reiterated after the constitutional crisis. The public are better served when there is strong oversight of public finance, and it is high time that SOE appointments stop being handed out as rewards to loyalists and used for narrow political gain.