COPE kaput?

THE Committee on Public Enterprises (COPE) presented its latest report covering 19 loss-making public enterprises to Parliament several weeks ago, but its fate as yet another pointless documents seems sealed as the ‘Yahapalanaya’ Government continues to drag its feet on serious public reform.    

Former COPE Chairman Minister D.E.W. Gunasekara went on record numerous times, warning monitoring of public finance is in a terrible state and Parliament has to take action on the reports that are released annually by the committee. Yet consecutive years have proven that such appeals are deftly ignored by the Government. Despite repeated appeals, neither the CID nor the Bribery Commission has seriously investigated and punished the numerous offenders citied in successive reports. 

Now that many of the loudest voices supporting COPE – including Deputy Foreign Minister Harsha de Silva and Deputy Minister Eran Wickramaratne – are actually members of the Government, they have more responsibility than ever before to ensure the findings of COPE are acted upon and wrongdoers punished.

Moreover, 13 important Government enterprises not even coming under the purview of the Auditor General raises serious questions on good governance, transparency and management of public finance on a scale that demands urgent attention.

Details of the companies emerged in Parliament when the Opposition pointed out State-owned companies which have failed to provide a decent return during the past 10 years but continue to be funded by State coffers. Amazingly, none of these loss-making companies are audited by the Auditor General’s Department but subjected to a private audit, which has “no binding with the shareholders,” which includes the Government.

Mihin Lanka Ltd., Shipping and Aviation Information and Research Ltd., Polipto Lanka Ltd., Sri Lanka Thriposha Ltd., Rakna Arakshaka Lanka Ltd., Lanka Logistic and Technologies, Sri Lanka Savings Bank, Lankaputhra Development Bank Ltd., Sri Lanka Insurance Corporation Ltd., State Trading (Co-Operative) Wholesale Co Ltd., Lanka Sathosa, State Resources Management Corporation, and Gal-Oya Plantation Ltd. are the 13 companies established during the past 10 years.

Of these companies only Sri Lanka Insurance has managed to accrue profits and pay taxes, a return on investment that the Government badly needs. Yet the financial governance of these institutions is not being regulated by the Auditor General. A COPE report on the alleged bond scam is also expected to be wrapped up before December but there is little hope of its contents being legally investigated unless parliament starts taking the reports seriously.  

The responsibility for acting on the COPE report falls primarily on Parliament itself, which should, in particular, pay attention to the revelation made by COPE that 98% of the loss in public enterprises is by four State companies: The Ceylon Electricity Board (CEB), Ceylon Petroleum Corporation (CPC), national carrier SriLankan Airlines and Mihin Lanka. Economists have estimated that loss-making companies bleed as much as 2% of GDP from the economy.

Yet COPE has failed to question Budget allocations given to companies that are repeatedly making losses and establish a mechanism that makes top officials directly culpable for mismanagement of public finance. At the very least it should ensure that a performance-based pay structure is implemented for the Board of Directors and other top appointees. Without stronger powers for COPE, these reports are unlikely to have any impact.