Giving teeth to the Committee on Public Enterprises (COPE) which overseas some 400 institutions, could go a long way to achieving the lofty promises made by the Yahapalanaya Government, especially if the current body carry out their plans to present individual reports on the most erring of organisations that were given a free pass under the previous administration despite hemorrhaging billions of rupees.
New COPE Chairman and JVP MP Sunil Hadunetti has ambitious plans to submit to parliament investigations into 15 state owned enterprises with some findings already sent to the Attorney General’s Department for legal advice. COPE has already interrogated officials of the CEB, SriLankan Airlines, State Pharmaceuticals Corporation, Agrarian Insurance Board, Rakna Arakshaka Lanka Limited, National Secretariat for Elders, Janatha Estate Development Board, Bank of Ceylon and the Central Bank among others.
Officials of the Cricket Board, National Water Supply and Drainage Board, Sri Lanka Insurance Corporation and Lankaputhra Bank are also to be summoned before the Committee shortly. Other plans include amending the Standing Orders of Parliament to increase the membership of COPE and engaging strongly with the media to increase transparency. Holding officials and policy makers accountable will likely be the toughest part but if COPE can find a new lease of life it could well improve the JVP’s flagging political fortunes as well.
The new investigations include 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 under the previous Government 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 that enjoyed almost complete impunity.
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. Several others, notably Mihin Lanka, have lost billions of rupees but continue to be allowed to fly into the red.
In the 2013 COPE report alone, 16 out of 72 public companies were found to be loss-making. 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), the Ceylon Petroleum Corporation (CPC), the 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. COPE has a rare chance at a second chance that could benefit the entire country.