Make COPE count

Good governance activist and JVP MP Sunil Handunnetti’s appointment as the new Chairman of the Committee on Public Enterprises (COPE) was hailed as a positive development by a public long tired of public finance being overlooked by Parliament, but the “Yahapalanaya” regime has much work left to do.

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 National 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 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. 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), 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. The world now has its eyes on Handunnetti.