Conflicts of interest in appointments to SOEs

Ever since the 2022 economic crisis, the performance of SOEs has become a contentious topic of discussion and debate within the public discourse. The continuous losses of public entities have resulted in taxpayers having to inject capital by paying higher amounts of taxes to the Treasury. 

Last week, Parliamentary Committee on Public Enterprises Chairman Dr. Harsha de Silva disclosed that State-run SriLankan Airlines – which is considered as a financial black hole – was incurring losses on 31 out of the 45 routes it is operating. The 2025 Budget set aside Rs. 20 billion to repay old debts and interests of the beleaguered national carrier.

One particular area which has not received adequate attention is the appointment of individuals with clear conflicts of interest to top decision making positions in Government commercial businesses. The NPP administration since gaining power has handpicked people with apparent conflicts of interest to key positions of SOEs. In fact, some of those who have been appointed to lead a few Government enterprises happen to be prominent executive officers who are involved in the management of privately-owned businesses which compete with the very Government businesses they are in charge of.

One prominent example of an appointment laden with conflicts of interest is Dr. Tilak Siyambalapitiya to the chairmanship of the CEB. As Siyambalapitiya is considered as one of the strongest proponents of coal in the country as well as a fierce opponent of renewable energy, his appointment to the influential post was severely criticised by energy experts because the policymakers have set a target to achieve 70% of the island’s electricity generation via renewable energy sources by 2030. Some of the CEB’s decisions subsequent to his appointment have been perceived as detrimental to the renewable energy sector. 

Furthermore, he co-owns the firm RMA Energy, which provides consultancy services related to the energy sector, raising concerns of conflicts of interest. At the time of Siyamblapitiya’s appointment to lead the CEB, RMA Energy was a registered service provider to the CEB. As per the firm’s website, the company had worked on various projects with the CEB, including reviews of gantry designs, resettlement plan preparations, and the National Grid Expansion Project apart from conducting research and analysis in collaboration with the State electricity utility.

Last month, the Electricity Consumers’ Association lodged a complaint to the Bribery and Corruption Commission, calling for an investigation into the alleged conflict of interest involving the CEB Chief. In the complaint, the Association had pointed out that RMA Energy has been providing services to the CEB even after Siyambalapitiya assumed the role of the CEB Chairman in September 2024. The Anti-Corruption Act, which was passed in 2023, addresses conflicts of interest, particularly within the public sector. It mandates public officials to disclose any direct or indirect interests they or their associates have in dealings with entities where the official is a member, director, or employee. The violations of the Anti-Corruption Act can lead to criminal charges and penalties.

Meanwhile, the public has been in confusion as conflicting reports emerged early this month over the resignation of Siyambalapitiya from the CEB’s Chairmanship. Although numerous media sources reported that Siyambalapitiya stepped down, the Ministry of Energy rejected those reports and claimed he was on personal leave for overseas travel.

The empirical evidence proves that when individuals who are directly or indirectly connected to the service providers of SOEs had been selected to lead those entities, they had used such positions to enrich the financial interest of themselves and associates to the detriment of public firms.

The Government should have carried out an extensive vetting process prior to confirming appointments to key public enterprises. Some of the appointments to top positions in SOEs reflect the NPP political dispensation’s lack of experience in governance. No enterprise, whether public or private, can realise its full commercial potential when leaders drive their personal interests instead of trying to achieve what is best for the enterprise.