First appeared in Daily FT, Daily Mirror, Lanka Business Online, Daily News and Ceylon Today
Advocata welcomes the recommendation to include representatives of the Attorney General’s (AG) Department at Committee on Public Enterprises (COPE) proceedings and urges the government to prioritise this suggestion. The third report of the COPE was presented to the parliament on the 23rd of October, 2019. While presenting the latest report, its chair Hon. Sunil Handunetti MP requested the speaker to allow the AG department representatives to observe the proceedings of the COPE in efforts to expedite the accountability of those responsible.
“With the current burden of debt Sri Lanka is holding onto, we cannot afford to continue to bail out loss making SOEs. The CPC loss of Rs. 105 billion needs to be inspected and COPE along with the government of Sri Lanka needs to ensure that our treasury does not continue to bail out these SOEs as our fiscal capacity cannot continue to sustain this.”
Currently, Sri Lanka’s debt amounts to 82.9% of GDP (Ministry of Finance Annual Report, 2018, Provisional Data). With domestic debt amounting to 41.6% of GDP (Ministry of Finance Annual Report, 2018), our treasury cannot sustain annually bailing out loss making SOEs. Advocata strongly believes that Sri Lanka needs to reduce waste that happens by way of SOE losses, corruption and monumental investments with poor rate of return.
The COPE is a key committee that oversees SOEs in Sri Lanka. The duty of the Committee is to examine the accounts of the Public Corporations and of any business undertaking vested in the government. The third report of the COPE highlights that the Ceylon Petroleum Corporation made substantial losses of Rs. 105 billion in 2018. Furthermore, it also reveals that losses made by the National Water Supply and Drainage Board amounted to Rs. 505 million and losses made by the Elkaduwa Plantation Limited amounted to Rs. 33 million.
Since the opening of COPE proceedings to the media in August 2019, there has been a significant increase in scrutiny of the conduct and financials of loss making State Owned Enterprises (SOEs) in mainstream discussions. This has promoted the transparency of the hearings as well as accountability of the respective SOEs and the COPE to the final decisions of these sessions.
Advocata Institute’s 2019 report, “The State of State Enterprises: Systemic Misgovernance”, highlighted the imminent need of strengthening COPE as a means of managing the losses and misconduct by SOEs. Ensuring that there is representation from the Attorney General’s department at COPE proceedings will fortify that the recommendations of the proceedings will be implemented.
Advocata Institute urges that further reform be considered seriously in efforts to improve structural failings and misgovernance that promote a breeding ground for corruption in Sri Lanka’s state sector. Advocata urges that the government opens committee proceedings to non parliamentarians; specifically for technical experts, to bring in industry knowledge and scrutiny.
Key Points:
Advocata welcomes the recommendation to allow AG department officials to observe COPE proceedings.
Opening COPE proceedings to the media brought about substantial scrutiny of SOEs conduct and losses which is essential to ensuring that the recommendations of the COPE reports are adhered to.
The duty of the COPE is to examine the accounts of the Public Corporations and of any business undertaking vested in the government.
Sri Lanka’s debt amounts to 82.9% of GDP. With domestic debt amounting to 41.6% of GDP, Sri Lanka fiscal capacity cannot sustain the bailing out of loss making SOEs, annually.
Advocata urges the government to further consider reform to strengthen the COPE. We recommend that COPE proceedings be open to non parliamentarians; specifically for technical experts, to bring in industry knowledge and scrutiny.