Spotlight moves from bonds to constitution
Posted on October 21st, 2017

Editorial Courtesy The Island

The front pages of the daily newspapers have become duller with the conclusion of the recording of evidence by the bond scam commission. The emergence of all manner of sensational information and disclosures during proceedings had become the order of the day and this provided lunu ambul to news pages and the evening bulletins of the various television stations. The commission is on record saying that it had served some interrogatories on Prime Minister Ranil Wickremesinghe, who volunteered to appear before it as his name had transpired during the evidence of some witnesses, and had requested him to respond by affidavit. If it is necessary to ask him questions on his responses, it has undertaken to arrange for this to be done.

The spokesman for a JVP connected organization has claimed it has more evidence to present and there have been demands for the further extension of the commission’s tenure. Obviously the investigation cannot continue indefinitely. The commission itself would be the best judge of whether it has got to the bottom of matters under reference. The Attorney General’s Department would no doubt appraise it of any new material meriting investigation that has surfaced if such is the case. The commission’s immediate task is to get on with the onerous responsibility of analyzing the evidence before it, making its determination and if necessary making recommendations on what must follow.

Meanwhile it is presumed that the various concerned organizations are making their own investigations into material that emerged during the commission proceedings. A matter that has attracted public attention is that the Employees Provident Fund (EPF), the private sector employees’ retirement fund which has long been a captive lender to successive governments, had been making investments in treasury bonds through secondary market transactions despite being a primary dealer itself. Clearly it makes no sense to pay more for the self-same instruments in the secondary market when they could have been obtained cheaper in the primary market. Ulterior motives of personal profit have been alleged.

Labour Minister John Seneviratne has said that these matters must be urgently investigated. The EPF falls within the purview of the Labour Department which only handles matters of enforcement. Treasury management has been delegated to the Central Bank. On and off dust has been raised about dubious share market transactions of the EPF. It is known that ministers, sometimes in the national interest and sometimes for personal reasons, have influenced EPF stock market investments usually during initial public offerings. The fund has also engaged in secondary market transactions. Although it owns significant stakes in many listed companies, the bulk if its funds are invested in risk-free treasury instruments.

Former Central Bank Governor Nivard Cabraal, during his tenure, frequently argued that it was necessary for the EPF to invest in appreciating equities rather than be confined to fixed income generating treasury instruments. His point was that as the country developed and became less indebted, there would be fewer treasury instruments that would be available. Investing in good shares would mean substantial income for the fund both from dividends and capital appreciation. While there is no doubt that EPF funds had been used for some questionable stock market transactions in the past, it is also a fact that it has earned substantial capital gains, in additions to dividends received, in its equity portfolio with the pluses comfortably outweighing the minuses.

With the spotlight moving away from the bond commission, the much talked of new constitution has been drawn into the limelight. Opponents of the proposed constitutional changes were encouraged by a statement from the Malwatte and Asgiriya chapters of the Siamese sect saying that neither constitutional changes nor a new constitution was needed by the country. Some newspapers published this statement with pictures of the Mahanayakes of Malwatte and Asgiriya. Prime Minister Ranil Wickremesinghe, attempting to speak to the Malwatte prelate who has been more accommodating towards the government’s constitutional proposals as a means of furthering ethnic reconciliation, found that he was overseas. The premier thereupon reacted strongly alleging media spin by implying that the Malwatte Mahanayake backed the published statement.

These public exchanges are doing nobody any good. The former president and his joint opposition are taking the same road historically traversed by both the UNP and the SLFP in blocking their rivals from settling the national question. The Bandaranaike-Chelvanayakam Pact which might have enabled an acceptable solution to the long festering problem was scuttled by the then UNP opposition while the Dudley – Chelvanayakam agreement suffered a similar fate thanks to SLFP agitation. Majority Sinhala fears have been ruthlessly exploited and sometimes inflamed by both major parties whose desire for political advantage subordinated the national interest. This eventually triggered a near three decade long civil war. On the other side of the palmyrah fence, Tamil politics too played a less than helpful part. Opposition leader R Sampanthan’s liberal stance today provides an opportunity for resolution that will not last for ever. He is well into his eighties and it is unlikely that his successors would be similarly moderate.

Unlike when the 13th Amendment was enacted, nobody is holding a gun at anybody’s head. There is no doubt that the Provincial Councils have proved expensive white elephants. But our politicians, who are more than willing to burden the taxpayer with twice as many local councilors than we have at present, are not inclined to agree on constitutional changes that will satisfy minority aspirations without hurting majority interests. Politics remains the name of the game and advantages will be sought by various contenders for power at the expense of the national interest.

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