Monday, November 28, 2011

Up the plantain tree

The weekend newspapers carried a story of a rare triumph for the rule of law. The company running a farm that encroached on a wildlife sanctuary has vacated the sanctuary, full story here and here.

What is noteworthy is the reason for the withdrawal from the sanctuary. It was not the law enforcement authorities or the courts that forced the company out. In fact the Department of Wildlife Conservation (DWC) and the Ministry of Agrarian Services and Wildlife claimed that there was no encroachment at all.

It was the multinational partner in the project, Dole Bananas of the US that acted, on being informed of the encroachment by local activists. Given that no local agency was even willing to look at the matter Dole could easily have followed the (now well trod) path of brazening it out and denying that the sanctuary was violated. Luckily for the public they chose to do what was right and not what was convenient or profitable.

Things have come to a pretty pass when it is a foreign multinational that acts responsibly, while the rulers, law enforcement and other agencies ignore a problem. Multinationals are frequently painted as evil, exploiting corporations. While not all of them are squeaky clean, many have embraced the concept of accountability and responsibility seriously. Do we now need to turn this concept on its head and treat Governments, rather than multinationals as the likely villains in the play?

Why did no one else act? Powerful forces were involved, as a quick glance at the Sunday Leader story will tell.

The rule of law is one of the foundations of a functioning state, the events above testify to the extent to which it has been undermined. Laws exist to protect the population from the whims of the rulers, as the rule of law unravels citizens will find themselves being preyed on by the rulers, as in this case. Looks like we are up the plantain tree?

Addendum 29th November

Serendipity looks at some other aspects on the same question here.

Tuesday, November 15, 2011

Colombo Hilton now vested with the Government?

Hotel Developers (Lanka) PLC, the listed company that owns the Hilton property in Colombo made a very strange announcement yesterday.

The announcement states that consequent the enactment of the Revival of Underperforming enterprises act the assets of the company are vested with the Government and all the shareholdings of the company are now held by the Secretary to the Treasury.

This has left many people in the stock market utterly confused, although the announcement may seem innocuous to the uninitiated. This is a public, listed company with many shareholders, all of who are unaware as to how the shares have been transferred.

How were the shares transferred? There is no record of any shares trading on the exchange, indeed the share has been suspended following the announcement of the bill. Were the shares traded privately, off the market?

If shares are traded off the market, the stock exchange has a share transfer form that needs to be signed by the buyer and the seller. No existing shareholder signed anything. They have not even been informed, they only read about the announcement in the news.

They have not been paid compensation, which is stipulated under the act. The electronic registry run by the stock exchange still lists the shares under the names of the original owners.

Are we to take it that the registry is no longer valid? Or that procedures necessary to transfer shares are no longer required, that a directive from the state will suffice to change ownership? Will this apply to the land listed for acquisition under the Act, with the requirements for land registry entries being dispensed with?

The Act itself left many unanswered questions, most pertinently on the status of mortgages on the properties to be acquired, the status of the winding up procedures that were being followed and the claims of the various other creditors. All norms and processes seem to have been thrown out of the window.

These seemingly mundane procedures are all part of the legal framework of the country on which business is conducted and which is taken for granted.

Now it suddenly seems to have given way, hence the confusion as to how businessmen should operate in the future.

Sunday, November 13, 2011


I went on a bit of a binge for breakfast today. I usually don't each too much bread and avoid butter altogether. Today I had home-made buns with butter and honey, accompanied by my favourite Mattekelle tea. It is a combination that I used to enjoy regularly as a child but have not tried in many years.

Good honey is the key and for best results should be accompanied by freshly baked bread (I ate some rolls that my mother made yesterday afternoon, so it was not a perfect combination, but it was good enough).

There is now a fairly good supply of local honey available. When we were children we had to rely mostly on imported Australian honey. The Australian honey is not bad, it is well packaged in nice jars (usually with a pretty picture of a bee) and has a rich golden colour, almost like golden syrup. Unfortunately (to my palette at least) it does not taste as good as the local honey.

I had been spoiled in my childhood by my grandfather, who used to return from his shooting trips to the jungles with a bottle of wild honey. This was honey that was collected by the Veddah's and was usually filled into an old arrack bottle, stopped with a cork or bit of wood cut into the shape of the mouth of the bottle. (I have heard stories that the Veddah's collect the honey in old kerosene oil tins and then empty it into the arrack bottles). Because the stopper was never perfect, there was some paper and string tied around the mouth. It was very messy, with some honey oozing down the side, soaking the grubby bits of paper and string.

The packaging was terrible, but the product was delicious, even if it had bits of honeycomb inside it. The honeycomb is perfectly edible (I think) and the beeswax has a nice consistency to it. We did not bother with the impurities, we just ate the stuff.

The Australian honey, for all its nice packaging, was never as sweet. After my grandfather died supplies of honey stopped and for years the only thing available was the Australian honey. I tried buying some honey from villages when on holiday but it was not good. Although the bottles looked the same it was heavily adulterated with treacle and sugar. After a few days the sugar and treacle starts to crystallise and it needs to be thrown away.

A few years back I discovered a small plastic bottle of honey in the supermarket. I was delighted because the dark, slightly messy contents looked very familiar. When I tasted it, it was exactly as I remembered it and we have been buying it ever since.

When I looked at the bottle this morning it claimed to be 'wild honey', I could not quite believe this, so I did a bit of research on it, it does seemed to be farmed, but in small remote villages, so its probably pretty close to wild honey.

I found that the company that is producing the honey is even trying to export it, in slightly smarter packaging.

I was amused to see an expiry date on the bottles, probably necessitated by law or possibly, requirements of sale. I don't think pure honey can expire, the Veddah's even used it as a preservative. It will not last for ever, but it lasts pretty long and will surely get eaten before anything can possibly go wrong, so who cares about expiry dates?

PS. For reference on how Veddah's preserve meat, Google books has an extract from Samuel Bakers Rifle & Hound in Ceylon(incidentally a book that I remember seeing in my grandfather's library) here.

Saturday, November 12, 2011

Gold Coast edges out Hambantota, awarded Commonwealth Games 2018

I had a feeling that Sri Lanka could pull off the bid to host the next Commonwealth Games in Hambantota (in 2018). It was a close thing but the Gold Coast prevailed in the end.

Hosting a big sports event is a huge PR exercise. It brings in a lot of publicity but reaping long term benefits can be tricky. After co-hosting the last cricket world cup Sri Lanka Cricket is now virtually bankrupt and has asked for a bail out. The same thing, on a far larger scale would have been likely had Hambantota won the bid, so on the whole the country probably better off having lost the bid.

I have a theory that the straw that broke Greece was its hosting of the Olympics in 2004. Originally expected to cost $1.3bn, later revised to $5.3bn and now thought to have cost $20bn (the official cost was $14.2bn but others estimate it to be higher). Total Greek debt in 2009 was around €374bn.

Hambantota is a sleepy little town, with charm of its own. The comparison, with the Gold Coast could not be more stark, as these pictures testify.

I would rather it remained that way.

Wednesday, November 09, 2011


I have mused on the subject of gentlemen before. To the male of the species, this endlessly fascinating topic has more aspects to it than one, work being rather important.

What one does plays a a role in defining ones place in society and as far as gentlemen are concerned the less work the better. You see, a gentleman is a gentleman of leisure. He does not work for a living, instead he manages land or perhaps, property.

He will usually manage other investments, in shares, bonds or (even better) works of art. In these straitened times he may be forced to work, something he will despise and avoid as far as possible, endlessly shirking responsibility in the office, making him a rather lousy (if charming-otherwise one can never get away with it) employee. He will never, ever, engage in trade.

The great industrialists of 18th and 19th century acquired respectability with a country seat, so my devious mind was went off on one of its usual tangents when I read about this.

In a feudal society, where the economy is primarily agrarian, land represents wealth and in turn social position. This state of affairs persisted for many centuries until it was overturned by the industrial revolution, which created new paths to wealth and the aforementioned quest for land by the industrialists.

Coming a couple of weeks after the bill to acquire underperforming entities, does this signal a renewed fascination with this feudal idea? Or are we turning the clock backwards, to a more glorious feudal past?

The preamble to the bill talks of vesting underperforming enterprises or assets with the state, yet the schedule lists only one enterprise (Hotel Developers), the rest is all land.

There are thirty six other companies listed - but only the property will vest with the state, not the company. Some of the companies have multiple plots of land listed, so this adds to to a lot of land.

The latest to join the foray is the Central Bank, which has now bought an office in New York. Doubtless a flat will follow, for the country may as well as save the hotel costs,since we may expect frequent travel in future (else why buy an office?).

We may live in interesting times but the truly bored can read my musing on work, here.

That's, all folk, now get back to your jobs. You must work you know, your taxes are what pay for all of this.

The dangers of multitasking

I sometimes read email, blogs or browse the web while doing other things in the office.

Last morning I was reading something online when a friend called. While I was on that call I saw the bank manager's direct number blinking on my office line. I ignored it (we have our priorities, right?) and went on with my conversation.

When I had finished, I called my bank manager while trying to read Dee's post on the Hed Kandi Girl at the same time.

When my bank manger asked why I had not answered I thought I heard the words "sorry I was on another girl at the time" coming from my lips. I wasn't quite sure if I just thought I'd said it or if I had actually said it.

There was a stunned silence on the other end. "Do you know what you just said?"

Shit! Talk about Freudian slips. And its all Dee's fault.

Thursday, November 03, 2011

Curious and curiouser

“Curiouser and curiouser!” Cried Alice (she was so much surprised, that for the moment she quite forgot how to speak good English).

Amidst the stormy weather some strange doings are afoot.

Take for instance the report that some 249 state enterprises lost a total of Rs.19,000m between 2007 and 2009. The usual culprits, the Ceylon Electricity Board and Ceylon Petroleum Corporation were there (and probably lose the most money) but the surprise inclusion is Sri Lanka Cricket. Cricket is a very lucrative game, the ICC shares some of its revenue with member boards which is in addition to direct advertising revenue earned locally. Yet they lost money. Some white elephant investments, built with expensive debt is the probable cause of the loss.

The Government's recent forays into business including Mihin Air and Lankaputhra Bank have also lost money. The timing of this report is rather unfortunate coming within the week of the bill to vest underperforming assets with the state. Why these State ventures lose money is anybody's guess.

We are also informed that Gazprom will start oil exploration in the Mannar basin. All very well, but what happened to the proposed tender for exploration blocks? Was it called? Who bid? How was it awarded? And where did Gazprom turn up from?

When the blocks were originally auctioned the sole bidder was Cairn, a small but respected operator that specialises in niche markets. Listed on the London Stock Exchange, they have reasonably transparent operations, some details of the exploration bid and recent gas strike being available on its website. Gazprom's website contains nothing on Sri Lanka other than two reports of meetings where the participants considered the prospects for bilateral cooperation in the energy sector.

Gazprom has a well earned reputation for opacity. It was a formerly privatised venture that the Russian state reacquired under controversial circumstances. Perhaps there is more in common between the parties than we thought?

In the meantime, the Central bank has told directors of banks to be diligent. This is all very well, but it was only a few months ago the directors at a couple of banks were changed under strange circumstances.

The BOI is now set to receive a CEO, a new position that has been created within the organisation. Last year, it was announced that the BOI was to be abolished...

I'm beginning to understand what Alice felt when she remarked "Sometimes I believe in as many as six impossible things before breakfast."

Wednesday, November 02, 2011

SEC Director General removed, market moves 200 points

It has been a good week for Governance. I just received a news alert that the Director General of the Securities has been removed, the market moved up 200 points during the day, before closing a 178 points up.

Many players in the market including some big fish have reportedly been pushing for the removal of the DG on the basis that the SEC was responsible for the recent decline in the market. How so? By imposing unnecessary regulation, including the necessity of payment for purchases three days after the transaction. What the players wanted was less regulation and, above all, credit. Credit! Credit in unlimited quantities. Credit makes the world go round and if no further restrictions are placed, the market is set for a heady, debt fueled ride.

Unfortunately the announcement is only that the DG is being transferred, there was no mention of any change in the rules. Perhaps these will follow? If it does not, then there will be some very disappointed people, more painful declines and another outcry for credit. The last time the players wanted credit, the SEC did approve it, but it took the market a week to work out that the amount was too little. Part of the problem is that the people don't know exactly what they ask for and may not really know what they are getting until it hits them.

This follows just days after news leaked out of a bill to vest underperforming assets with the state. Drafted by a private law firm and sent for review by the Supreme Court as an urgent bill (more details here), it is set to be approved next Wednesday.

People have sometimes accused the islanders of leading slothful and indolent lives, fast service is quite uncharacteristic. Parliament, however is setting the right example with legislation being made with the speed that MacDonald's reserves for its burgers. In contrast, the Mother of Parliaments serves a leisurely four course dinner consisting of green/white papers, draft bills, pre-legislative scrutiny before the final bill is taken up for debate. Here we just have the preprocessed burger, all ready for deep frying in cheap oil with a side order of chips.

Light regulation is best, no regulation better still. Half of Mexico no longer requires driving tests. In the 1990's driving tests were difficult and a bribe was often necessary to pass. Instead of tackling the corruption, they abolished the tests.

Six out of ten road deaths worldwide take place in just 12 countries, one of which is Mexico, but critics claim these statistics are wrong. Given the size of its population, Mexico they say, is no more unsafe than anywhere else. They claim that the absence of tests actually makes driving safer, since the drivers learn to expect the unexpected. We too can do the same.

Addendum: 4th November 2011

The Daily News has finally deigned to report on the bill to vest assets with the state, a full week after news of the extent of the bill began to trickle out (and about two weeks after rumours began to circulate). "Decision prompted by poor management, corruption etc" read the banner below the headline, "No hurry to pass Act" read another. Quite.

I have noticed a pattern, matters that closely involve the rulers are almost never reported in the State owned press, at some point when it does make its way its usually couched as a rebuttal or denial. Where did we see that last???? Hmmm that little matter of the beggars? See also here.

Addendum 2 4th November, 4pm

It now appears that the Sevanagala sugar factory has been stormed and the management thrown out.