Monday, November 26, 2012

The TFC deal and the Chief Justice

My post on the TFC deal seems to be picking up a lot of hits, it is now, by a large margin, my most popular post.

The impeachment of the Chief Justice, now underway is probably the cause. The connection  between the TFC deal and the CJ is that the CJ's husband was the Chairman of the state-owned NSB which bought the shares at the inflated price.

That deal was undoubtedly flawed but how should that affect the impeachment? My previous post would not be helpful to anyone seeking an answer to that question, but Mr Nihal Jayawickrama, does address that here.

Mr Jayawickrama is a founder member of the Judicial Integrity Group which is devoted to the task of improving judicial integrity and accountability.

As far as the TFC deal is concerned Mr Jayawickrama is of the view that:

"A judge’s spouse is not prevented from engaging in any activity, so long as the judge does not get involved in such activity. A lack of circumspect or good sense on the part of the spouse in choosing which activity to engage in, is not a matter for which the judge can be held responsible unless the judge was, in fact, or appeared to have been, thereby improperly influenced in his or her conduct as a judge."
Mr Jayawickrama also has some interesting observations on the due process to be followed for the disciplining of judges here.

It is also worth remembering that this was not the only flawed deal on the CSE, the EPF has lost billions on several deals, and so has the state-owned Sri Lanka Insurance Corporation.  The TFC was merely the last in a long list, which despite calls from the COPE and unions, no one seems interested in investigating. Even the investigation to the TFC deal needs to be more broad based, there were surely others, besides the chairman, who were involved?

For those interested the Chief Justice's response to the charges is here.

Updated with a few new links to relevant commentary.

Friday, November 23, 2012

Imagine - fund raiser concert to help children of prisoners

The Association of Friends of Prisoners Children is charity that aims to try to keep the children of prisoners in school. 

Although this may seem a rather simple goal, it is in fact a lot harder than it appears. Apart from difficulties with money, the biggest problem faced is social stigma.

A common question that comes up is when the school mistress asks a child-what does your father do? Most children will be happily jumping up and answering but the child of a prisoner has no answer to give. Once identified as such they are stigmatised and bullied, will probably drop out of school and, more often than not, end up as criminals themselves

This charity is attempting to break this cycle. They are holding a fundraising concert on the 25th (this Sunday) at 7pm at the Bishops College auditorium featuring the De Lanerolle Brothers, Natasha Ratnayake, Choro Calibre, Harsha Makalanda and many others.

Box Plan and Tickets: Bishops College auditorium. Box office open from.8.30am-4.30pm, Telephone 0114712326

 I can vouch that the charity is well run and funds properly accounted for please contact them for further information.

Thursday, November 22, 2012

Former Sri Lankan MP and diplomat convicted of sexual assault, to be investigated for fraud.

We already know what rotters we have in parliament, but the sheer cheek of this man leaves me speechless.

The story is fairly straightforward, man goes for massage, gropes therapist and is hauled into court. What any sensible man should have done would be to plead guilty, pay the fine and learn from the experience. This course of action is not apparent to a former member of parliament and ex-diplomat.

What ? Plead guilty? He does no such thing, he's a man of standing who is used to relying on his network power to get what he wants. He righteously decides to rely on his good character,  so he goes to court, lies and then to top it off, has the sheer, brazen cheek to actually claim legal aid for his defence! The judge makes some very pertinent observations.

Judge Wide QC added: “It was a really nasty offence.

“When good character is relied upon in your case, it does help me to understand what sort of man you are.
“What you did was really bad. To get yourself off the hook, and for no other reason, you accused this completely blameless sensible and conscientious woman of having stolen from her employer by keeping the money and getting more out of you by then offering you extra special services.”

He said the woman masseur who worked as a beautician was “entirely respectable” as was the spa but Gunasekara made inappropriate remarks about her private life, asked her back to his hotel room, and then offered to read her palm as a means to get intimate with her.

When that failed he offered her money but when his advances were rejected, he lunged at her. Judge Wide said: “It was obviously very, very upsetting for her. She fled from the room in high distress, pushing the panic button as she went.”
The court heard despite claiming he only had a £100 a month to live off, he had £1,850 and $631 in cash, and £50 worth of traveller’s cheques when he was arrested for groping a masseur’s breast.
Yet despite the sums readily at hand he pleaded poverty and got legal aid to fight his case.
Gunasekara had travelled to the UK to visit his grandchildren when he groped the masseur’s breasts. In Sri Lankan he lives on a 25 acre estate complete with servants.
Judge Wide QC exploded with rage when he learnt of the legal aid funding adding: “The British public would be appalled to know they are paying for this man’s costs – one of Sri Lanka’s leading successful businessmen and government minister and ambassador to Poland and he say’s he’s got no money. ”I think it is a lie, I think it is one of a number of lies he told in this court. ”Frankly I don’t think the British public should pay a penny to this.” the Telegraph reported.

I share the judge's anger. I hope they lock him up for a good long time, he deserves it. Perhaps one step towards reforming the system of justice here would be to restore the right of appeal to the Privy Council in the UK?

Read the full story here.


Friday, November 16, 2012

Re-imagining Development

T has posted something on the topic of development, a question I have been grappling with for a while. She has posted a parable of a simple fisherman, lying on the beach, waiting for the fish to bite and  content with his lot.

The ultimate goal that everyone probably has is to end up like the fisherman on the beach. Unfortunately life is not quite so simple. Look around our own country, there are many poor and disaffected people, whether they are the displaced in the North/East or subsistence farmers in the South.

Development should be about creating opportunities or choices for people. They key word is opportunities-not handouts, not state jobs (handouts in another form) but real opportunities. A state job is only redistribution, some people are taxed and the money used to pay someone else.

Failure to create opportunities can lead to a tinderbox, witness the Arab spring and its fallout.

Sri Lanka's own tortured history of violence has its roots in the closing of opportunities - first to minorities and then, when no tangible benefits flowed, to rural youth. Witness the uprisings of 1971 and 1987.

At the moment, the innovative people of Sri Lanka are creating their own opportunities-by leaving in droves, to the Middle East and elsewhere, legally and illegally.

As long as we allow people to leave we will face no problems. If they are forced to stay back, either by diminishing opportunities aboard or ham-handed interception of human smuggling, then it is only a question of time before an explosion occurs, unless of course someone wakes up and realises the need to create opportunities.

What does the state need to do to create opportunities ? Certain social investment in education and health will help but the most important thing is to get out of the way; stop interfering in business or the economy, cut regulations and ensure justice prevails. In other words, reduce the size of the state and improve transparency and governance.

Why are poor countries poor? Time Harford has an explanation, which I have discussed here. Why did the Near East explode? Some thoughts here.

We have fifty or sixty years of development experience to draw on, since the first new states began to emerge from end of the second world war. The questions as to what can work and what does not have been largely answered, there is no need to look very far, one can draw as many useful lessons from the many failed experiments as from the few successes. The real tragedy is if we fail to learn anything from history, either ours or anyone else's. 

Tuesday, November 13, 2012

Regional development

A friend who resides in Galle had an interesting observation. Apart from personal services (mainly doctors and lawyers, who would need to be near their clients) there is very very limited scope for employment outside the capital and its suburbs. The only other opportunities are for a few bank staff, supermarkets and hotels.

He added that, even by the standards of the UK, which has a high concentration of businesses in or around the capital, Sri Lanka was excessively centralised.

Part of this is natural; due to the port and airport and relatively poor transport infrastructure elsewhere, any import or export business will locate close to the capital. When the density of population is high, it becomes viable to offer other services (restaurants, gyms, schools etc) and thie in turn attracts more people.

At one time I think the plantation companies used to run regional offices and so did the engineering firms (Browns, Walker & Grieg etc) that catered to the industry but these seem to have withered away. Better telecommunications probably means that it is possible to control a remote branch from head office.

Apart from overcrowding and excess pressure on resources and infrastructure, the lack of suitable employment opportunities in the regions is troubling.

My friend's suggestion was that Government offices be moved to the regions (something that can be done by fiat) with a set of regular pick up points in each city for documents to be moved. For example one could deposit a passport application at a supermarket or a bank in Colombo and it would be picked up and couriered to the passport office in Matara. Even better if most of the documentation could be done on-line, the couriering being limited to the most critical items only.

Making the popular schools open branches to cater to people in the regions  will ease a huge burden on the transport and educational infrastructure. One only needs to look at the destination boards on school vans (some are from as far away as Hikkaduwa) to realise the magnitude of the problem. 

President Premadasa tried to address this with his '500 garment factories' programme of getting companies to open factories in the regions, this was partially successful but the majority of them are still Colombo centric, being located within an hour or two of the capital.

Any thoughts on how this lop sidedness came about or possible solutions?

Saturday, November 10, 2012

A few thoughts on the budget for 2013

A few quick thoughts on the budget, no time for a detailed analysis. Dr. P B Jayasundera claimed that the treasury wanted to improve the budget in terms of transparency and on that score they have delivered a significant improvement on the practices of the last few years: a significant proportion of the revenue measures were included in the budget.
True, there were a few tax increases that were pushed through between October and November, but there was a lot that came through in the budget, which means that (a) it is worth paying attention to; (b) that its presents a reasonable picture for analysis; (c) we can sleep easier on long weekends and holidays in the knowledge that the chance of taxes going up overnight has diminished.

There were several positive measures in terms of increasing clarity, such as the requirement for the Inland Revenue to give rulings on tax interpretation within six months (previously they could dawdle for ever) and a shorter time bar (18 months instead of 24 months).

The shorter time bar means that taxpayers can close their tax affairs sooner (the time bar prevents the Inland Revenue from digging up the past, which means once the return is accepted any questions from the Inland Revenue must be raised within 18 months, if they don't, the return is taken as final).

Inconsistencies between the Inland Revenue act and BOI regulations were also ironed out (Inland Revenue to prevail if those terms were more favourable)   

Several positive measures for the capital markets (tax holidays for new listings, Withholding tax on listed debentures removed, foreign investment allowed into unit trusts) were also proposed.

The extension of VAT to large scale retailers is unobjectionable (no reason why they should have been excluded in the first place) - this will lead to some increases in prices but that is a different question.

I am not opposed to taxation; I am opposed to "bad" taxation; taxes that are hidden, or inconsistent. Taxes need to be simple, uniform and visible, people must know exactly what they are paying as taxes. If they feel that the taxes are too high then they need to hold the Government to account: what are you doing with our tax money? Could it be better spent elsewhere?

Piecemeal taxes on specific industries (why add a special tax of 1% to bank profits for example) are not recommended but odd exceptions (maximum income tax on pilots and staff of IT companies limited to 16%) are probably worse. (apart from creating greater complexity in the tax code thereby increasing administrative cost they are also discriminatory, the one on pilots (why pilots and not the other staff in an airline?) being worse in this respect than the on the IT industry-at least it applies to the whole industry and one that is good source of high quality jobs).

Last years budget was replete with carefully tailored benefits for specific entities, this years budget was mercifully less discriminatory, apart from a few exceptions like the racing car concession, so again a move in the right direction.

One of the stings in the tail (which some may have missed) were the revisions to import cess (details here) and export cess (details here). As an analyst I welcome their inclusion in the budget, although as citizen I may question as to why imported meat and dairy products should be taxed at 30% or Rs.200 per kg, imported vegetables at 30% or Rs.50 a kg or fruit at 30% or Rs.80/120. Looks like it is going to be a very expensive Christmas.

PB, addressing the Ernst & Young budget breakfast made an amusing speech, I don't necessarily agree with all his views but at least he was worth hearing.

Perhaps the most telling sign of the cost of living was the menu for the breakfast at the Cinnamon Grand: no cornflakes or whole wheat bread (too expensive to offer at current tax levels). What was on offer was mostly a collection of short eats, sandwiches, some fruit and yoghurt.

Patrons of 'Sri Lankan' themed buffets in general may have noted the absence of "pol sambol" from the menu-undoubtedly due to the high cost of coconuts. Time to start holding the Government expenditure to account, methinks. 

Tuesday, November 06, 2012

A boss, a boss, my kingdom for a boss...

who is either;

a) sane, or
b) human.

Is that too much to wish for? Both would be nice, but I would not complain if they had either of the above. Anyway, I can empathise with the Dilbert cartoon below:  

On a more random note, now that the radio frequencies have changed I am having a hard time tracking down the stations I usually listen to. While scanning through the the stations I came upon a broadcast of the BBC news so I listened. The next programme turned out to be - Children's Birthday Greetings. There were two greetings that were read out, but the concept of sending a postcard to a radio station a few weeks ahead to get announced on the programme is quaint and somehow, rather charming. Does anyone else listen to this station?

They had an advertising blurb after the children's programme that carried clips from the past, including the BBC announcement of D.S Senanyake's death (preceded by phrase "this is London"; famous to listeners of shortwave radio) an announcement by Mrs B (sounding a lot like CBK) declaring a state of emergency. (ps for some of the classic BBC identification themes, listen to this)There seems to be a wealth of material on the SLBC archives, there must be some way of monetising this, it is fascinating.     

Sunday, November 04, 2012

The month of November is a "bad" period

Sri Lankans are a superstitious people; astrologers, soothsayers and fortune tellers earn a tidy sum catering to the various neuroses of the people. The rulers are, by common consent, more superstitious than most, events of state such as the impeachment motion on the Chief Justice are carefully aligned to the movements of the stars, planets or deities that watch over the country.

Critics of such beliefs, such as myself are a small and diminishing minority. As any member of Colombo's Hi!! magazine set instinctively realise, its no fun trying to have a party one ones own. Therefore the time is right for the sundry remaining jokers to join the bandwagon of superstition.

I shall therefore start my own tradition: November shall be declared a "bad" month, during which no important activities should take place. Ceasar was asked to beware of the ides of March,  he ignored the warning in the mistaken belief that he was being forewarned of tax day. After all, Caesar does not pay tax on that day, he collects.

In Sri Lanka budget day falls in November, a good enough reason to declare the month bad, but much else seems to happen. Chandrika Bandaranaike launched coup d’├ętat nine years ago in November and this year, the month has claimed more victims.

In another time, in another place called Ceylon there existed a certain nutcase by the name of Abraham Kovoor. Relentless in his campaign against superstition, he lived by a rather silly creed:

He who does not allow his miracles to be investigated is a crook; he who does not have the courage to investigate a miracle is a gullible; and he who is prepared to believe without verification is a fool!   

He, and his ideals are all now thankfully dead. The Miracle of Asia is self evident, no questions need be asked and anyway, who needs a party pooper?  And beware of the month of November.