Central Bank usurps Cabinet powe

Another lesser known PR firm hired at a cost of Rs. 99 million without approval from the ministers CBSL takes over issues handled by External Affairs and Media Ministries Ch mo aid

The UPFA Government's saga of hiring more PR agencies in the United States to lobby and win over President Barrack Obama's administration continues. Paradoxically, this is whilst being engaged domestically in a bitter war of words with the US.

Just this week, the External Affairs Ministry (EAM) issued a strange news release with the heading "Examine root cause for US perception of antiWestern sentiment". It alluded to the security message given to US citizens by the US Department of State Bureau of Diplomatic Security following a demonstration opposite the US embassy in Colombo protesting Israeli military operations in Gaza.

The EAM release had a weird paragraph; "With reference to the US perception that there is increasing anti-Western sentiment, for which the basis is unclear, it would be prudent for the US authorities to examine the root cause for such a development, and corrective measures may be sought in order to stymie the widening gap in the bi-lateral relationship". By such a reference there was grudging admittance that there is a widening (i.e. growing) gap in US-Sri Lanka, or West-Sri Lanka relations. It puts the onus on the US to correct it.

External Affairs Minister G.L. Peiris told the local media this week that he had met US Secretary of State John Kerry on the sidelines of an ASEAN meeting in Mynamar and invited him to Sri Lanka, but there was no mention of whether he told him to mend fences with Sri Lanka or to "… stymie the widening gap in the bi-lateral relationship".

Now, the Central Bank of Sri Lanka (CBSL) has signed up with the lesser known Liberty International Group LLC in Florida for a total fee of Rs. 99 million (around US$ 760,000) for a year. The Monetary Board will pay Rs. 8,250,000 (or around US$ 63,300) every month to this firm in terms of the contract from August 1, this year till July 31, next year. Interesting enough, the amount is just one million rupees less than what Botanical Gardens and Public Recreation Minister Jayarathna Herath is seeking approval from his colleagues to complete the second phase of work at the new Botanical Gardens in Hambantota by constructing and developing 60 acres of land.

The contract has been signed on behalf of the Monetary Board of the Central Bank by Deputy Governor Dr. P. Nandalal Weerasinghe, and Liberty International Group President Connie Mack. The company is based at 15081 Tamarind Cay Court, #1005, Fort Myers, Florida 33908. Until January last year, Mack was a member of the House of Representatives. Once a member of the Foreign Relations Committee, he served in the Sub Committee on South Asia.

The documents connected with the latest deal have been filed with the US Department of Justice in accordance with the Foreign Agents Registration Act or FARA. A six-page contract between the Monetary Board of the Central Bank of Sri Lanka and the Liberty International Group LLC, a copy of which the Sunday Times has obtained, gives three reasons why the US firm has been hired. The Central Bank (CBSL) has described them as its "statutory stability objectives." They are to create: 1. A political environment in the United States of America (US) that is more conducive to enhancing Sri Lanka's long-term political and economic aspirations; 2. A comprehensive information platform where decision-makers in the US receive clear and accurate information about Sri Lanka's current achievements and future plans; and 3. A higher volume of private sector investment in Sri Lanka from the US. The CBSL says these objectives are to be achieved for six reasons. They are: Sri Lanka has suffered a long and brutal war. The current international media focus on Sri Lanka is unbalanced, which the Monetary Board considers as being unfair, unwarrant- 1. 2.

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6. ed, and overshadows the impressive post-war socio-economic achievements of Sri Lanka and also could undermine the long term US political geo-strategic and economic interests; Sri Lanka has made an earnest and genuine effort to improve the living standards of people in the conflict-affected areas in the process of post conflict rebuilding and reconciliation. The process of post-conflict rebuilding and reconciliation is a long-term process and cannot be imposed from the outside and therefore, Sri Lanka needs reasonable time and space to undertake the task; There are growing opportunities in Sri Lanka for additional direct US investment and businesses, as a gateway to the fast-growing South Asian region; and It is necessary to have a re-calibration of US policy, based on a wider and fairer information base, leading to multi-dimensional and more balanced engagement with Sri Lanka. All these six objectives, the CBSL believes, could be achieved by a PR agency headed by a one-time member of the US House of Representatives. That is for Rs. 99 million per year, a cost which is higher than running the Sri Lanka Embassy in Washington DC. The contract calls upon the new PR firm to Among other matters, it also wants the agency to "reach out to opinion leaders in think tanks and academia in the USA and engage with the broader Sri Lankan Diaspora, by organising interactions and meetings as appropriate."

In the FARA declaration, this is how the PR firm has declared its foreign principal: "It is governed by a five member Monetary Board, comprising the Governor of the CBSL as Chairman, the Secretary to the Ministry of Finance and Planning and three members appointed by the President of Sri Lanka, on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council. The Governor of the CBSL functions as its Chief Executive Officer. The Governor, two Deputy Governors and several Assistant Governors, along with the Heads of Departments, from the senior management of the CBSL."

The PR agency has declared that it will " identify US business leaders; Members of the Congress and officials in the Executive Branch; opinion leaders; media outlets; and academics. The registrant will prepare background papers for these audiences and engage them through personal contact. The registrant may also plan a series of meetings between Sri Lankan and US business, government and opinion leaders."

The latest PR deal by the Central Bank raises a number of vital issues. First is the all-important question whether 'The Bank' has in any way usurped the powers of the Cabinet of Ministers? This is in determining both their objectives in the United States and the means to achieve it. Since independence in 1948, it has been the responsibility of the Ministry of (Foreign or) External Affairs to create a more conducive environment in any country for Sri Lanka's "long term political and economic aspirations." Such measures have been executed through the country's diplomatic missions. There were occasions when additional funds for such purposes have been approved for use through these acknowledged channels.

Here is an instance where the latest Central Bank (CBSL) transaction has not even got the approval of the Cabinet of Ministers for the staggering Rs. 99 million it will spend. Another is the CBSL assertion that "the current international media focus on Sri Lanka is unbalanced." If indeed there is merit in such a claim, the best way to overcome the situation would have been for the CBSL to raise issue with the Ministry of Media and Information. It is this Ministry's responsibility to formulate strategies and obtain approval from the Cabinet of Ministers. Such approval, perhaps in consultation with the Ministry of External Affairs (MEA), would have even led to the selection of a foreign PR agency after a due process. In this instance, the CBSL has picked on the US agency on its own without any call for tenders or a proper, transparent selection process. Nor has it been conscious of the role of the Sri Lanka Embassy in Washington DC.

A more serious demand from the American PR agency is the requirement that "it is necessary to have a re-calibration of US policy, based on a wider and fairer information base, leading to a multidimensional and more balanced engagement with Sri Lanka." Is it the mandate of a Government or that of a Central Bank to spend public funds to "recalibrate" the policies of a foreign Government over local concerns? Even if the CBSL did entertain such concerns, is it not the accepted norm that it should have been routed through the relevant Ministry? If it is not the case, it opens the door for any state agency to unilaterally enter into its own agreements with foreign concerns with no recourse to approval by the Cabinet of Ministers. For example, the Board of Investment could have one US agency, the Tourist Promotion Bureau its own, the Export Promotion Board another and the Tea Board its own. On the other hand, Monetary Board members, who may be experts in their own field, have become judgemental in other specialised areas like communications, foreign policy and governance issues. Would it not have been in the country's interest, since taxpayers money is being used, to have commissioned a local study first? Also if one is to go by the provisions of the Central Bank's own contract with the US agency, there may be no need for the functioning of some Government Ministries, more particularly the External Affairs and the Media. PR agencies would become the arms of the Government, at least in the United States.

This is much the same way as the hiring of new PR agencies by Sajin de Vass Gunawardena, Monitoring MP for the EAM. He has hijacked the functions of the Sri Lanka Embassy in Washington DC. The transactions, which have remained a secret, were revealed exclusively in these columns last week. The objectives of hiring those companies were also to win over the Obama administration through different measures. If diplomacy is outsourced to some PR agencies in the US, it is also now a case of outsourcing matters of governance and policy to another. This is whilst locally, a strong campaign against the US has been launched. Until the hiring of Liberty International Group LLC, the Central Bank was serviced by the Thompson Advisory Group (TAG). This deal was signed by Governor Ajith Nivard Cabraal. As revealed last week, in 2013 the Central Bank paid this company US$ 683,635 (or over Rs. 88.87 million). A part of the money went to a Sri Lankan limousine driver for his "expertise" as a consultant.

The hiring of PR agencies in the United States is part of the Government's new strategy for damage control from possible adverse fallout over international investigations into alleged war crimes. This is now being directed by the OHCHR (Office of the High Commissioner for Human Rights) in Geneva. The hiring of PR agencies, however, has come in for criticism from retired diplomats and US officials. They say that hiring PR agencies and retired legislators to bring about a foreign policy change from the Obama administration is a futile and enormously costly exercise with no commensurate returns.

Besides the efforts in the United States, in Sri Lanka, the domestic inquiry mechanism is also gathering momentum. The scope of the Commission on Disappearances has been expanded to cover alleged war crimes. Four out of a panel of six international advisors have already been named. "I am awaiting the Presidential Secretariat to arrange a formal meeting with the Advisory Council members," Commission Chairman Maxwell Paranagama told the Sunday Times. He said, "About two weeks back I met Sir Desmond de Silva in Colombo. This was an unofficial meeting. It took place at my office. However, we are awaiting an official meeting to be arranged by the Presidential Secretariat. I am yet to meet with oth-