Whistle-blowers in Lanka’s new growth path

Ayoung chap recently visited the new southern airport at Mattala in Hambantota with a group of school children, and, on returning home asked his father: “Daddy where are the planes?” From the airport, they were driven on a conducted tour to the Hambantota harbour, and the small fellow again (later) asked his father: “Where have all the ships gone?”

There is nothing wrong in building new airports or harbours as Sri Lanka feverishly tries to make up for lost time (after seeing the end of a near 30 year-old civil war) to rebuild its economy and compete with the rest of Asia in a globalized world. But at what cost!

While the two mega projects have been the showpiece of infrastructure development, its rate of return is likely to take much longer that the Government expected. Apart from SriLankan Airlines, Mihin Air, Air Arabia and FlyDubai – all of which are not operating daily flights -, the airport terminal is empty while the port is starving for ships as the young student found out.

For projects that are built at a massive cost from the country’s tax revenue; the rate of return, economies of scale and location of the projects must (all) be taken into consideration before they are undertaken. For the moment, the Mattala airport and Hambantota seaport appear to have unwittingly turned into museum pieces waiting for schoolchildren and the public to visit, a bad idea itself in projecting projects with empty shells.

This however is not the bone of contention this week but a reason to digress before dealing with an issue connected to development; that is changing the Colombo skyline with concerns over governance, transparency and corruption.

The Business Times keeps returning to the issues, week in week-out, as they are assuming more-than-ever-before proportions of a serious nature. In a current mega project, the Krrish development in Fort, allegations have been swirling over several weeks of money changing hands and pay-offs being made to bribe officials and high-ups. It came to a head 10 days back, and was exclusively reported in the Business Times on July 7, where a top official who holds high positions in the public and private sectors is accused of involvement in the pay-off scam. That we learn now is just the tip of the iceberg with the involvement of many others in one of the biggest scandals.

Krrish has, in response to queries from the Business Times, denied any wrongdoing or payoffs and insists that it is a legitimate business in Sri Lanka. Questions have however surfaced in the past about its Indian business where other than having a stake in a beer business, there is little else. The contraction however is its links to some high profile and respected French personalities who are partners in Krrish’s Colombo project, some of whom the Business Times has also written about like business consultant and former French Minister Renaud Dutreil, a former chairman of Louis Vuitton Moët Hennessy (LVMH) – an iconic global lifestyle brand -, and French architect of the project Edouard Francois who is also a LVMH architect.

The US$650 million project is yet to get off the ground as a final lease rental payment of Rs. 700 million (14 per cent of the lease) needs to be paid by Krrish to the Government by before deadline.

The Business Times story spread like wildfire last week and two versions of the official, whose name is being withheld for legal reasons, appeared in some websites.

One said that he had taken a pay-off of $3.5 million (Rs.400 million) while the other version was a defensive one where he has been implicated by others who had received the money.

Sri Lanka’s growth path is unfortunately clouded by the issues of governance, transparency and a corruption-free society which in our view are the three tenets of running a corrupt-free economy.

Transactions between the state and private parties are not properly structured (fundamental rules of governance are not followed); the deals lack transparency and are kept secret even from parliament; and, huge bribes and commissions are the order of the day in most of these transactions. We can go on and on but nothing changes apart from some papering of the cracks (token gestures) to justify that public, parliamentary and media criticism is taken ‘seriously’.

It was also unfortunate that the Ceylon Chamber of Commerce’s looked-forward-to Economic Summit this week didn’t have a section of governance and transparency though some of these issues including the rule of law were flagged by parliamentarians during their panel discussion.

On the other hand, this (fact that these matters didn’t figure sufficiently at the summit) is not unusual. For, many high profile businessmen and business professionals are themselves guilty of not conforming to the three tenets of societal behaviour.

Citing one example of private sector corruption, Sri Lanka’s best-known corruption buster, Nihal Sri Ameresekere told an international conference recently that “monies are stashed away under the guise of corporates, professionally constructed and held in trust for beneficial owners, who are the real owners of such proceeds of crime of corruption” and such funds are in turn laundered in the share markets through stock exchanges.

For that matter all the corporate service responsibility (CSR) or philanthropy in the world won’t absolve companies or individuals if they are involved in pay-offs to get a head-start over others or win a contract.

A few Sri Lankan companies are known to encourage whistle-blowers to blow the lid off any wrongdoing in the company. How far this is applied if the company hierarchy are themselves involved in making a ‘santhosam’ to be rewarded with a contract, remains to be seen.

Questions on the following have also been asked in the past and repeated here: Were projects like CATIC (Galle Face development), Shangrila, ITC (Galle Face development) and Krrish awarded on an individual basis or were tenders called? Shouldn’t tenders have been called for these projects to get the best deal for the people who have placed their trust in the government and its agencies? Even if institutions were invited on the basis of being considered for Strategic Development Project status, these projects should have been revealed in parliament much before opposition parliamentarians began querying about them.

At the end of the day, the Government and its representatives are a mere appendage of the people and thus must act in their (people’s) best interest. Yes, the war against the LTTE was won which is a huge step forward. But that doesn’t give anyone the right to govern without transparency, rule of law and accountability.

In a transparent and wellgoverned system, the Government of the day wins the hearts and minds of the people and goes on to do more good. A Government lacking in transparency and credibility will attract questions even in projects that are ‘clean’ and will be seen by the public as ‘incredible’ projects.