Report from Eran

Editorial-July 12, 2014

It was widely reported in the press that President Mahinda Rajapaksa, who last week attended Parliament, had requested UNP National List MP Eran Wickremaratne to send him a report about Ministry Secretaries sitting on the boards of private companies. We can’t believe that the president would be unaware of the fact that billionaire tycoon Dhammika Perera, who is Transport Secretary, sits on the boards of dozens of companies in which he has extensive financial interest. He is the chairman of many of these companies and serves several in an executive capacity. Secretaries of Ministries are appointed by the president and it is only the extremely naïve who would believe that the appointing authority would have been unaware of the much publicized other interests of Perera when he made the appointment. Assuming that the president knew of these at that time, it will be reasonable to presume that he saw nothing wrong in making such appointments. If that is the case, it behooves on Rajapaksa to say so publicly and defend this position.

We report today that Wickremaratne intends to comply with the president’s request and will send him whatever information he can gather once he has completed his checking. While criticism leveled against the UNP is legion, and there is a lot of justification in what many people including long standing supporters of that party feel about its ineffectiveness and failure to do its job, Mr. Ranil Wickremesinghe deserves credit for his choice of National List MPs like Eran Wickremeratne and Harsha de Silva who have done excellent work in Parliament and outside. A former CEO of the National Development Bank, Wickremaratne has an intimate knowledge of the working of the private sector. Over and above that, he has also made substantial financial sacrifices by quitting his banking career for politics. We hope that the president, in addition to picking the brains of the opposition MP, will also get his own officials to go into this matter and provide him with a detailed briefing. There may very well be other senior public servants holding private sector appointments and it is necessary to establish how prevalent this practice is.

Before Mr. Dhammika Perera became Secretary to the Transport Ministry, he was Chairman and Director General of the Board of Investment. There is no doubt that at least some companies in which Perera has financial interests, and on whose boards he serves both in executive and non-executive capacities, would have dealings with the BOI. That would naturally throw up conflict of interest issues. It could be said, and indeed it must have been said, that the Chairman/DG does not participate in decisions relating to his companies and such business is conducted ``at arms length.’’ Nevertheless officials and other BOI functionaries would have been well aware of the connections between their boss and matters they are evaluating. In such cases the old maxim that justice must not only be done but seem to be done must apply. There is also the matter of how much time a businessman like Perera can afford to give to the Transport Ministry of which he is Secretary. While he may very well be trying his best to find the necessary time, there are only 24 hours in a day and sixty minutes in an hour. The annual reports of listed companies in which Perera is a board member gives information of positions he holds in quoted companies. Apart from these, he also has interests in many unquoted companies and these also, surely, must be taking up quite a bit of his time.

Perera is not the only public official serving on the boards of companies. It was recently reported that University Grants Commission Chairperson Shanika Hirimburegama, is on the board of a private medical college. She has justified the appointment saying that the UGC has an interest on how these private higher education interests are run and sitting on the board provides an opportunity on offering necessary guidance on such matters. The UGC, apart from its responsibilities regarding disbursement of funds to universities, surely has at least some regulatory functions over higher educational institutions. In such a situation it is useful to carefully examine whether it is wise to permit persons holding high office in such bodies to wear other hats in commercial enterprises that are run for profit. Back scratching for mutual benefit, after all, is not unknown in this country which certainly does not have a monopoly of that. Many developed western countries that project themselves as holier than thou do very much the same under a shroud of hypocrisy.

It is now well known that state controlled funds like the EPF and ETF have made investments in quoted private sector companies in several of which they hold substantial stakes. Along with such stakes, claims for board seats have been made and granted. This is another means for government to offer patronage to its supporters because many of these companies pay even non-executive directors handsome remuneration that sometimes run to over a lakh of rupees a month. It can be argued that just as much as a private investor with a sizable interest in a company can rightfully claim representation on its board of directors, it would be also true for the state sector. While we have no quarrel with the principle, there have been occasions when less than suitable appointments have been made. This is even truer of state owned enterprises to which successive government have appointed incompetents for political reasons. Let us hope that President Rajapaksa’s request for a report from Eran Wickremaratne on Ministry Secretaries serving on private company boards will lead to a thorough examination of the big picture and necessary reforms.