Sri Lanka needs permanent secretaries, SOE director vetting to improve governance: Report

ECONOMYNEXT – A top professional organization has called for the institution of permanent secretaries to be restored and directors of state enterprises to be vetted for qualification and past record to cut corruption and boost governance.

Permanent Secretaries

"Secretaries to Ministries should be appointed after applications are called by the Public Service Commission from the public including ‘senior management groups’ of public sector and Private Sector," a revised summary of a report by committee of the Organization of Professional Associations said.

"Such appointments are to be Permanent to the extent that they may be removed only by the Public Service Commission for reasons adduced.

"This will not make them necessarily permanent, but it will free them from political pressures and arbitrary changes.

"The Public Service Commission should have Rules of Procedure which will strengthen its independence when confronted with what it sees as unreasonable requests."

An OPA committee revised an earlier comprehensive report by the National Human Resources Development Council and had come up with a concise series of recommendations.

Sri Lanka descent into arbitrary rule and corruption had been blamed on the break-up of the institution of permanent secretaries.

In the 1972 constitution the power to appoint, transfer and discipline was taken from the Civil Service Commission and given to the cabinet.

In the 1979 constitution the final nail in the coffin of rule of law, good governance and freedom for the common man, came with the President becoming the sole authority in appointing secretaries, critics have said.





The current administration has made wholesale changes to ministry secretaries at least twice.

SOE Corruption

The OPA report also called for vetting of directors to state enterprises which have become a playground for corruption.

Politicians of all hues have built state enterprises and mis-used their more flexible financial regulations to get money to themselves and their supporters by getting commissions from procurement, stuffing them with appointees and excess staff.

"Chairpersons and Directors of Corporations and Statutory bodies shall also to be appointed on the basis of specified criteria; proposed for senior management groups from which nominations are called for or nominations are called from the professional organizations related to the subject and the political appointments are done away with," the report said.

"All appointees should have an impeccable record of accomplishment, free from any charges and the boards should have a good mix of diverse skills and expertise required by the institution.

The report said finance ministry representatives appointed to the Boards should be senior officials and have finance, economics qualifications with experience in fiscal policy and public finance.

"The solution to addressing SOE governance issues in the long term lies in establishing a proper nomination process for the appointment and carefully screening who get appointed as chairpersons and board of directors of SOEs,"

"What is required primarily is public awareness about the political theft that is going on and to bring in high standard of governance to SOEs."

Unlike a private firm, in which a governance failure results in losses to shareholders, losses in SOEs hits the entire population who pay import duties and value added tax to make up for the losses.

"The selection of board of directors should be carefully screened through a nomination committee of the constitutional council or public service commission to ensure people with criminal charges or accused for bribery and corruption are not appointed for such positions," Ravi Abeysuriya, a member of the OPA executive committee who was on a panel that revised the report.

"The unsustainable and highly politicized practice of treating SOEs as a means to solve unemployment problems through ‘sponsored employment’ should cease.

"Administrators should be protected against interference by politicians. The Right to Information Act should be strengthened in this respect to make information as to all appointments and criteria followed publicly available."


He said the cumulative loss of 55 large SOEs was 636 billion rupees from 2006 to 2015 which was 31,750 rupees per citizen. Bank borrowings by SOEs were at 471.2 billion in the period, crowding out private citizens.

Between 2009 and 2014 the workforce of SOE had grown from 140,500 to 261,683.

According to the latest data 16 SOEs have lost 87 billion rupees in 2017 and the return on assets was just 0.64 percent.

He said citizens have been misled by politicians who point to some instances where privatization sold at undervalued prices.

"The politicians have cleverly misled the citizens to believe that state ownership is for public good without addressing the core issues," he pointed out.

The latest development in the last decade in milking SOEs has been to manipulate investment portfolios to sell stocks and bonds to third parties at low prices and get kickbacks or buy them at high prices and get kickbacks. (Colombo/June13/2018)

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