Cronyism and Impunity – Ireland Pays the Price

This article was published in the Sunday Island on March 5, 2011.

 

On February 25 2011, Ireland chose a new government.The turnout was 70.1% per cent and was the highest since 1987. The election was a resounding success for the Fine Gael (FG) party and its leader Enda Kenny, although the proportional representation system means that FG will need a coalition partner. Kenny, who will be the new Taoiseach (prime minister) himself won 17,472 first preference votes in his Mayo constituency- the highest number for any candidate. The outgoing Fianna Fail (FF) government was severely trounced. FF have been in office for most of the republic’s life – 60 of the 79 years since it first won office in 1932. Its vote has only rarely dipped below 40%. This time it was 15%.
 

Many senior figures lost their seats. One casualty was Seán Haughey (son of the notoriously corrupt former Taoiseach Charles Haughey). In the Dublin area the FF vote was down to 8% with only one FF candidate winning a seat.
 

FG won 76 seats, Labour 37, FF 20, Sinn Féin 14, United Left Alliance 5 and Others (including the United Left Alliance with five) 14. The share of first-preference votes was: FG 36.1%, Labour 19.4%, FF 17.4%, Sinn Féin 9.9%, Independents 15.2% and Green Party 1.8%.
 

The Green Party were in government in the previous coalition. None of their candidates were elected this time. They were punished for their complicity.
 

Gerry Adams for Sinn Fein topped the poll in Louth, in the north-east. His party scored its best-ever election result in the Republic and will be a major Opposition force.
 

When FG was in government last, it formed a coalition with Labour, with Labour’s Dick Spring, former Rugby international, serving as deputy PM. This time, the courtship has not been smooth. Labour are in a stronger position than heretofore. There are major differences between the two parties on the reduction of public-sector debt; the ratio between tax and cuts and public-sector reform. The Labour leader, Eamon Gilmore, said he was confident that a programme for government could be negotiated.
 

The election was caused by the meltdown of the Irish economy after a few years when it seemed a model to the world. Between 1993 and 2000, Irish GNP grew by an average of 9% a year; unemployment—which had reached a peak of 17% in the 1980s—almost disappeared.
 

People flocked to Ireland from Africa and Eastern Europe. Now emigration, the curse of the island nation throughout history, is rising again. With youth unemployment exceeding 30%, many young Irish people have already fled abroad. According to the Economic and Social Research Institute, at least 100,000 Irish citizens will be emigrating in the next two years.
 

The country’s well-educated workforce made it attractive to foreign investors, particularly American corporations. The US share of industrial investment in the Irish economy rose from 32% in 1990 to 68% in 1997. FDI was concentrated in computers, pharmaceuticals and electronic engineering. The Celtic model did not have enough sustainable indigenous strength. Multinational corporations were responsible for 85% of total Irish economic growth. Multinationals exported 90% of their output; Irish-owned firms sold less than 40% of what they produced abroad.
 

Part of the illusory Irish prosperity depended on “financial services” – in other words, funny- money practices akin to money-laundering, which caused Dublin to be called “Liechtenstein on the Liffey”.
 

Property and financial services created a bubble economy. Despite the wealth of some, Ireland ranked second-to-bottom in the OECD league tables for poverty and inequality; only the USA fared worse. The number of households earning below 50% of the average income rose from 18% in 1994 to 24% in 2001. Government expenditure on social protection as a proportion of GDP was 20% in 1993, but fell to 14% by 2000—barely half the EU’s average.
 

When I lived in Ireland builders were a scarce and expensive commodity. We wondered why so many houses were being built when the population never exceeded 4.5 million. The average price of a new house rose from €67,000 in 1991 to €334,000 in 2007, by which time there were 21 new units of housing being built per thousand citizens. Our own house was an old one but we saw its market value rise by 464% in four years. Unfortunately, the apartment we bought when we sold that property has no chance of being sold now for anything near what we paid for it; it is doubtful if it can be sold at all.
 

Construction became the main source of new private-sector jobs, with employment in the industry rising by 59% between 2000 and 2008. Some estimate there are 300,000 unoccupied homes. The National Housing Development Survey identified 2,800 “ghost” estates which presented safety hazards. Hundreds of thousands of homeowners have already found themselves saddled with negative equity as a result of the crash, with as many as one in seven families affected. The jig is finally up for the Irish. Ireland had to follow Greece with the begging bowl to the EU and IMF. PM Brian Cowen could not absolve himself from blame on the grounds that the problem started before he took office – he had been the finance minister who engineered the boom and failed to stop the bust.
 

In Sri Lanka we have the mudalali; in Ireland they have the Gombeen Man. Politicians achieve prominence by cronying up to influential local figures and doing favours like getting jobs and planning permission in return for political support. The “brown envelope”, i.e. bribery, has long been a feature of Irish politics and commerce. FF has been particularly adept at developing clientelist networks which delivered just enough goods to ensure personal loyalty and gratitude through parish-pump politics.
 

Widespread disillusionment with the political class has been focused by writers such as Fintan O’Toole and David McWilliams. Bob Geldof felt it necessary to announce that he did not intend to run for president in October. In one of his more printable comments the ex-Boomtown Rat spoke of boom and bust. “The overwhelming feeling I have is one of sadness for the country – and of anger for the incompetence beyond measure, the sheer stupidity and the clear venality which has Ireland where it is now”.
 

O’Toole wrote: “People are sickened by the amorality of so many aspects of our public life, particularly those where politics and business overlap. Cronyism and impunity are the twin pillars of an edifice that has to be demolished.”
 

As with austerity measures in all countries, it is not the culprits who tighten their belts. Ordinary taxpayers pay for bank bailouts, the old and the vulnerable see their welfare benefits and public services cut savagely, while speculators whose “risk-taking” caused the problem continue to get their bonuses. The bondholders who engaged in speculative commercial activity should be punished by taking the losses rather than getting unlimited compensation.
 

Sri Lankans who call for more privatisation and less regulation should take note of Ireland’s fate.

 

 

 

Killer Buses

This article was published in Ceylon Today on Wednesday 26 March 2014

 

A few years ago, a sad event integrated us into our local village community. We were invited to a funeral house which should have been celebrating a marriage. Two young men had been born on the same day and had been friends since childhood. One friend was to be married and the other was to be his best man. The best man had won a scholarship to an Australian university. They died on the same day, killed by a speeding bus that pulverised them and their motorcycle.

 
The sight of the young man on his funeral byre came back to my mind the other as we narrowly avoided a head-on collision with a speeding bus along that same road. The roads in our area are narrow and winding as they climb the mountains. The code is that vehicles coming downhill give way to vehicles going up. We had made our careful way onto a narrow bridge when the monster came hurtling downhill towards us. The driver saw us and knew that we had nowhere to go. He refused to even slow down, let alone give way. His only acknowledgement was to blow black diesel smoke into our faces.

 
On our trips to Colombo, we have witnessed horrific accidents. On one trip we saw a bus was wedged into the front room of a house. Last week we saw a crowd gathered around a motorcycle which had been cut in half. The people were looking into the ditch, presumably at corpses.

 
Dr Kapila Wickremanayake, Director, Accident Service, National Hospital Sri Lanka, said in January 2014: “Road-traffic accidents accounted for over 35 percent of the patients (25,876) admitted to our ward in 2012. The victims were pedestrians and motorcyclists who did not wear helmets. They were bus drivers and drunken or careless motorists speeding on the roads ignoring traffic regulations”. Five major road accidents involving buses and motorcyclists, leaving over 80 people critically injured and four dead were reported in the week Dr Wickremanayake spoke. There was a head on collision of a SLTB bus and private bus at Pasyala where 68 persons were injured and one killed.

 
Trawl through the Sri Lankan newspapers and it is not hard to find many examples of horrendous accidents involving buses. Not far from where we live, on November 4 2013, an SLTB bus fell over a 350 foot precipice on the Bandarawela–Poonagala Road, killing ten and injuring 18. The driver had been speeding, showing no regard for the terrain and the foggy weather. Sixteen-year old Nimesha Thisari was one of the dead. She was to take her Ordinary Level Exam in December. Also in our area, last November, a bus skidded off the road and crashed into a telephone post on the Welimada-Haputale road injuring 23 passengers.

 
On July 18 2013, 48-year-old Priyadarshani Gunawardena was on her way to work at a bank in Kollupitiya. She was thrown from the footboard of a speeding bus and run over by another speeding bus. She died of cerebral injuries.

 
Traffic Police said that from January to October 2013 there were 2184 accidents involving private buses and 592 accidents involving SLTB vehicles. Fatalities occurred in 186 of the accidents. There were fatalities in 157 accidents involving private buses and 29 involving SLTB buses. Private bus accidents injured 1009 people and 323 people were injured in SLTB accidents. About 18,000 of the 23,000 buses in the country are private buses.

 
Various explanations and remedies have been put forward but there seems little hope of improvement.

 
Some claim that the root problem is lack of timetables. This, it is argued, has led to bus drivers competing for passengers, thereby creating an unsafe environment. Gemunu Wijeratne, president of the Private Bus Owners’ Association, says: “The buses are regulated by the National Transportation Commission (NTC) or provincial authorities. However, both these bodies have failed to provide us with timetables. We have gone to courts regarding this and the Supreme Court has ordered them to formulate timetables. Even though the order was given five years ago no one has looked into the matter”.

 
Professor Amal Kumarage, a former chairman of the NTC, said that there was a dire need for “demand-based scheduling” where there was a ratio between buses and passengers. “If the timetables are corrected there will be no speeding and more responsible driving as buses won’t be competing to pick up passengers”. Professor Kumarage said SLTB buses had better drivers, but with irregular scheduling, they had to compete with private buses and could be tempted to drive carelessly. It was not a private bus driver who threatened us the other day.

 
A Transport Ministry spokesman thought the timetable issue was a red herring. “Time Tables have already been implemented on some routes. However, what happens is that the buses take their own time picking up passengers and then start racing against each other to get the next turn. The cause of the problem is that there is no proper organisation. Most of them are only interested in earning a few rupees more at the end of the day”. Single owners finance most of these buses at high rates of interest. The drivers and the conductors have to hand over each day the amount demanded by owners – to cover their operational costs, interest rates and profits.

 
There have been suggestions of criminal or political involvement. GG Wimalasena, President of the Trincomalee District Private Bus Operators Association, said that criminals often controlled private bus fleets. Bus owners cannot choose their own drivers but have to employ those recommended by gang bosses. Gemunu Wijeratne said: “Thuggery and extortion from bus crews is rampant and our pleas to the authorities to remedy the situation have fallen on deaf ears”.

 
Current NTC Chairman, Roshan Gunawardena, claimed that private bus drivers have to pay a minimum of Rs 300 kappam on each of their turns, resulting in losses, and leading to poor service to commuters. He said that touts helping to load buses have political connections and no action is taken against them.

 
Mr Gunawardena conceded that complaints about bus services were increasing and averaged about 40 per day. He said that the NTC had already launched a pilot project to monitor bus services. “We can monitor the bus if it exceeds speed limits and also entertain complaints while the bus is plying and try to resolve some of the issues.” As this statement was made on April 1 2012 and two years later things are still getting worse, one is tempted to believe it was an April Fools’ Day hoax.

 
There are good ideas being floated. Mr Gunawardena himself said that the NTC had fixed GPS (Global Positioning Systems to about 200 private buses that the NTC head office in Narahenpita was monitoring. “Our target is for all private buses to have the GPS facility by the year end. The owner has to pay only Rs 10,000 while the balance Rs. 25,000 will be met by the NTC.” Was this target met by the end of 2012?

 
Drivers of petrol bowsers generally comport themselves like gentlemen of the road. They drive carefully and slowly and give way to other vehicles when they are labouring their way up steep inclines. Many of them have a phone number in a prominent position on the back of the vehicle with the message: “How is my driving?” Buses should bear a similar message. Three-wheelers often bear the phone number of the nearest police station. Buses should do the same. The NTC hotline number should be displayed on all bus stands and all buses.

 
Retired deputy inspector general of traffic police, Camillus R. Abeygoonawardena said: “At present there are only static policemen. Rarely does one see mobile police vehicles. There should be unmarked police vehicles observing violators with detection equipment such as video cameras. When they are close to the violator, they can place the police siren on top of the vehicle. This will create a fear psychosis among drivers…During my tenure I deployed only ten policemen in civvies but all bus drivers thought police officers were in almost all buses.” “Mystery shopping” was standard practice by the early 1940s as a way to measure employee integrity. Undercover police should travel on buses as “mystery passengers” to monitor standards.

 
In June 2013, Inspector General NK Illangakoon issued a directive to all police stations check the experience of private bus drivers, the validity of their driving licences, the condition of the vehicles and whether temporary drivers are being used. Police have been instructed to keep a close watch on whether private buses violate the law when they compete with each other on the roads.

 
Motor Traffic Commissioner General S.H. Harischandra said in February 2014 that a new law was expected in two months that would institute a separate category for driving licences for passenger transport.“Buses, three-wheelers, passenger transport vans and other vehicles will come under this category. Bus drivers will have to undertake compulsory training on first aid, technical areas and ethics.” Heretofore, there have been no checks done at all on the physical fitness of bus drivers. Will this be done? Let us see if the law is introduced. Let us see if it is enforced. Will the spot fines be derisory? What we require are not new laws, or expensive new machines but to ensure the existing laws are implemented by police using their eyes, ears and noses.

 

 

 

Foreign Investment in Sri Lanka

This article appeared on Page 9 of the January 1 issue of Ceylon Today

 

Why would a foreigner invest in Number 85 on the Forbes Best Countries for Business list when he could invest in number1?

Sri Lanka is keen to attract foreign investment to offset its heavy borrowing for infrastructure development. I recently received an e-mail from an exiled Sri Lankan who was trying to get a project going. This man is not an enemy of Sri Lanka; in fact, some accused him of being a government stooge. Nevertheless, he told me was shocked at the level of corruption he witnessed and said he had little hope for the future.

In October 2013, the World Bank published its 2014 Doing Business list of the most business-friendly places in the world. The places with the greatest number of positive ticks are Singapore and Hong Kong.

The survey shows a decade-long trend in which many countries are shortening the amount of time it takes to start a business. The report also finds a relationship between the degree of black market or “informal” business activity and the Doing Business ranking; the higher the degree of informality, the worse the score.

In the 1960s, Sri Lanka had a per capita income comparable to those of South Korea, Malaysia, and Thailand but failed to maintain its advantage. Foreign investment is still not enough to move the economy to higher levels of economic growth. The country has been unable to attract the kinds of investments that would have multiplier benefits to the economy.

Rankings on the Doing Business index depend on a number of indicators such as Starting a Business, Getting Electricity, Investor Protection, Enforcing Contracts. The gap is narrowing as countries such as Rwanda, Philippines, and the Russian Federation improve regulations to foster entrepreneurship and trade. Ireland remains at 15 in the ranking of 189 economies.  Sri Lanka has fallen four places to number 84.

Forbes magazine did its own survey by grading 145 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance. Ireland came top in this index. In 2010, Ireland’s budget deficit reached 32.4% of GDP – the world’s largest deficit. Ireland achieved moderate growth of 1.4% in 2011 and cut the budget deficit to 9.1% of GDP. Although the recovery slowed in 2012, Dublin managed to trim the deficit to about 8.5% of GDP. Sri Lanka comes in at number 85. Forbes comments: “A large trade deficit remains a concern. Strong remittances from Sri Lankan workers abroad have helped to offset the trade deficit.”

A report by the American Chamber of Commerce in Ireland said that US investment into Ireland in 2012, at $22.8 billion, was of a similar scale to all of the investment by US companies last year into Asia. The level of foreign direct investment into Ireland increased during 2012, to €258 billion from €225 billion, with the main contributors to the increase being the Netherlands (€22 billion) and Asia (€5 billion).

The American chamber of commerce in Sri Lanka, through its president Vijaya Ratnayake, said the US wanted to increase FDI flows to Sri Lanka and see an increase in Sri Lankan exports to the US. However, the US State Department has some doubts about investment in Sri Lanka. “Sri Lanka can still be a difficult place to do business with an unpredictable policy environment, cumbersome bureaucracy, and a recent asset seizure bill that has created business uncertainty. Further, the government has increased control of the economy recently and is a concern for private investors… Some U.S. and other foreign investors have realized worthwhile returns on investment in Sri Lanka while others have tried and departed frustrated.”

IMF Resident Representative, Mr. Koshy Mathai said: “FDI has been very slow… $725 million for an economy of Sri Lanka’s size is still quite a low figure…Look at countries like Vietnam, where FDI is many times what it is in Sri Lanka. Clearly there is a lot of room to grow, and I think that’s why the government has been focusing so much on all these things like the softer factors, improving the business environment, and why we also think that keeping the macroeconomic environment stable to attract those investors is going to be a key thing.”

Sri Lanka is indeed making efforts. Although Canada boycotted CHOGM, a separate delegation took part in a business forum. According to the Board of Investment, a group of 540 foreign business delegations took part and including 138 from Britain, 85 Chinese and 77 Indians. The BOI claims that potential investors were interested in the advantages derived from the free-trade agreements Sri Lanka has with India and Pakistan, where a wide range of goods produced in Sri Lanka can be exported duty-free to those large markets. In early 2014, there should be a similar agreement with China. In 2013 China has been Sri Lanka’s leading foreign direct investor, accounting for 24 percent of the total $870 million in FDI from January to September, followed by Hong Kong and Singapore.

The editor of the English Catholic magazine The Tablet noted the contrast between David Cameron’s behaviour in Sri Lanka and in China. “He made it plain for all to see that China’s indifference to most of the values that define a civilised society was of little or no interest to him, provided the British economy benefited from an increase in trade and investment.” There has been great amusement over a deal Cameron struck to export pig semen to China.

Even before the LTTE had been comprehensively defeated, there was much hopeful talk of how the peace dividend might encourage members of the Tamil diaspora to invest their money in Sri Lanka rather than in death. In August 2008, Jane’s Intelligence estimated the annual income of the LTTE as between 200 and 300 million US Dollars.  It would be most beneficial to the reconstruction and development of the Northern and Eastern provinces if some of the LTTE’s ill-gotten and ill-used wealth could be diverted to more benign investment than the purchase of arms.

K Godage wrote in the Island newspaper on 27 September 2009:   “We are today fortunate that Raj Rajaratnam has set an example which we hope would be followed by other members of the Diaspora to whom, whether they accept it or not, this is also their land”.

LMD had a cover feature on Rajaratnam. This fell short of the accolade of LMD Sri Lankan of the Year  but being on the cover did imply some kind of imprimatur for Rajaratnam’s activities. To be fair, Godage and LMD were bestowing their approval before Rajaratnam went to prison. One grants an absolution to those who came to praise him in ignorance of his insider trading. That absolution must be somewhat tempered by the suspicion that a successful business magazine which claims to campaign against corruption should have had some inkling of what he was up to.

Many diaspora organisations claiming to be working for Sri Lankan Tamils are calling for donations. Where are the diaspora Warren Buffets or Bill Gateses  who are prepared to put in their own money? LMD was optimistic about Raj Rajaratnam but he ended up in the slammer.

There are also members of the Tamil diaspora actively trying to prevent investment. The U.S. based activist youth group, PEARL, urged Microsoft to reconsider investments in Sri Lanka. Constant criticism of Sri Lanka from abroad orchestrated by pro-LTTE elements of the Tamil diaspora do not create an inviting environment for potential Tamil investors. Governor of the Central Bank, Ajith Nivard Cabraal told an interviewer:  “My message to them is; without grumbling come and invest and improve their conditions here. This is the best service they can do for them, unless they want to indirectly make them suffer further.”

Canada boycotted CHOGM because of human rights. GSP+ ended because of human rights. Cabraal said “On every bond issue I handle I’ve had to confront this problem” He believes that he has convinced investors that it is safe to put their money into Sri Lanka. “I believe the world will understand the true picture behind these lies.”

Well, up to a point, governor. Perhaps more of an obstacle than human rights is corruption. I read  in a newspaper paper that a senior official at the Board of Investment is being investigated in relation to a serious allegation of bribery. I turn to another paper for the same date and see a report that the Commission to Investigate Allegations of Bribery or Corruption has received complaints against 111 politicians including nine ministers. A third paper reports that the chairman of that very Commission is himself being investigated about corruptly receiving a car. On another page of that same paper, an article reports that Sri Lanka has slid 12 places to 91^st position on the Transparency International Global Corruption Perception Index. The writer of the article thinks the Index is bogus. Try to tell that to people who have money to invest here.

Something Rotten in the EU

The EU’s democratic deficit oils the wheels of the gravy train and encourages corruption.

Hamlet spoke of “something rotten in the state of Denmark”. Today Denmark serves as a benchmark for low corruption compared to the rest of the EU. The view from Europe used to be that corruption was a problem in developing countries, while the EU set a model of the rule of law and had a mission to export good governance. A recent report indicates that this is not so, and has probably never been the case. The estimated cost of corruption cited in that report, published on 9 April 2013 by the Hertie School of Governance in Berlin, amounts to nearly one-third the proposed EU budget for 2014-2020.

Tobacco Poison

Tobacco is a poisonous substance that has a corrupting effect, physically and morally. Dealing in this deadly drug has highlighted the potential for corruption in the EU. Health Commissioner John Dalli resigned in October 2012, but the ‘Dalligate’ affair rumbles on in Dalli’s native Malta.

John Dalli left his post after a report from OLAF (Office de Lutte Anti-fraude) accused him of taking bribes from the tobacco lobby. The tobacco firm Swedish Match alleged that Dalli solicited a €60 million bribe to alter the tobacco directive for which he was responsible. The company manufactures Snus, a tobacco product consumed by placing it under the lip for extended periods. The sale of snus is illegal in the EU.

MEP Jose Bové alleged that Swedish Match’s lawyer lied about a crucial meeting during which Dalli’s agent allegedly solicited the bribe. Bové said company officials told him that that a meeting described by the lawyer never took place.

Where Is the Money Going?

There were concerns that the Dalli imbroglio might undermine OLAF. A House of Lords report accused EU member states, which are responsible for administering 80 per cent of EU funds, of being unenthusiastic about assessing fraud. The report criticised OLAF’s ineffectiveness; budgetary restrictions limited the number of cases investigated; there was little coordination with other EU agencies such as Europol and Eurojust.

Enlargement Fatigue

There is a tendency to blame corruption on the newcomers to the EU gravy train. Older member states felt that Romania and Bulgaria joined in 2007 without resolving organised crime and corruption issues. The downturn eroded the principles of European solidarity, and boosted support for nationalism and immigration control. Some of the former Yugoslav republics attracted investment and began growing strongly in the credit boom before 2008, but they have been slow to emerge from the recession. There is fear that disappointment of their EU hopes could weaken the desire for reform and the region could, not merely sink into financial corruption, but explode into violence again.

Romania’s relations with the EU are at their lowest ebb.  The EC published a scathing report on judicial reform and corruption. Austerity measures designed to please the EU are causing poverty and chaos and creating room for extremism in Romania. The EC published a wounding report on Bulgaria’s efforts to tackle corruption and organised crime.

Hertie School of Governance Report

The Hertie School of Governance report questioned the assumption that EU membership had a positive impact on corruption levels. Spain, Greece and Italy show a clear regression in the corruption index, despite being long-standing EU members.

The study puts EU nations into four groups.

Group A nations display high deterrents and low opportunities. This group includes Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Luxembourg, Malta, the Netherlands, Sweden and the UK. These countries control opportunities for corruption through transparent administration, reduced officialdom and few opportunities for discretionary spending.

 

Group B includes countries that have managed to create significant deterrents but still struggle with important challenges due to high resources available for corruption. This group includes Estonia, Lithuania, Hungary and Cyprus.

 

Group C includes Italy, Spain and Portugal, plus Slovenia and Slovakia. These are countries with relatively low resources, but also low constraints. The crisis itself has acted as a strong anticorruption agent in these countries, because of diminished resources and opportunities. They remain at risk because of insufficient normative and social constraints through civil society and media as well as legal deterrents.

 

Group D includes the five worst EU performers. Greece from the old member states and five newer members: Poland, the Czech Republic, Latvia, Bulgaria and Romania. Excessive bureaucracy poorly developed civil society and lack of media freedom is common to all of them. Bulgaria scores lowest on audit capacity and judicial independence. Greece has internet access at the level of an undeveloped country, which leads to poor controls and lack of transparency.

 

Democratic Deficit

 

The Commissioner in charge of the Directorate for Economic and Financial Affairs is Olli Rehn. The Finnish electorate convincingly rejected Rehn – think of Neil Kinnock and Chris Patten in the UK. Imagine Ranil Wickremesinghe as a European Commissioner. After Rehn’s party was defeated in Finland, he went on Brussels where his effortless rise was disproportionate to his competence. His first brief was EU Enlargement; despite evidence of massive political and economic corruption, Romania and Bulgaria became EU members on his watch.

 

Turnout at European Parliamentary elections is consistently low. Why should voters bother when they know that real power lies with un-elected has-beens and faceless bureaucrats? In the light of this democratic deficit, does the EU have the systemic capacity to deal with the corruption eating away at it? The new powers of the European Commission and the Troika mark a further diminution of democratic control. The response of Brussels to the curtailment of democracy has been to propose a “commensurate increase” in the role of the European Parliament, to lend democratic legitimacy to the Commission’s expanded powers. The Parliament is constitutionally incapable of that. The EU electoral process cannot do what voters expect of parliamentary elections – i.e., determine the make-up of the ensuing government. EC president Manuel Barroso simply brushed aside MEPS’ concerns in the Dalli case.

 

Two years after the launch of the European Citizens’ Initiative, aimed at increasing direct democracy in the EU, not one of the 25 proposals has been implemented.

 

Conclusion

Although the nature and scope of corruption may differ from one EU State to another, it harms the EU as a whole by lowering investment levels, hampering the fair operation of the Internal Market and straining public finances. On the global Corruption Perception Index, Sri Lanka ranks 79th out of 176 countries. The nation badly wants foreign investment but investors will be wary of investing in a country widely regarded as corrupt. COPE could learn some lessons from the Hertie report on how to address corruption in Sri Lanka. The report recommends transparent administration and economy, reduced officialdom and limited opportunities for discretionary spending. Other essential assets required are an independent judiciary, free media (including an unfettered internet), and a healthy civil society. The capacity to audit and control is essential. The report indicates that nations with the least risk of corruption have high deterrents and low opportunities. The most at risk combine many opportunities with few deterrents. Which category will Sri Lanka choose to occupy?

 

 

South Africa after Mandela

This article was published in The Sunday Island on July 7 2013 but did not appear on the paper’s website.

It is sad to see Nelson Mandela’s family squabbling in an unseemly fashion around his death bed and shuffling around the bodies of his offspring. Is this a symbol of today’s South Africa?

Rainbow Nation

It would take a heart of stone not to feel  emotional about Nelson Mandela. In my more sprightly days, I took part in anti-apartheid marches, singing along to Jerry Dammers’s song “Free Nelson Mandela”. Walking along the South Bank past the Festival Hall, I would nod reverently to the sculpture by Ian Walters which was commissioned by Ken Livingstone when he was leader of the Greater London Council. It was unveiled in 1985 by ANC president Oliver Tambo. Livingstone said: “The commissioning of this statue was symbolic of the wide support that existed amongst Londoners for the struggle against apartheid at a time when many in the media and the British government regarded Nelson Mandela as a terrorist”.

Like many, I experienced tears of joy when a beatifically smiling Mandela embraced Francois Pienaar, the Springbok rugby captain, with both men wearing a number six captain’s jersey. Whoever could have thought that the evil fascist apartheid regime could fade away without bloodshed and that Mandela and de Klerk could work together?

Mandela’s Legacy

Bob Dylan sang: “Don’t follow leaders/Watch the parking meters”. It is dangerous to venerate any human being. Less than perfect civilians  like to see in leaders, or even mere celebrities,  qualities they would like have themselves. Mandela and  Aung San Suu Kyi are mere humans who have to operate in the real world of politics. The Economist feels it can write about her, “the halo slips” among foreign human-rights lobbyists, disappointed at her failure to make a clear stand on behalf of the Rohingya minority.

Mandela has himself tried to discourage people viewing him as a saint or a hero. “I am not a saint, unless you think of a saint as a sinner who keeps on trying.”FW de Klerk last year described Mandela as “brutal and unfair” as a political opponent: “I do not subscribe to the general hagiography surrounding Mandela.  He was by no means the avuncular and saint-like figure so widely depicted today”.

Ethics of Violence

Mandela was one of the founders of Umkhonto we Sizwe (MK) – Spear of the Nation – the ANC’s armed wing,  which launched guerrilla attacks on the racist government, only disbanding in 1990. In his statement at the Rivonia Trial, Mandela said: “I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die.”

Those sound like noble words but Mandela did not die then and neither did the vile racists governing the country. MK’s main aim initially  was sabotage rather than murder. Mandela did not object to later attacks on burger bars and amusement arcades and refused to repudiate the armed struggle in 1985 when he was offered his freedom. As with  Provisional IRA, Hezbollah  and LTTE attacks, most victims were not politicians or military but  women and children. MK’s violence did not speed the dismantling of apartheid.

Mandela got a difficult job done with the tools at his disposal. His great achievement was that power was handed from the minority to the majority without a bloodbath. What kind of nation will he leave behind?

Truth and Reconciliation

Although apartheid had been defeated, its minions still dominated the police, army, and civil service. Transition had to be handled cautiously if civil war was to be avoided. The majority of whites refused to acknowledge the systemic nature of government brutality. In the words of Archbishop Desmond Tutu: “It’s very difficult to wake up someone who is pretending to be asleep.”

The South African Truth and Reconciliation Commission (TRC) captured public attention and provided a model for other countries. The  TRC mandate was to go beyond truth-finding to promote national unity and reconciliation, to facilitate the granting of amnesty to those who made full factual disclosure, to restore the human and civil dignity of victims by providing them an opportunity to tell their own stories.

Steve Biko’s family described the TRC as a “vehicle for political expediency”, which “robbed” them of their right to justice. John Pilger criticised the TRC for allowing the easy transition from white exclusive capitalism to multiracial capitalism, and for avoiding trying criminals, including murderers.

Inequality

The transition from white exclusive capitalism to multiracial capitalism means that today  there are eight million black South Africans with an adequate income, and at least 20 million poor: one in four does not get enough to eat. An (OECD)   report says: “Despite considerable success on many economic and social policy fronts over the past 19 years, South Africa faces a number of long-standing economic problems that still reflect at least in part the long-lasting and harmful legacy of apartheid” .

A report by Statistics South Africa shows two-thirds of young  people live in  households with  a per capita income of less than 650 rand a month (around £47). The first census done in a decade indicates that white South Africans still take home six times more pay than blacks. The country’s black middle class is now the same size as the white South African middle class, helped by the country’s employment laws which were drawn up to redress decades of inequality and unfairness by previous white regimes.

Crime

A survey covering 1998–2000 compiled by the UN, ranked South Africa second for assault and murder per capita and first for rapes per capita in a data set of 60 countries. South Africa was tenth  out of the 60 countries in the dataset for total crime per capita.

A study commissioned by the government attributed this to a number of factors:

•    Normalisation of violence allows it  to be seen as a justifiable means of resolving conflict;
•    The criminal justice system  is seen as  inefficient and corrupt;
•    There is a thriving subculture of violence and criminality;
•    Poverty, unstable living arrangements, inconsistent and uncaring parenting, enhance the chances that children will become involved in criminality and violence;
•    High levels of inequality, poverty, unemployment, social exclusion and marginalisation.

Corruption

South Africa’s national budget is USD 167 billion. USD 103 million was lost to financial misconduct by workers in national and provincial governments in the fiscal year 2011-2012, up from USD 38.5 million in 2009-2010. Only 13 per cent of the money lost to corruption is recovered. While 88 per cent of people tried for financial misconduct are found guilty, only 19 per cent are dismissed. Forty-three per cent get final written warnings.  Many escape by resigning and getting another government job offering the opportunity to carry on stealing.
Financial forensics expert Peter Allwright,  author of a report called The Real State of the Nation, said: “Corruption is rampant. And the dedicated units that have been created to fight financial misconduct are in essence fighting a losing battle”.  An insufficient investigative capacity in the public service means nearly two-thirds of cases take more than 90 days to investigate. “You can give 30 days’ notice and leave, and the public service office then often abandons the investigation,” Allwright said.

President Zuma himself Zuma was charged with rape in 2005, but was acquitted. He  fought a long legal battle over allegations resulting from his financial advisor Schabir Shaik’s  conviction for corruption and fraud. On 6 April 2009, the National Prosecuting Authority decided to drop the charges against Zuma, citing political interference. Zuma still has allegations that he received 783 corrupt payments totalling Rand 4.1 million (nearly £300,000) hanging over his head and no-one has been prosecuted for that “political interference”. Mr Zuma’s popularity rating,  according to a recent poll , has dropped to an all-time low.

In his book, Zuma Exposed, investigative journalist Adriaan Basson forensically unpacks the charges against Zuma and “reveals a president whose first priority is to serve and protect his own, rather than the 50 million people he was elected to lead”.  Jackie Dugard, head of the Johannesburg-based Socio-Economic Rights Institute of South Africa, which lobbies for access to social and economic rights in SA, claims that Zuma’s salary itself places him ahead of most world leaders: “It reflects a huge divide between himself, workers and poor unemployed people”. Jacob Zuma is a polygamist who has been married six times and has (at least) 20 children. Activists complained about the amount the state paid to support Zuma’s wives, especially in the context of the country’s widespread poverty. In 2009/10 Zuma received a budget of £1.2m for “spousal support”. Politicians’ families are a rich source of embarrassment. With such a large family the risk is exponentially exaggerated. One son in particular seems a liability. Nkwazi Mhango commented: “Like any prince in a corrupt Africa, Duduzane is a source of wealth for any con man that’s able to fix and use him.”

Human Rights

The number of police-related deaths last year totalled 797, more than double levels ten years ago, according to figures from the Independent Police Investigative Directorate. Deaths of police personnel on active service totalled 92.

On 16 August 2012, at  Marikana platinum mine, owned by the British-based company Lonmin, police opened fire on striking miners killing 44 and wounding 78. This was the worst of a series of violent incidents in the mining industry. The massacre represented “probably the lowest moment in the short history of a democratic South Africa”, wrote Cyril Ramaphosa, a senior figure in the African National Congress and a former mining union leader. Most of the victims were shot in the back,  many victims were shot far from police lines, suggesting summary execution.

In April 2013, MPs passed widely condemned protection of state information bill, dubbed the “secrecy bill” by its opponents. Lindiwe Mazibuko, parliamentary leader of the Democratic Alliance, argued that the proposed laws had been “tabled within the context of a revived securocrat state”, citing the secrecy surrounding the Marikana massacre and use of public funds on President Zuma’s homestead.

 

The Devil’s Excrement

This article appeared in the Sri Lankan newspaper The Nation but has disappeared from their website.

In his treatise Petroleo y Dependencia, Dr. Juan Pablo Pérez Alfonzo, principle architect of OPEC, wrote: “Oil will bring us ruin. It’s the devil’s excrement. We are drowning in the devil’s excrement.”

Sri Lankan hopes of oil finds

Once again,  fantasies of Sri Lanka becoming oil-rich are bubbling to the greasy surface.

Sri Lanka imports nearly 30 million barrels of oil, which is used to generate electricity as well as for transport, every year. This used to cost around $800 million a year. In 2005 it cost $1.64 billion. In 2006 higher international prices took the bill to $2.2 billion. Add to this, $19 million per month in subsidies, the knock-on effect of transport costs on prices and the never-ending cost of war and reconstruction and one can see why the government would like to have its own oil.

India started exploring the Cauvery Basin in the Palk Strait as long ago as 1954, drilling 100 test wells. From 2000, India started production from fields close to Sri Lanka at the rate of 1,000 barrels per day. In the late 1970s, the Ceylon Petroleum Corporation, assisted by US and Russian companies, drilled seven test wells on and offshore in the Gulf of Mannar Basin without success. India’s success encouraged Sri Lanka to try again. The Cauvery and Gulf of Mannar basins are said to be associated with rift complexes of the Late-Jurassic-Cretaceous Age and have the potential to yield 100 million barrels.

Gamble

An oil bonanza cannot be confidently predicted without drilling. Offshore wells require more than $10 million each and the investor loses it all if the well is dry. It will be at least five years before there is any return on the investment.

The Director General of Petroleum Resources, Dr Neil R de Silva said in January 2007 that the picture was still ‘fuzzy’ about how viable the fields were. “One of the requirements oil companies would be expected to meet in getting a licence for oil exploration would be a benefits plan – this would ensure employment for Sri Lankans and enable Sri Lankan manufacturers and service providers to take part on a competitive basis to supply goods and services.” He added that they must be competitive, efficient and trained. How can that work? He conceded that there was a serious shortage of  professionals to work in the field and that the industry needs to train  a certified labour force. There are no petroleum professionals coming through the education system.

The number of local people employed after the construction phase of the Chad-Cameroon pipeline was negligible in Cameroon and around 350 in Chad. In Ecuador, 50,000 new jobs a month were promised; there have been only 9,000 new jobs so far, mostly unskilled and temporary.

De Silva gave the Sunday Observer an update in March 2011. He did not sound very positive to me: “with the available data it is not possible to estimate the amount of oil in the Mannar Basin confidently… At the beginning of the oil production process the Sri Lankan Government’s share would be 15% and Cairn Lanka’s 85% … As the years go by, Sri Lanka’s share will increase to … 85% while Cairn Lanka’s share will come down to …15%”.

Oil and Corruption

As long ago as 2004, Transparency International estimated that billions of dollars were lost to bribery in public purchasing and oil seemed to guarantee corruption. Oil-rich Saudi Arabia, Angola, Azerbaijan, Chad, Ecuador, Indonesia, Iran, Iraq, Kazakhstan, Libya, Nigeria, Russia, Sudan, Venezuela and Yemen were highly corrupt. Public contracting in the oil sector is plagued by vanishing revenues.

Inequality

Even if Sri Lanka’s oil exploration is successful, it is unlikely that many citizens  will benefit. Venezuela is to some extent an exception in that government policy has been to  use oil to improve the lot of the people as a whole. Even with Chavez’s reforms, problems persist and Caracas is one of the three most violent cities in the world.

Prof. Michael Ross of UCLA  produced a chart mapping  oil sales against literacy and malnutrition. Every  5% rise in oil exports was matched by a three-month fall in life-expectancy and a one-point rise in childhood malnutrition. Sri Lanka currently enjoys good WHO indicators, but child malnutrition figures are causing concern. This could get worse with the “benefits” of oil.

Terrorism and Environment

 

Spillages from sabotage sometimes occur. In Colombia  and Nigeria guerrillas persistently targeted pipelines. In 1995 the LTTE attacked CPC refinery and oil storage installations in Colombo causing several deaths and massive fires in the storage areas. Security fears undermine human rights. In more recent times the LTTE air force targeted oil installations.

The seismic vibrations generated by drilling can adversely affect buildings and the chemicals used can also deplete aquatic life in rivers and streams. Pollution can occur because of human error, sudden rupture of pipelines, or instrument failures.

Conclusion

So, does Sri Lanka want to be a nation where foreigners call the shots – a polluted nation, plagued by poverty and  inequality; where corruption, dynastic elites and nepotism compromise good governance and erode human rights?

Does Sri Lanka deserve the blessing of oil?