Thursday, July 12, 2018

What the German Ambassador said…



The Controversy created over the alleged violation of tender procedures with regard to the LNG Plant, to be installed at Kerawalapitiya, is just the tip of the Iceberg; corruption, bribery, malpractices and kickbacks have become almost an integral part of State initiated mega development deals and projects of this nature.

The deviation from the accepted procedure, in the LNG plant case was such, that Jorn Rohde, the German Ambassador himself, had to make his voice heard putting pressure on the government to get the deal done according to the standard procedure.

The concern shown by the German Ambassador is largely due to the fact that the local entity Lakdhanavi, the lowest bidder at the tender, were to engage German technology in accomplishing the task and also in the process of obtaining German assistance in the form of a Loan to fund the execution of it.

The pretext under which the tender was to be awarded to a Chinese company, which fell short in terms of the lowest cost vis-a-vis the Lakdhanavi Bid, was that the cost of a unit proposed by Lakdhanavi was without taking account of the VAT and other taxes levied in importing the machinery needed.

Yet, experts see it as a simple matter of amending the figures with such tax calculations, which, even then put Lakdhanavi as the most viable option.

Tentacles of the corrupt

The labyrinthine nature of corruption in this country (As anywhere else in the world) is highly complicated and shady. It touches politicians, top officials, professionals, Multi-National Companies and sometimes even foreign Sovereign States.

The tentacles of these forces who violate, circumvent and manipulate standard tender procedures reach very high levels making it very difficult to detect and extremely dangerous to bust.

Although our legal system is quick to pounce on corruption at the lowest levels such as the office peon taking a 500 rupee santhosam or the Police officer taking a gratification in the thousands, it seems paralyzed and even non-existent when it comes to shady deals amounting to billions of dollars and involving big shots, as the common man would put it.

The Highways, Ports, Airports and any project of substantial worth are covered in a misty shade of opaqueness that seems impenetrable.

The Hambantota Port, the Southern and Colombo Expressways, the Central Expressway are some of the more prominent instances of corruption at gigantic levels.
All allegations against the former rulers disappear to oblivion as there seems to be a tacit understanding that ‘it is our turn now’ by those ruling the roost now.

When projects of national importance are afflicted with corruption, it is the national economy, before anything, that suffers. It would not be an exaggeration to say that the national wealth thus lost outweighs the prospective benefits that would bear fruit in the long run.

Exposing shady deals

Unlike the yesteryears, there are groups who are interested in these deals and who make public inquiries regarding these suspicious workings at the top.

The Right to Information Act is a very potent tool used by these vigilantes to bring to light these vampire-like figures who suck the lifeblood of the nation. The sil redi case is a good lesson for the public officials to exercise caution and to have some backbone in resisting the urgings of the political strong men to skip and deviate from the rule book.

Yet, it is quizzical as to how it is only the trigger men but not those who scheme these daylight robberies of public wealth, are taken to task and punished, albeit very rarely.
Despite the non- stop and now stale, mantra of attracting Foreign Direct Investment, there is little improvement in terms of actual investment.

One reason undoubtedly is the lack of transparency that foreign investors eagerly expect in investing in foreign countries. If not for the Chinese investments the former regime made use of freely and which this Government too seems to be wooing despite accusing the Rajapaksas of underhand deals with China, do we have anything substantial in terms of FDI s? I doubt it very much.

Especially, when it comes to manufacturing and the industrial sector, where we are in dire need of funding and expertise, the picture is bleak.
Over-reliance on the service sector, without much in terms of agricultural and industrial production has its own hazards
Highly polarizing political stances by respective Governments have alienated us from our friends such as Germany and Japan, who in the past have contributed with their investments, funding and loans at very concessionary rates to major undertakings at the national level.

What makes it convenient for the rulers to obtain funding from China et al is that they do not expect any kind of criteria to be fulfilled by the recipient countries in obtaining loans. Especially in terms of those nations that are not in the good books with the US and the West, they would eagerly grant funding, ultimately creating a web of indebtedness around those States which give the Chinese more leeway and influence over political and military matters of those
hapless States.

Needless to say, the US too, is past masters of making weaker foreign sovereigns victims of their debt-trap.

Investment for the manufacturing industry

When one sees the sky risers coming up in the Colombo city, it might seem that we are rapidly developing; in a sense we are. But little in terms of manufacture or industry oriented workplaces where we badly need substance.

Over-reliance on the service sector, without much in terms of agricultural and industrial production has its own hazards.

In a global context closed and conservative national interest becoming the moving force in developed countries, there is a risk in waiting for our foodstuffs and other necessities to come from the sea.
The threat of transnational terrorism poses to international trade, air and sea routes, logistics etc. questions the wisdom of relying entirely on the service sector sans backing of sound agricultural and industrial cushioning economically.

We need to attract foreign investment and good investors at that; not those marauders who come with the mind to rob us and then flee with the plunder; nor should we lean heavily against superpowers who lend freely until we are in their debt traps up to our necks. The most viable method of ensuring such investment is by ensuring transparency, accountability and ensuring a level playing field for the would-be investors. Adhering to standard and accepted Tender procedure is in the forefront of encouraging good foreign investors. Debacles of the LNG plant type certainly do not encourage such investors; on the contrary, they act as shriek alarms of a deterrent to them.

Germany has recently opened a trade office in Sri Lanka with a view to facilitate German investment in Sri Lanka.

Yet, the word of the German Ambassador, questioning the openness and fairness of procedures adopted in tenders does not encourage any investor of credible repute.

That is the pith and substance of the concerns voiced by the German Ambassador.