Getting Away With The Numbers Game
Not so long ago most young Sri Lankan students wanted to end up in one of three professions – medicine, engineering or law – in that particular order. Then somewhere between J. R. Jayewardene’s open economy and Mahinda Rajapaksa’s open sesame it all changed. Today this country produces more accountants each year than medicine, engineering and law put together.
The younger generation of Sri Lankans, both men and women have taken to accounting like ducks to water so much so that outside Britain, Sri Lanka has the largest population of CIMA (Chartered Institute of Management Accountants) members in addition to about 80,000 trainee accountants – all of them crunching numbers in what is turning out to be a national speciality.
With such a rapid proliferation of accountants it is reasonable to expect the country to have in place a governance structure that places some degree of importance on accountability – at least when it comes to numbers. But as in everything else in this land of contradictions, reality is anything but that.
Take for instance the two hotel projects at Galle Face, for which the government gave the green light recently. Initial reports stated that the Hong Kong based Shangri-la hotel group would invest US$ 125 million in the Galle Face hotel project. A few days later government media placed the investment at US$ 250 million. Just last week the Government Information Department in a statement said that the foreign hotel project will bring in a direct investment of US$ 500 million. Within a period of a few weeks the Shangri-la investment, just like Transport Secretary Dhammika Perera’s stock market investments, first doubled and then tripled.
This overnight multiplication did not stop there. With another Chinese chain given the green light to put up another luxury hotel at Galle Face the Government Information Department is on record stating, “the two giant foreign hotel projects will bring in a direct investment of US$ 1 billion.”
Not to be outdone Sri Lanka Tourism then joined the party claiming some US$ 1.5 billion worth of hotel projects are expected to kick-off this year. We are not sure if this figure includes the Galle Face projects. Whether it does or does not, what is raising eyebrows is the fact that this figure is double the entire national Foreign Direct Investment component for the entirety of last year.
In this somewhat dubious accounting environment one is entitled to suspect whether some of the highly qualified accountants of this country are more a part of the problem. After all the former president of the Institute of Chartered Accountants of Sri Lanka, Nivard Cabraal is today presiding over a Central Bank that is shamelessly cooking up numbers to show the government in a positive light. With the cost of living at an all time high it does not take much for even Muthubanda from Mahiyangana to tell Cabraal that his single digit inflation rate is way off the mark. Same goes for his cost of living index where systematically consumer items that are rapidly going up in price are surreptitiously taken out and replaced with insignificant items that are less likely to experience regular price hikes – an example being bread being taken out of the Central Bank’s basket of consumer items and replaced with biscuits. Which family in this country has replaced bread with biscuits at their breakfast, lunch or dinner table?
With the thousands of accountants in this country choosing to look the other way when obvious manipulation of numbers is staring them in the face, the problem is assuming serious proportions. Take for instance the recent flood damage assessment.
According to the government the flood damage has been assessed at Rs. 50 billion. What kind weather gods we have – since they don’t want to trouble our accountants too much with cumbersome figures they created damage to the exact value of Rs. 50 billion. Nice and big and round and convenient – not like say 46, 456, 153, 987 which is bound to give one a headache. Then again the Paddy Marketing Board is supposed to have made a loss of Rs. 500 million last year. Once again a nice, big, round and convenient figure.
How considerate these loss-making entities are towards our hassled accountants – they come up with very easy to handle figures. Mind you this institution that has come up with this 500 million loss assessment has not had an audit done of its accounts since 1994. COPE Chairman, Senior Minister D.E.W. Gunasekera said a mouthful last Monday when he lamented that unless a new culture of financial discipline and budgetary guidelines were introduced at all 149 state ventures, a majority of them were bound to fail. Unfortunately Gunasekara’s alarm comes a little too late with terminal damage already done in most of the state enterprises.
Why is it that no one, not least the thousands of our world beating accountants, ever queries these nice, round numbers that are frequently trotted out? For instance the Ceylon Electricity Board loss for last year is Rs. 50 billion. How come its not 49.5?
This disregard for fiscal discipline was highlighted by a startling revelation in parliament last week. It was brought to the notice of the house that a mind-boggling sum of Rs. 2,400,000,000 had been spent to ‘rehabilitate’ 43 km of the Trinco – Habarana road. That basically works out to a massive Rs. 55,813,953 to ‘rehabilitate’ one kilometre of road. The colossal cost of the Trinco – Habarana road had prompted Opposition Parliamentarian Dayasiri Jayasekara to inquire from the minister concerned, in parliament, whether this particular road was paved with gold.
If this is the ‘going’ rate to ‘rehabilitate’ one kilometre of an existing road then what would be the cost if the entire rail and road network the British built from scratch was to be replicated tomorrow by this mega-project-loving government?
Now there’s a figure for the accountants to crunch on since more adventurous pursuits like probing the nice round figures presented by various entities is not their kind of thing.