People's Bank sold
"hedging" contracts despite ban
By Faraz Shauketaly
The Burj Al Arab, Dubai was the
hotel of choice for banking officials in the infamous
"hedging" case. At a cost of US$ 10,000+ for 2 nights,
banking officials were regally entertained at the hotel
that is set on its own artificial island and where top
rates can exceed US$ 25,000 per night.
It is The Hotel for Hollywood
and Bollywood stars and multi-millionaires - not quite
the same league as hotels for DGM-level bankers or
indeed other state officials. It was, a hotel fit for
the magnitude of the value of the transactions.
In the meantime, the People's
Bank has had to pay out US$ 6.5 million to Commerzbank,
Germany when they lost out on a deposit on back-to-back
arrangements. Arrangements put in place by the same team
of officials involved in the transaction that was
famously referred to in Court as a "Casino" for want of
a more apt description.
In an astounding revelation,
that rocks the very foundations of banking controls, the
People's Bank has been found to have sold the Ceylon
Petroleum Corporation "hedging" contracts despite an
explicit ban by the Central Bank of Sri Lanka.
On December 21, 2005, the
Central Bank sent out a directive entitled "Financial
Derivative Products (Revised)" which was issued by the
Director, International Operations and the Controller of
Exchange. These directives are part of Sri Lanka's
commitment to the Basle Agreement that governs and binds
the Central Bank on such matters including the 'Adequacy
Ratio' which are necessary to ensure continuity,
longevity and the probity of the banking system.
Instead in astonishing disregard
of these most clear cut instructions, the People’s Bank
followed the lead of the other banks – who had no such
constraints – and entered the deepest depths of the
hedging mire – with disastrous results with perhaps only
the Supreme Court, Vasudeva Nannayakara and Nihal Sri
Ameresekere able to save them from oblivion.
The rules are abundantly clear:
banks are precluded from selling derivative products in
the event that the bank’s adequacy ratio falls below
11%. People’s bank, entered into these contracts – the
legality of which is now being challenged in the Supreme
Court – with absolute disregard for their regulators’
It appears that the so-called
“specialists” imported by the People’s Bank to advise
and oversee such sensitive and complicated matters were
too busy being entertained by the lead bank involved in
this transaction and embarked on a progrom of
entertainment which included stays at super-luxury
hotels in Dubai and gourmet meals at a leading Japanese
restaurant in Colombo.
These included running up bills
of Rs 36,000 for just one meal and the use of the
hotel’s premium TV channels running movies unsuitable
The sad indictment is this: that
had they paid as much attention to their professional
work as they did for their pleasure, Sri Lanka’s other
state bank – the People’s Bank would be far healthier
than it is now.
Drastic increase in current
By Mandana Ismail Abeywickrema
The country’s current account deficit has seen a
drastic increase of Rs. 91 billion in the first quarter
The Central Bank reported that government revenue for
the first quarter has declined to Rs. 144.9 billion from
Rs. 158 billion recorded in the corresponding period
Current expenditure mean-while has recorded an
increase to Rs. 235.9 billion from Rs. 173.4 billion in
the first quarter of last year.
Therefore the current account has recorded a Rs. 91
billion deficit in the first quarter, while the revenue
deficit for the entire 2008 was only Rs. 88.4 billion.
Economic growth has also declined to 1.5% in the
first quarter of the 2009, against 6.2% in 2008 and 4.3%
in the last quarter of 2008, the Census and Statistics
"The global turmoil has directly or indirectly
affected the local economy," Head, Census and Statistics
Department, Suranjana Vidyaratne has said.
Economist Dr. Harsha de Silva noted that the
government has recorded a decline in its revenue "after
a long time."
However, he said that given the present economic
conditions in the country, the entirety of the state
revenue in 2009 would not be sufficient to pay the
"The current account deficit is going to balloon," he
said, adding that any money received by the government
including monies of the EPF and ETF the government is
planning on using to fund its programmes would have to
be used to bridge the deficit.
Finance and State Revenue Minister and Deputy Finance
and Planning Minister Ranjith Siyambalapitiya said that
the Central Bank statistics indicated the effects of the
global economic crisis on Sri Lanka.
He told The Sunday Leader that the government
experienced a shortfall in its revenue due to the
collapse in imports as well as exports.
He said that while there was a decline in revenue,
there was an increase in the expenditure.
"While facing a global economic crisis, we also
fought a war. All that increased the government’s
expenditure," he said.
However, Siyambalapitiya observed that the economy
would show positive improvements in the second and third
Maharagama UC in violation of regulations
By Nirmala Kannangara
The Maharagama Urban Council (MUC) Chairperson has
allegedly violated government regulations by issuing
council attendance recording cards to her personnel
staff, which are intended strictly for public officers,
MUC sources told The Sunday Leader.
Chairperson, Maharagama Urban Council, Kanthi
Kodikara has recruited her party supporters to the MUC
for the past two years and in order to place them in
permanent grades has ordered the establishment unit of
the council to issue attendance-recording cards
according to Deputy Chairman, MUC, Senaka Kalubowila.
"Kodikara is a people’s representative and does not
have any authority to instruct the establishment unit to
issue attendance recording cards to temporary employees,
which is illegal. We learn that Kodikara is trying to
place these seven employees in permanent grades when
there are many other temporary employees who have worked
for the council many years and are awaiting their
permanency," Kalubowila told The Sunday Leader.
Kalubowila further said that questions have now been
raised as to how these employees are being paid as they
cannot be paid from council funds.
"The Chairperson is only getting an allowance of
Rs.10,000 and not a salary. She could employ one person
and he could draw an allowance of Rs. 2,500 from the
council funds but not the other six. When we asked her
about it, Kodikara said that she pays their salaries out
of her money. There is really something fishy, and an
investigation has to be carried out as to how she has
got money to spend," Kalubowila alleged.
When asked as to when and why she issued
attendance-recording cards without any government
approval, Thanuja Caldera, of the Establishment Unit -
MUC told The Sunday Leader that she was compelled
to follow Kodikara’s instructions.
"I was instructed to issue these attendance cards by
the Chairperson and I issued them on June 1," Caldera
Meanwhile Commissioner of Local Government, Western
Province, H. Sumanapala told The Sunday Leader
that he has already instructed one of his investigative
officers to give a full report on it. "Unless there is a
government directive, people’s representatives do not
have any authority to issue attendance-recording cards.
I could release the investigation report tomorrow
(Monday)," Commissioner Sumanapala added.
Electronic bus ticket
machines before 2010
By Risidra Mendis
The Lanka Private Bus Owners Association (LPBOA) will
introduce electronic bus ticket machines before 2010.
The electronic bus ticket machines are expected to cut
down on the losses incurred by private bus operators and
The 6000 electronic bus ticket machines will be
brought down from Hong Kong at a cost of Rs 35,000 per
Speaking to The Sunday Leader President, LPBOA,
Gemunu Wijeratne said sample bus ticket machines were
brought down from Hong Kong and India to be tested in
the country. "We are very happy with the electronic bus
ticket machine from Hong Kong as it has many features.
The Hong Kong bus ticket machine has the GPRS facility.
This machine operates on a card system. A passenger has
to buy a card, which is the size of a visa card, and
give it to the bus conductor when he gets into the bus.
The conductor will run the card through the bus ticket
machine and give it back to the passenger. The card will
have the reload facility and passengers can get a reload
from any main bus stands or shops when the card runs out
of credit," Wijeratne said.
According to Wijeratne this machine will benefit the
public and the private bus owners as conductors will not
be able to cheat them any longer.
"There are an estimated five million people who
travel by bus in the Western Province. Conductors take
an estimated 25% of a day’s earning from private bus
owners by not issuing tickets to passengers," Wijeratne
He added that the LPBOA hopes to get a bank to
sponsor the bus ticket machines. "Out of the 100%
earnings per day the LPBOA will give the bank that
sponsors the ticket machines a 5% commission. Which
means they will in turn get back the money they invested
in the bus ticket machines," Wijeratne said.
Two more children diagnosed with
By Raisa Wickrematunge
According to latest reports two more persons were
diagnosed with the H1N1 virus on June 19. The first
patient, an eight year old boy who is an Australian
citizen, arrived in Sri Lanka for a family function. The
latest cases are also children, aged 7, 6 and 2. All the
children are close relatives of the young boy who was
first diagnosed, one of them being his sister.
Accordingly, the Ministry of Health has isolated the
children showing symptoms of the virus, in the
Infectious Diseases Hospital in Angoda, where the drugs
needed for treatment of the disease are available.
Epidemiologist Sudath Pieris from the Epidemiological
Unit, Ministry of Health, said that the passengers who
were on the flight from Singapore to Colombo, with the
infected children have been traced. They are all to be
kept under quarantine.
He said that a new anti viral drug is available in
Sri Lanka to treat the flu, within the government
The epidemiologist went on to say that although there
was widespread consternation when the flu was first
detected in Mexico, it is not as dangerous or virulent a
strain as was feared. According to the WHO website,
there have been 35,928 reported cases of the H1N1 virus,
but only 163 deaths globally. "Compare the figures on
the website to the number of reported cases of dengue in
Sri Lanka, 9000, and 140 fatalities," Pieris said.
Despite the fact that there were not many reported
cases of the H1N1 virus, preventive measures were in
place, according to the epidemiologist.
"Since this is a new disease, the only cases we are
likely to see are from people travelling. The moment
people come in from African countries, they are required
to fill a health declaration form, stating whether they
have had any contact with known H1N1 cases," Pieris
stated. He went on to say that if people did declare
contact, they would be quarantined for seven days,
during which time if they developed fever they would be
treated with the new drug. In addition, a thermal scan
is available, and if at the time of arrival people have
a temperature higher than 35 degrees Celsius, they too
will be quarantined, Pieris said. He added that other
measures included using a hanky or elbow when sneezing,
and frequent washing of hands, as with any other flu
In addition, he exhorted those who travelled from
countries where the flu had been detected, to use a mask
for at least seven days upon arrival into the country,
to prevent the disease from spreading.
However the epidemiologist warned that there was "no
foolproof method," to ensure the disease wouldn’t
spread. People arriving might not fill out the
declaration forms truthfully, or they might still be
within the ‘incubation period’ of infection, and unaware
that they are carriers of the disease, upon arrival into
A press release by the Health Ministry said that 20
hospitals have been identified as sentinel hospitals for
pandemic influenza preparedness under the World Bank
funded National Avian/Pandemic Influenza Programme.
Meanwhile, additional stocks of anti viral drugs and
Personal Protective Equipment (PPE), including
paediatric doses, have been supplied by the WHO, at the
request of the Sri Lankan Health Ministry. Guidelines
were also sent to the airport and port health officers
to ensure that personnel were aware of the danger.
A photographic exhibition titled Slice Of Life
by Abraham Ling of Singapore will be held at the Harold
Pieris Gallery of the Lionel Wendt today from 9 a.m to 7
Ling holds a Bachelor of Arts degree from
Australia having studied photographic and graphic design
there. The photos in black and white are of museum
quality and are expected to last about 200 years. The
theme is on Sri Lanka.
Ling is a widely travelled photographer having
visited many Asian counties like China, Vietnam and
Japan. He has held photographic exhibitions such as in
the Contemporary Center for Photography, Melbourne;
Group Photo Exhibition at WaggaWaga New SouthWales and
the Charles Sturt University Wagga Wagga.
Sri Lanka has high quality
investments in UK — HC
Sri Lanka has high quality investments in the UK in
the ICT and advanced engineering sectors, British High
Commissioner to Sri Lanka Dr. Peter Hayes said last
A statement by the British High Commission in Sri
Lanka said foreign direct investment in the UK has
risen, with 1,744 investment projects locating and
expanding here. Every day, five new foreign direct
investment projects make the decision to locate in the
UK over the last financial year (2008-09).
"Although the number of Sri Lankan businesses
operating in the UK is small, there are some very high
quality investments from both the ICT and advanced
engineering sectors. The UK is the natural place for Sri
Lankan organisations to grow their business in Europe or
the US as it acts as a unique gateway of international
connections," Dr. Hayes noted.
jobs lost in industrial sector in 1stQ
The Census and
Statistics Department in one of its survey reports has
said that 96,000 persons have lost jobs in the
industrial sector in the first quarter of 2009. The
survey conducted by the Department has also indicated
that agriculture had created 203,000 fresh jobs and the
services generated 129,000 jobs.
According to the
Department, those who had lost jobs in the industrial
sector may have looked at employment in the agriculture
and services sectors.
The unemployment level
for the first quarter of 2009 is recorded 450,000, a
40,000 increase from the 410,000 recorded in the
corresponding period of last year.
The large number of
job losses recorded between 2008 and the first quarter
of 2009 has been attributed to the economic recession
experienced by the country.
The government has
said it would look into the plight of the workers who
have lost jobs and discuss ways to compensate them.
The National Centre
for the Jobless (NCJ) has called on the government to
address the issues faced by the large number of people
rendered jobless due to the economic crisis.
NCJ Convener, Wasantha
Samarasinghe told The Sunday Leader that they had
already forwarded several proposals to the government in
addressing these issues.
Key among them is the
need to pay compensation to the workers who have lost
jobs and to create a fund that would pay a monthly
allowance to them as well.
A request has also
been made by the government to provide relief to the
jobless employees who have taken out bank loans. “The
government has not made any positive response to the
requests, “ Samarasinghe said.
The government has
however said it has launched several programmes for the
welfare of the working masses.
Gamini Wickremasinghe is no more
Photographer Gamini Wickremasinghe passed away on
June 17. Wickremasinghe worked at the Davasa
newspaper, The Sunday Leader, Irudina,
Lankadeepa, and the Sunday Times. He also
worked as a still photographer for films directed by
Lester James Peiris and Milton Jayawardene. He leaves
behind his wife Indrani. The funeral took place on
Friday (19) at the Mirigama cemetery.
Paintings and sculputre exhibition
A paintings and sculpture exhibition by Yaswant
Amaratunga will be held on June 27 and 28 at the Harold
Pieris Gallery of the Lionel Wendt.
Yaswant Amaratunga is a Chartered Civil Engineer who
took to art on his retirement from engineering. His
creations—paintings, sculpture, glass carvings and
etchings will be on display. Amaratunga’s works differs
from the professional artists in that his engineering
knowledge and skills are reflected in his works.
The exhibition comprises paintings — acrylic on
canvas; water colours; sculpture includes ceramics,
terracotta, glass carvings and etchings.
Govt. to not name Uva CM candidate
By Mandana Ismail Abeywickrema
The government has decided to leave the chief
ministerial candidate slot at the forthcoming Uva
Provincial Council election open.
UPFA Secretary General, Minister Susil Premajayanth
told The Sunday Leader that the party has decided
to not to name a chief ministerial candidate for the Uva
PC polls and to leave the slot open.
When asked if President Mahinda Rajapakse’s nephew,
Shasheendra Rajapakse, who is to contest the election
would be named the UPFA’s chief ministerial candidate,
Preamjayanth said the party had not arrived at such a
He also said the UPFA’s nominations lists for the Uva
PC polls would be ready by tomorrow (22).
The main opposition UNP meanwhile has so far not
named a chief ministerial candidate.
However, UNP Parliamentarian Ravi Karunanayake said
his party would name a chief ministerial candidate for
the Uva PC and that the name of the candidate would be
made public after the handing over of nominations on
So far the JVP remains the only main political party
to name its chief ministerial candidate for the Uva PC
The JVP has named the party’s former group leader at
the Uva PC, Sudath Balagalle as its chief ministerial
candidate for the Uva PC polls.
CEB to launch sick note campaign on
By Nirmala Kannangara
The Ceylon Electricity Board (CEB) employees will
stage a ‘sick note’ campaign on July 17 crippling the
CEB, JVP affiliated Lanka Viduli Sevaka Sangamaya (LVSS)
Convener, LVSS, Ranjan Jayalal told The Sunday
Leader that the government’s failure to grant their
due salary hikes and the decision to reduce medical
facilities and overtime have resulted in the proposed
sick note campaign.
"We have been agitating to get the once in three year
salary hike in 2009 but so far the government has failed
to grant a salary increase. Earlier they said that the
government does not have enough funds to increase our
salaries due to the war. But now the war is over but
still they do not want to talk about our salary
increments. Although the government claimed that they do
not have enough funds to give the CEB employees their
due salary increments, from where do they get money to
hold mega war victory tamashas," asked Jayalal.
According to Jayalal, it was the Public Utilities
Commission of Sri Lanka (PUCSL), that regulates the CEB
that has ordered the Power and Energy Ministry to
curtail the employees’ overtime.
"Since the PUCSL has been entrusted with the CEB
regulatory responsibilities, they are urging the CEB to
go for cost cutting as the Board incurs losses up to Rs.
50 million a day," said Jayalal.
"Now the Power and Energy Ministry is dancing to the
PUCSL tune and if things continue in this way CEB would
be privatised in the near future," alleged Jayalal.
Refuting allegations levelled against the PUCSL,
Chairman PUCSL Dr. Jayatissa de Costa told The Sunday
Leader that the allegations were unfounded and added
that the commission does not interfere with general
administrative decisions but acts to protect the
interest of the electricity consumers while promoting
efficiency in operation, allocation of resources, safety
and service quality. "Since our commission has been
entrusted with the regulatory responsibilities it is the
PUCSL that has the power to advice the government on
matters concerning power generation, transmission,
distribution, supply and use of electricity.
It is the PUCSL that would also regulate tariffs and
other charges levied by the Electricity Board in order
to ensure that the most economical and efficient service
is provided to the consumers. The PUCSL does not have
any power over general administrative work," Dr. De