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’ explicit instructions.

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 for children.

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.

The country’s current account deficit has seen a drastic increase of Rs. 91 billion in the first quarter of 2009.

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 last year.

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 Department said.

"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 country’s debt.

"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 quarters.

Chairperson running Maharagama UC in violation of regulations

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 said.

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

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 public.

The 6000 electronic bus ticket machines will be brought down from Hong Kong at a cost of Rs 35,000 per machine.

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 said.

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.

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 sector.

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 type disease.

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 Sri Lanka.

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.

Photographic exhibition

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 p.m.

  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 week.

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.

96,000 jobs lost in industrial sector in 1stQ 

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.

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 decision.

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 Wednesday (24).

So far the JVP remains the only main political party to name its chief ministerial candidate for the Uva PC polls.

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.

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) said.

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 Costa said.