In its modern form, the origins of the so-called National Question go back to the early twentieth century.  As understood by the man in the street, this intractable problem was created by the claims and counter-claims made by politicians of all races, particularly the Sinhalese and the Tamils, over several decades as to how the “national cake” should be divided.  The armed conflict that eventually ensued came to a decisive conclusion in May 2009.  Nevertheless, a solution acceptable to all the racial groups is no nearer.

Going back to fundamentals, the Concise Oxford English Dictionary defines “ethnic” as “of or relating to a group of people having a common national or cultural tradition; denoting origin by birth or descent rather than by present nationality”.  It defines “race” as “each of the major divisions of humankind, having distinct physical characteristics” and also as “an ethnic group”.  Regrettably, these definitions do not provide a fail-proof test procedure to determine anyone’s ethnic or racial origins.  Nevertheless, the use of this terminology is unavoidable when it comes to discussing the National Question.

Dr E.W.Adhikaram, a highly regarded scholar, wrote an article in Sinhala on the irrationality of thinking on racial lines and had it published in the SILUMINA a few days before the first serious race riots broke out in 1958.  In this piece, Adhikaram had tried to clear up the thinking on the issue of classifying people by race.  An English translation of his contribution, under the title “THOUGHTS – Pamphlet E1”, was published on 15 December 1983 – that is, a few months after the conflagration of July 1983.  He mentions in Pamphlet E1 that “Some received it (the original article in Sinhala) with much appreciation and understanding, while some others showed deep resentment.  I am glad to note that the article is now receiving increasingly better attention and appreciation”.

In a simple test, he had asked persons claiming to be Sinhalese or Tamil, how they knew whether they were one or the other.  If a person claimed to be a Sinhalese (or a Tamil) by virtue of having had both parents of one race, Adhikaram asked them how their parents would have known whether they themselves were Sinhalese (or Tamil).  Repeating the same question about each preceding generation, we would inevitably reach a time which was before the Sinhalese and Tamil peoples even came into existence!

Examining the matter a little more deeply, a person would have had to have 4 grandparents of a pure race to be certain of the racial purity of one’s own parents.  Going back a generation further back, that person would have had to have 16 racially-pure great-grandparents if his grandparents were to be accepted as racially pure.   Another generation earlier, all of one’s 64 great-great-grandparents would have had to be of unblemished race.  At this point, it would probably be safe to say that there is not a single person in Sri Lanka, however well-connected, who could provide, with proof, a list of 64 racially pure great-great-grandparents.  Thus, claiming to belong to a race because one’s parents are of that race is a far from sound approach to establish that one belongs to a specific race.

Adhikaram also considered whether a person could be classified as a Sinhalese or a Tamil if he spoke Sinhala or Tamil respectively – presumably as the mother tongue.  Following Adhikaram’s logic, let us now take the case of a couple who claim to be either pure Sinhalese or pure Tamil, and have emigrated.  Their foreign-born children may not even be able to manage a simple sentence in Sinhala or Tamil.  Can such children claim to be Sinhalese or Tamil in terms of this classification?  What about a Tamil child who was adopted in infancy by Sinhalese foster parents?  Would that child be Tamil or Sinhalese?

The above process of inquiry could be applied with equal effectiveness to the subject of caste.

Adhikaram’s position was that a right answer cannot be given to a wrong question.  He inquired whether there is any special mark or feature on a person’s body that would help identify that person as a Sinhalese or a Tamil.  Search as you may, you will not find such a key.  Adhikaram explained that, although a new-born child’s race or nationality is not marked on its body, it is nevertheless given a racially-distinctive name by his parents and deemed to belong to a particular race or nationality.  Accepting what was thrust upon him by his parents, he comes to believe that he belongs to that particular race and is prepared sometimes even to kill to defend his race’s interests!  What could be more blind and absurd?

At the time that Adhikaram examined the issue of race, the scientific study of evolution had not yet conclusively revealed (as it has now) that the entire human species originated in East Africa tens of thousands of years ago.  It is presently accepted that the first individuals and tribes from there migrated in all directions.  Their DNA can be traced in all the races and ethnic groups on earth, including nations and races as diverse as Africans, Arabs, Jews, Europeans, Indians, Red Indians, Chinese, Maoris, Sinhalese, Tamils, Moors, Malays, Burghers and so on.  However, by a process of natural selection over tens of thousands of years, some physiological characteristics changed (eg. skin colour, hair colour, average height etc) so as to cope better with the climatic conditions and other natural constraints in the new habitats where these migrants settled.

As our ancestors, the East Africans, were themselves descended from apes, what on earth is the sense in being so attached to one’s race, whatever that might be?  Arguments based on cultural heritage are even weaker.  Sinhalese and Tamil have innumerable features in common because they absorbed substantial cultural and other contributions from those who came from Persia (modern Iran) and North India.  In addition, Sinhala culture has hefty contributions from Tamil, Arab, Portuguese, Dutch and English sources.  Over the next few decades a whole host of extraneous cultural influences will be irresistibly absorbed by our nation, causing the differences between our indigenous cultures to become less and less distinct.  No amount of atavistic screaming from public platforms will be able to halt the march of these influences.  Therefore, we need to find less divisive and more productive approaches to resolving the National Question without harping on the subject of race or ethnicity.

Sri Lanka has lost huge numbers of its citizens by migration to other countries, tens of thousands maimed or killed, and thousands of billions of rupees in destruction, loss of development and disincentives to investment.  In the mind of most ordinary people, the origins of these losses can be traced back to the quarrels and fighting caused by racial thinking by various groups.  Of course, there is very little that can be done about what we have lost in the past but we need to refrain from holding on to those irrational concepts about race which have prevented the evolution of an all-encompassing Sri Lankan identity.

What we have to accept first to help solve the National Question is that anyone born in Sri Lanka is a Sri Lankan and the equal of every other person born in Sri Lanka, with the same rights and responsibilities.  He is free to practise any religion of his choice and adopt any cultural elements that he finds congenial as long as he does not interfere with the similar rights to which every other Sri Lankan is entitled.  The State should not encourage or interfere or get involved in these matters, especially if it ends up by either showing a preference for one citizen or group of citizens over others.

Dr Jekyll and Mr Hyde were two personalities in one body.  Our Attorneys General (AGs), by their “flexibility”, have developed rather more schizophrenic morphs.  The lure of a seat at the head of the Supreme Court may have encouraged some chameleon performances in the past. The manner in which they switch between their often incompatible roles leaves many a citizen bewildered. This undesirable state of affairs owes its sustenance to the fact that our Constitutions have been crafted to leave as much room as possible for the Executive to appoint compliant persons of its choice to all important positions, including that of the AG.  Hence, taking constitution-making out of the hands of politicians and entrusting the task to a well-balanced committee of persons of integrity and intellectual independence is an urgently required measure.

Article 35(2) of the Constitution states that proceedings against the President in respect of the exercise of his powers shall be formally instituted against the AG (ie. because the President enjoys a certain measure of personal immunity insofar as the Courts are concerned).  This means that the AG is forced not only to be the proxy of the President but also to act as the counsel who fights the President’s battles in Court – even where the President has blatantly violated the Constitution.  The AG is called upon, all too frequently, to defend the indefensible.  Instead, the technical requirement for the President to be represented by the AG can be met by providing for the appointment of a senior officer in the Presidential Secretariat for this purpose, and for lawyers from the unofficial bar to be engaged as legal counsel to defend the President in Court.  If this is done, the AG could devote himself single-mindedly to assist the Courts in the greater interests of the People.  Such an arrangement would be consistent with the opinion expressed by the Supreme Court in 1981 in a case involving the Land Reform Commission, Grand Central Ltd and the AG.  It was made clear on that occasion that “… the AG has a duty to the Court, to the State and to the subject to be wholly detached, wholly independent, and to act impartially with the sole object of establishing the truth”.

If the AG does not appear as the counsel for the President, who are the independent lawyers upon whom the President could rely to advise and defend him? The Citizens’ Movement for Good Governance (CIMOGG) believes that the answer is readily found in the Constitution.  In view of the special treatment that the Constitution gives the legal profession, unlike all other professions and vocations, the President should call upon a few senior Attorneys-at-Law who have secured the privilege of being made President’s Counsel (PC) to appear for him. Those chosen should be happy to be asked to do so, even without a fee, because they enjoy a special constitutional prerogative and a financial goldmine secured for them by their erstwhile seniors who formulated the 1978 Constitution.  Other than for the two or three PCs who might be called upon to head the President’s legal team, there need be no restriction on the remaining PCs from appearing for the other side, if retained to do so.

Under the 17th Amendment (17A), Article 41C(1) provided for the AG to be appointed by the President with the approval of the Constitutional Council (CC).  Now, under the totally undemocratic 18th Amendment (18A), the President can appoint any person of his choice to virtually any State post.  All that the President has to do is to inform the 5-person Parliamentary Council of his selections and seek its observations.  This Council consists of the Speaker, the Prime Minister (PM), the Leader of the Opposition (LO), an MP nominated by the PM and an MP nominated by the LO.  The President is entirely free to disregard such observations and appoint anyone he wants to be, say, the AG!  Understandably, an AG appointed under 18A, very probably over the heads of more deserving candidates, would be distinctly inclined to safeguard the President’s interests rather than those of the People.

Article 41C(4) of 17A stipulated that the Attorney General’s views may be sought by the CC regarding the appointment of Judges of the Supreme Court, as well as the President and the Judges of the Court of Appeal.  Now that the CC has been displaced by the Parliamentary Council, it is not clear whether the latter would seek an opinion from the AG regarding the aforesaid appointments.  Whatever the procedure followed, a conflict of interests would certainly arise if the past practice of sometimes appointing the AG to be the Chief Justice remains a potential reward for “pleasing the boss”.  Consequently, the appointment of judges may be better done if entrusted to an enlarged Judicial Services Commission (JSC), which would, say, have as its members the Chief Justice, the most senior Judge of the Supreme Court, the President of the Court of Appeal and four other non-judicial persons of distinction, including two eminent legal academics.  Broadening of the JSC membership in this manner would reduce the distorting effect of the inevitably close relationships that persist among the various branches of the judiciary, the official bar, the unofficial bar and the Executive.  Incidentally, South Africa has established a good precedent by providing for a 15-member JSC.

Increasing the distance between the Executive and the AG is absolutely vital if the latter’s position is not to be prostituted for political ends.  We have no record of how many instances there have been in the past where the Police and State Counsel did a professional job in carrying out difficult investigations and preparing to charge suspects in Court, only to find that, under improper pressure, the exercise is abandoned by the AG on the grounds of “a lack of sufficiently compelling evidence”.  For example, cases had been filed some considerable time ago against two persons accused respectively of rape and of murder (both with strong political pull).  With remarkable alacrity, the AG unilaterally withdrew the cases many months later, incurring the justified displeasure of the Court, which opined that he was not entitled to do so without its leave.  Given the likelihood that AGs will continue to use their powers wrongfully in the future as well, when called upon to do so, it is apparent that the need has arisen once again to reactivate the position of an autonomous Director of Public Prosecutions – but not under 18A, which renders democracy, the Rule of Law and good governance totally irrelevant.

What is the role of the AG with regard to the vetting of contracts entered into by State entities?  How did the infamous oil hedging contracts get past the AG, to whom we used to look up as the authority who ensured that such contracts are worded so that the potential benefits to the non-State parties are not greater than those to the State?  Now, having been involved in fighting the claims arising from these contracts, has the AG advised the Executive on the steps it needs to take to fix responsibility for the losses suffered and to help prevent future corrupt transactions of this nature?  We believe that the AG should not wait to be asked before offering advice to the Executive on how to safeguard the interests of the public.

Considering the number of loose ends that one can see in defining the roles of the AG and making them work, the public should be kept better informed on this subject.  Therefore, in order to effect the accurate dissemination of knowledge on the multiple functions of the AG, it would be greatly appreciated if Department of the AG were to produce an explanatory booklet containing a reasonably detailed description of the powers and duties of this critical public office.  The booklet should also contain proposals as to how the laws should be amended so that the AG may be better insulated from unhealthy coercive forces and work more effectively for the benefit of the People.

Dr A.C.Visvalingam
President, CIMOGG

The Citizens’ Movement for Good Governance (CIMOGG) has generally refrained from proposing any specific solutions to the ethnic conflict because successive governments have invariably gone against the advice given by moderate individuals and groups in this regard.  It would have been counterproductive for CIMOGG to have tendered yet more unsolicited advice that was bound to be ignored.  Even the interim recommendations made months ago by the Lessons Learnt & Reconciliation Commission (LLRC), within the circumscribed Terms of Reference given to it, have been largely ignored by the government. What will eventually happen to the recommendations contained in the Commission’s Final Report and the several earlier reports on solving the National Question is anybody’s guess.

Without going into the complexities of the so-called class and ethnic problems, there is little doubt that, if our governments had not progressively made a mockery of the Rule of Law and good governance, there would, for example, have been no JVP uprisings, or the demand for Eelam or a Muslim Provincial Council, or increasing attacks on the Police, who are called upon far too often to protect politically powerful wrongdoers as well as to impose on the public ill-thought out laws, rules and regulations.  In the absence of well-discussed and fair laws, properly administered, the average citizen, irrespective of group allegiances, is faced with the choice of suffering every kind of injustice in silence or resorting to violence.

Individual citizens, irrespective of race, religion, caste, gender or other affiliation, would probably have had occasion to feel, on some issue or another, that they were denied justice because of improper interference with the normal administrative and judicial processes.  Although the majority does not suffer the adverse effects of misgovernance to the quite same extent as the minorities (on account of the history of the past thirty years and more), many of the former who do not have political patronage and protection do.  This is an aspect of the reality that the minorities should not ignore.  In the interests of building a productive partnership with the majority, they should adopt an inclusive approach on such matters and work with the majority for a level playing field for everyone rather than concentrate solely on their own special problems.  The confrontational atmosphere that permeates discussion of minority problems will tend to become less sharp with time as the majority and minorities work together on broader national problems.  In any event, on the basis that unity is strength, it is in the interests of the minorities to join hands with the majority to safeguard the common rights of all Sri Lankan citizens.

The rights which are most often violated in Sri Lanka are probably freedom from wrongful arrest and indefinite detention, freedom from torture, the right to life and the right to information.  Some of us are liable, at some point of time, to be at the receiving end of these violations unless we happen to have powerful political backing.  Manifestly, what is required is for all citizens to demand jointly that there should be a stop to these perversions, which became rampant as a consequence of the barefaced violation of the 17th Amendment (17-A).  The situation became much worse after 17-A’s subsequent reincarnation in the form of the diabolical 18th Amendment (18-A) which was created by a constitutional coup d’etat that has converted Sri Lanka into a comprehensive dictatorship.

In their preoccupation with their own problems, which are certainly matters of the greatest consequence, minorities have totally lost sight of the many ways in which they should and could fight many other equally important causes jointly with the majority.  For example, assuming – however far-fetched it may be – that the North-East Tamils get “13-A plus devolution” within a unitary or even united Sri Lanka, the retention of 18-A will make complete nonsense of whatever they achieve on paper.  Consequently, the restoration and improvement of independent institutions for public administration and the dispensation of justice, as set out in 17-A, is of the foremost importance.  All thinking people knew that there were some imperfections in 17-A which had to be rectified, but the right answers are not to be found in 18-A.

All citizens, irrespective of whether they belong to the majority or the minorities, should make every effort to do whatever is necessary to counter the wildly undemocratic content of 18-A.  For a start, they should press loudly and clearly for the appointment of an independent Constitutional Council (CC) somewhat on the lines set out in 17-A.  How the members of the CC are to be chosen should, however, not be left in the hands of one man or one party or even Parliament alone.  An acceptable mechanism for ensuring that only persons of independence, integrity, ability and experience are selected as members of the CC can be designed.  CIMOGG, if called upon to do so as part of a constitution-making exercise, would be prepared to develop the framework of such a mechanism and submit it for wide public discussion.

Yet more cause for apprehension is that, in the course of time, there is bound to be yet another unfair Constitution foisted upon the People as an “urgent” matter where only a privileged few and the Supreme Court will be allowed to have a superficial glance at its contents some hours or a couple of days before it is rushed through a Parliament, of which the government members, post 18-A, have been allowed less independence of spirit than a collection of castrated sheep.  Citizens of every provenance should move quickly before they are forced to fall from the 1978 constitutional “frying pan” into a “fire” that would be much more incendiary. It should be obvious that, in the common interest, every citizen should oppose the surreptitious imposition of a new Constitution, with even worse provisions than the present one, being brought in to make vassals of all of those who do not belong to the privileged oligarchy.  This is a matter of concern not only for the majority but also for all the minorities.

It is heartening to note that there are some well-intentioned people who are trying to take steps, outside the ambit of governmental initiatives, to bring together the diverse peoples of Sri Lanka so that the enmities of the past may be given decreasing importance, even if the injuries and hurt caused are not formally forgiven or forgotten.  The 6 January 2012 appeal in the ISLAND by a group of thoughtful Tamils is a praiseworthy example of this kind of desire for concerted action. We welcome their initiative, just as several others have already done.  But how does one convert these good intentions into actions that will actually result in reconciliation and greater justice for all?  This is where proactive citizens, of whatever community or group, should not remain silent but get together and lobby vigorously to have all proposed future legislation opened out to considered public discussion and comment, and have a panel of independent experts, appointed by the CC, to help eliminate the usual resort to deliberate vagueness of concept and wording.

Not only will the minority automatically benefit by any improvement achieved in governance and the dispensation of justice, they will get to have a better rapport with the majority so that all could live and work together peacefully as Sri Lankans with a firm commitment to the welfare of the next generation.

President Mahinda Rajapaksa earned a vast measure of goodwill in May 2009 by defeating the LTTE, and went on to accumulate even more public approbation thereafter by employing his exceptional public relations skills.  In marked contrast, a number of his hangers-on have conducted themselves, from even earlier on, with an almost total disregard for public opinion and the President’s good name.  Their despicable behaviour has been increasingly eroding away the goodwill attached personally to the President.  In this situation, President Rajapaksa should be wary of thinking that the People of Sri Lanka will put up eternally with the arrogant and corrupt misbehaviour of those who are seen to be close to him.  Once a reaction sets in, even the most draconian of laws will not help to restore the status quo.  It mystifies the People as to why President Rajapaksa does not consider putting a stop to the lawless acts of the sycophants who surround him and thereby eliminate unwanted speculation as to why they are permitted to go their wayward ways.

The seeds of the destruction of the sovereignty of the People of Sri Lanka were sown by President Jayewardene’s writing of the 1978 Constitution, which provides for an apparently omnipotent President who is immune against legal suit.  In the early 1980s, the Supreme Court ruled that, whilst the President could not be summoned before a Court, there was no bar to his actions being challenged when they were in conflict with the Constitution or the Law.  Nevertheless, for various reasons, it has not been feasible to have this ruling consolidated.

Sri Lanka’s politicians’ and administrators’ increasing contempt for the law accelerated many-fold when President Kumaratunga, during her second term, insisted on going against the recommendation made by the Constitutional Council, under the 17th Amendment, to appoint a particular retired Judge to the post of Chairman of the Elections Commission.  Had she then acted in accordance with the letter and the spirit of the Constitution, the People’s rights would have been safeguarded and her stature in the Country enhanced significantly.  Collaterally, she would not be so openly denied the respect that is customarily shown to retired Presidents and Prime Ministers.

Her nominee and successor as President, Mahinda Rajapaksa, lost no time in destroying the 17th Amendment altogether.  He employed his acknowledged political dexterity and his brother MP Basil Rajapaksa’s renowned negotiating expertise to disembowel the UNP, figuratively speaking, and swallow its innards!  With MPs of various colours abandoning the platforms on which they were elected to Parliament so as to savour the irresistible flavours of the Rajapaksa gravy train, the President was able secure and control a two-thirds majority in Parliament without much further ado.  It did not take long for the monstrously destructive 18th Amendment to be passed by a captive group of MPs in Parliament, who meekly surrendered their independence to the will of the President.  Not a single MP of the ruling party had the courage to stand for principle and try to protect the People from what can safely be described as a suicidal journey into despotism.

The 18th Amendment has vested the Executive with the power to act with impunity, without regard to accountability or the welfare and rights of the People.  The consequent deterioration of the body politic must be viewed with the greatest foreboding.  A few examples should suffice to make this point.

We see an unceasing succession of reports in the media about a much-despised politician.  He is reliably believed to have physically attacked the genitals of a monk MP in Parliament. He was given a rough time by the employees of Rupavahini for having got an underworld character to assault a senior employee of Rupavahini.  He has snatched and damaged valuable cameras and equipment employed by the media to cover events of public interest. The whole Country knows how this man violated the human rights and dignity of a Samurdhi officer by “persuading” this State employee to allow himself to be tied to a tree for having been unable to attend a meeting called by this obnoxious character.  He had stated in a TV programme, seen by the general public and thousands of children, that he would like to suckle at the breasts of a well-known actress.  More recently, this cowardly thug, backed by an intimidating contingent of bodyguards, was shown on TV grabbing the shirt of a defenceless parent and slapping him for exercising the right to protest against a forcible money-collecting lottery exercise initiated by a school.  Some time ago he was reported to have escorted an underworld character through the VIP lounge at the Katunayake Airport. The list of his nauseous exploits and threats against anyone daring to cross his path is virtually endless.  He has repeatedly claimed that he is the one and only authority who decides what can be done in Kelaniya – even if not in the Peliyagoda Fish Market.  The incomprehensible part of this saga is that this opportunistic and shameless groveller is seen on TV constantly loitering around President Rajapaksa.  Could anyone seriously believe that the public could be anaesthetised into accepting President Rajapaksa’s close association with a man whose background is a perpetual exercise in foul and dishonest behaviour?

We have also seen pictures of a club-wielding mob near Vihara Maha Devi Park.  The excuse given by a senior Police officer regarding this phenomenon was that these clubs may have been necessary to keep aggressive dogs at bay!  The person who was responsible for this demonstration of underworld power was no doubt encouraged by this kind of official support to confirm his own perception that he was above the law.  The confidence that he could act with impunity and not fear any legal consequences must surely have been behind a subsequent assault on the wife of an election candidate whom he did not like and, worse still, the murder thereafter of a prominent politician and several others.  Who actually pulled the triggers of the multitude of weapons which were carried during the recent deadly confrontation between the well-known UPFA stalwarts is not the point at issue here. What is relevant is that more than two years after the end of the 30-years of the large-scale armed hostilities in our homeland, the Government has made no effort worth talking about to recover the tens of thousands of small arms in the hands of professional and amateur criminals, among whom there are undoubtedly a large number of politicians in power.

There are dozens of other lower-profile characters in public office who are robbing the People blind and are engaged in nefarious activities of every conceivable description.  They hide away from the open glare of the media but operate without fear in the confidence that any unlawful act of theirs, if exposed, can be “fixed” by remaining close to certain VVIPs.

The key point that concerns us is whether the President wishes to be remembered as a national hero and statesman or as a shortsighted politician who allowed the Rule of Law to be flouted and good governance relegated to the waste paper basket.  It is true that, by violating the public trust, an imperial lifestyle can be enjoyed for years just as Bokassa, the Duvaliers, Gaddafi, Idi Amin, Marcos, Mubarrak, Suharto and others did.  But what happened to them in the end? How do their fellow citizens remember them?  How do they compare with the exemplary Mandela and the reverence with which the whole world views him?  The lessons are there waiting to be learnt; it is only the will that appears to be lacking.

The People of Sri Lanka would undoubtedly want President Rajapaksa to distance himself from the rogues and criminals who are so much in evidence these days.  How he deals with them will decide how history will remember him.

In May 2009, CIMOGG wrote to the Press regarding several questionable features of the so-called “hedging” contracts entered into by the Ceylon Petroleum Corporation (CPC).  Whatever be the final outcome of the arbitrations and appeals that are involved, the public needs to look into this unsavoury episode from first principles, without being put off by the associated technical jargon.

The essence of CIMOGG’s May 2009 article titled Hedging Against Oil Price Changes is given in the next paragraph.  The full article may be found at www.cimogg-srilanka.org or at p145 of the CIMOGG book Good Governance and the Rule of Law.

What we said was that Minister A.H.M.Fowzie and certain officials of the CPC went abroad for a few days to learn about hedging in connection with petroleum purchases.  Despite price hedging being a skill which financial, economic and commodities specialists take years to master, the Minister and the CPC tried to create the impression that they would acquire during that short visit the necessary expertise to make an informed decision.  They conveniently ignored the inherent contradiction of getting the relevant training from the very banks that would obviously protect their own interests vis-a-vis the CPC.  It was entirely in keeping with the nature of this corrupt exercise that the cost of air fares, accommodation etc is reported to have been borne by the same banks.  Furthermore, the CPC officials concerned would have been well aware that many historical rapid oil price rises had been initially thought to be irreversible but that such increases were invariably followed by substantial drops to an intermediate level.  That so experienced an organisation expected prices to go up greatly but were most unlikely to drop significantly has all the appearance of having been a deliberate omission in favour of the banks.

It is known that, before Minister Fowzie and the CPC embarked upon the hedging exercise, a strong recommendation had been made to the Cabinet by Mr Ajith Nivard Cabraal, Governor of the Central Bank, to get the CPC to resort to price hedging when purchasing petroleum.  Whether this advice to go in for hedging was a prudent one merits examination. A good starting point for doing so would be to look first at lotteries and gambling, and then turn our attention to hedging.

All lotteries are run by organisations which retain a substantial percentage of the sales moneys to cover their administrative costs as well as a much larger percentage by way of profits or taxes.  Therefore, even if just one person buys all the tickets in a lottery and wins all the prizes, that person will get back only a part of the total investment made, whereas the organisation responsible for the lottery (which one might refer to as the “banker” for convenience) will always get a positive return from the retained part of the sales proceeds.  When a person buys only a few lottery tickets, he accepts the reality that the chances of winning are remote but, dreaming of the off chance that Lady Luck may award him a big prize, he does not mind taking the risk of losing his small investment.  By the inexorable laws of chance, regular bettors will, except in the rarest instances, lose money on the lotteries in the long term.  The fact that a percentage of the money the banker retains is usually diverted to a “good cause” helps to counteract one’s disappointment when there is no prize.  Moreover, the bettor risks only his own money, and this fact tends to keep his conscience clear.

Gambling in casinos is rather different.  Gamblers bet on an outcome they hope will be realised.  The frequency of occurrence of a favourable outcome is generally greater than in a lottery but the prizes are usually only a relatively small multiple of the value of the bet.  The odds of winning a bet vary from game to game but the methodology of the wagering process is so designed that the casino (“the banker”) always has a handsome profit over a period of time.  If there were no profit, the casino would go bankrupt pretty rapidly.  Unlike the self-discipline that one can easily exercise when buying a few lottery tickets, the atmosphere in a casino, combined with alcohol and many other attractions, makes chronic bettors reckless.  Thus, gambling in casinos is several degrees more damaging to one’s wallet than buying lottery tickets.  Although it may be argued that the gambler is risking only his own money, he may have many dependents whose lives are ruined by his losses.  To make things even less palatable, there is no “good cause” that is sponsored by the casino to solace one’s spirit.

We now turn to hedging.  When someone goes to a banker to help insulate himself against price rises of a commodity, what he really does is to gamble that his guesses or assessments of price rises and price drops will be superior to that of the banker, whatever the formula used to compute their respective liabilities.  The banker, on the other hand, would not remain solvent if he is going to be so generous as to ensure that his clients benefit every time.  In fact, he remains prosperous because his information on price trends, backed up by highly professional internal research and commercial intelligence units, is greatly superior to that of his clients.  However, just as much as the Goddess of Chance may occasionally help a lottery ticket buyer or a casino gambler, hedging clients may also be lucky once in a while. Nevertheless, it is the banker who will win more often than his clients.  Considering that the contribution of chance to the outcome in hedging is much less than the element of prior expert knowledge, it is an unequal battle of wits between a well-informed banker and a less-informed client.  In short, hedging is a form of speculation or gambling where the odds are badly stacked against the “bettor”.  For example, it has been revealed that, in two of the recent cases in dispute, the maximum that the CPC could have expected to gain was only US$3 Million, whereas the bank was able to make a claim for US$21 Million when prices started to drop – that is, excluding other consequential claims.

Everything about the CPC hedging exercise should give any rational person, with basic common sense, a sick feeling that the people of Sri Lanka have been taken for suckers yet again by our politicians and administrators.  One is forced to the conclusion that the Cabinet was not given a realistic briefing by the officials of the Central Bank and the Minister.  That this episode is not an isolated one is seen from the years of importing expired drugs and foods, polluted petrol and uncertified cement, undersized eggs and unmarketable chickens, not to mention Sri Lanka Cricket’s TV rights manipulations and any number of other foul rackets by politicians and public officials.

CIMOGG calls upon the Cabinet to insist on some degree of accountability being assigned to the various persons involved in this more than suspicious deal although, judging by past experience, we would be unwise to wager (sic!) even two cents on the likelihood that anybody important will be called upon to answer to their wrongdoings.