Gajalakshmi Paramasivam – 04 July    2016

No Profit No Loss in Public Service

‘As Ceylon Today learns, the AG has pointed out in his report that the government incurred a Rs 1.6 billion loss in only these two instances of Treasury Bond issues because of increasing the bid rate to 12.5 per cent exceeding the interest rate. However, the management of CBSL has failed to rationalize their decision to increase the bid rate.’

What would have been the Auditor General’s report if he had learnt that the Treasury Bond issue produced a profit of Rs.1.6 billion? Would he have declared that Mr. Arjuna Mahendran was suitable for the position of Governor of Central Bank? Good Governance says ‘NO’. Auditors are required to be Independent of Management – including of Public Enterprises in this instance. Auditors ought to observe through existing pathways. The pathway of the Auditor General needs to be different to that of the Management – so the auditor observes and does not participate.

As per the above news report :

‘Pointing out that only long-term captive areas are capable of purchasing the long-term Treasury Bonds, the AG questions why the State bodies like Employees' Provident Fund (EPF), Employers' Trust Fund (ETF) and Bank of Ceylon did not buy them directly.’

Unless there is a rule that requires these State enterprises to purchase such bonds from the Central Bank and that rule was breached – the Auditor General is going beyond his authority to criticize managements of these Public Enterprises. To remain independent – one needs Observation which needs to be clean of participation – mental and/or physical.

The Title  of CEO of Central Bank is developed through a particular pathway. The Title of Auditor General is developed through a different pathway. Indiscriminate criticism confirms that the Auditor General has failed to satisfy the fundamental requirements of an Auditor. The role of the auditor is to observe, verify and report whether the outcome shown reflects a ‘True & Fair View’ of the state of  Affairs of the Central Bank during that particular period. The Auditor General reports on what happened and whether the pathway that produced that outcome was within the laws governing that particular institution. The rules making up  the pathway travelled by the Audit office in its operational area  need to be different to the rules making up  the pathway travelled by the Central Bank in its operational areas. Rights and wrongs of one should not be used by the others for its own business. Any auditor who so uses the outcomes of clients for her/his own business purposes –  disqualifies her/himself from the position of Auditor. Auditor General of Sri Lanka Mr. Gamini Wijesinghe has done just that.

The Title of Central Bank Governor was developed through minds that forewent immediate enjoyment of pleasures for the work they did. This naturally develops a position. Any institution / family is a network of such positions developed by ourselves and/or  others. The relativity between those positions is confirmed through laws and rules that would connect the holders of those positions to each other. When the minds are connected – one naturally uses laws and  v.v. When the minds are not connected or  the laws are different – one needs to assess the other through outcomes produced and prevent the use of one’s laws to explain oneself or use the other’s laws without faith nor understanding.

Hence Equal Opposition in Parliament and Equal Opportunity Laws applicable in Multicultural areas – towards facilitating production of visible outcomes through which one relates. This renders the attraction of diversity.

Where the position is required to be independent of another – the outcomes need to be reported on for the purposes of the other but not ‘used’ in the business of the one required to impartially observe.

The next Central Bank Governor may need to produce strong outcomes to uphold the business of the Central Bank as it is now. How he does this is his business and that of others within Central Bank. The Auditor does not have the authority to praise or criticize on the basis of profits or losses. A loss could be an asset under certain circumstances. Some losses are necessary to save the status of the parent body with outsiders. A true banker would know that pathway far better than an Auditor. When the Auditor does his job to satisfy his position – there would be no space for the others’ business in his mind. The Sri Lankan Auditor General seems to be having much idle time by playing politics.