Hedging with no responsibility                                                                           

When Poker was a highly popular card game in America, different players had to deal the deck of cards to ensure there was no foul play. The person who was next in line to deal would be given a token, which was usually a knife, the handle of which was made of a buck’s horn. When the dealer’s turn was done he passed the knife; hence the term, ‘passing the buck.’ In modern usage though, the phrase is used to indicate the shifting of responsibility to others.

If the origins of the phrase came about because of a mechanism to ensure a fair deal for everyone, last week was quite the opposite. The buck was passed furiously and figuratively but in the end, the people of Sri Lanka had to be content with a raw deal: A loss that has been estimated to cost the country at least US$ 400 million.

The Supreme Court was to intervene in the matter last week when several individuals filed fundamental rights applications against the ‘hedging for oil’ agreement entered into by the Ceylon Petroleum Corporation (CPC).

In yet another landmark judgment, the Supreme Court ordered that cricket selector turned CPC Chairman Ashantha de Mel be suspended and severely questioned De Mel’s competence and capabilities to head a vital state venture of this nature.
Not quite content with that, the Court also suggested that President Mahinda Rajapaksa take over the duties and responsibilities of Petroleum Resources Minister A.H.M. Fowzie, relieving the veteran minister of his portfolio.

De Mel has already been replaced, but Minister Fowzie has been defiant. Making a statement in Parliament this week he said he did not wish to cause the slightest disrespect to the highest court in the land, but was keen to emphasise two issues.

Fowzie claims hedging was not his brainchild; instead it was the baby of Central Bank Governor Ajith Nivard Cabraal and that the governor had in fact suggested that the hedging agreement be entered into ‘without delay.’ The Minister was also keen to point out that the contract was entered into only after approval by the cabinet of ministers.

This raises a plethora of questions. The Supreme Court clearly found the conduct of Ashantha de Mel wanting, especially in the manner the deal was concluded; apparently heavily in favour of several banks with no protection for the state in the event of a sudden fall in world oil prices.

But de Mel, influential as he was, is a nobody in the political hierarchy – he is merely the chairman of the corporation concerned and for all intents and purposes a mere bureaucrat. Who then takes the political responsibility for the transaction?

The Supreme Court seemed to be of the opinion that Minister Fowzie is responsible, which is why it suggested that the minister be relieved of his portfolio. Minister Fowzie is adamant that this was not his idea but that of the Governor of the Central Bank. Then, Fowzie was also hinting that if he is in any way to shoulder blame, then the entire cabinet should do so, because he claims the agreement had the sanction of the cabinet.

This blame game will take the country nowhere. De Mel’s resignation may appease a few and perhaps even Minister Fowzie’s resignation will satisfy his detractors. But, such resignations are only imposed upon them by the Supreme Court, rather than being offered voluntarily and indicate that neither Fowzie nor de Mel nor Ajith Nivard Cabraal for that matter are taking any responsibility for their actions.

Contrast this attitude with what transpired in neighbouring India in the aftermath of the recent terror attacks in Mumbai. A host of ministers and key officials resigned. No one asked them to and some of them were only indirectly responsible for the events that occurred – yet they felt resigning were the right thing to do.

That culture of responsibility appears to be sadly lacking south east of the Palk Straits. Here is a deal that was obviously ill-conceived and ill-advised, leading to a loss of massive proportions; an amount of money that has been estimated as being sufficient to fund the war effort for three months. Yet, there is no sense of responsibility or accountability for the loss.

We are not for a moment interested in apportioning blame to anyone in particular. In fact, that will get us nowhere as a nation. But, what we would wish for is that there is transparency in transactions of this nature, and that there is a clear line of responsibility that can be delineated when matters take a turn for the worse.

The recently concluded ‘Waters Edge’ case was again an instance of bungling and lack of responsibility. There too, then President Chandrika Kumaratunga’s defence was that the decisions were taken with the sanction of the cabinet.

It is time that this blame game stops at some point. Who passes the buck to whom is immaterial as finally the buck has to stop within the boundaries of the government in power. Therefore, it augurs well for the government if maximum transparency is ensured in mega transactions of this nature at least in the future.