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How about some Yahapaalanaya for the private sector?

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The private sector is corrupt. No, it’s not the Janatha Vimukthi Peramuna, Frontline Socialist Party, one of the many parties that grew out of the Communist Party or one of those people who used to call themselves ‘left intellectuals’ that said it. It was the leader of the undisputed right wing party of Sri Lanka which is also the all-time favorite political party of the private sector who said it.

When Ranil Wickremesinghe says there’s hanky-panky in the private sector he has to be taken seriously not least of all because he is the Prime Minister, the Finance Minister and by the looks of it the supreme ruler of the country, never mind that the people did not exactly want him to be all this.

The corruption didn’t start yesterday, of course. Neither did it begin the day Maithripala Sirisena took oaths as the sixth Executive President of the country. It didn’t start during the tenure of Mahinda Rajapaksa. Private sector corruption began a long time ago; Marxists might argue that capitalism is by definition corrupt, so we would have to go back to the time when markets were formalized.

If the problem is part structural (the other part being, of course, the easy argument of inherent human frailty), then the solution should address flaws in relevant structures. This side of overthrowing the capitalist system, there’s a lot that can be done. In a word, regulation.

The Central Bank Bond fiasco offers some lessons. As things stand, the Governor is still not in the clear, the committee investigating what is possibly ‘indirect’ involvement only ruled out ‘direct’ involvement. Clearly, there’s something wrong in the appointment of the particular individual in addition to the absence of checks and balances that could stop wrongdoing and wrongdoers.
Clearly, one cannot fault the sharp-minded quick-buck-makers for taking advantage of loopholes in the system. The issue is to ensure there are no loopholes. These have to be identified. Moreover, a watchdog must keep an eye on weak spots that can be made weaker and eventually broken down. This is why even in a capitalist system it is imperative that there are men and women of integrity in regulatory bodies. That, and robust regulation.

What we have however are weak systems and compromised regulators. There are informal systems of operation which encourage wrongdoing. There are old boy networks that spring into action to bail out the old-boy thieves.

Ranil Wickremesinghe has had the courage to acknowledge that things are not right when it comes to the private sector. For too long, the focus has been on ‘corrupt’ and ‘inefficient’ state sector institutions and flawed institutional arrangements. For all the compliance requirements the Prime Minister’s statement clearly indicates intolerable levels of inadequacy.
It is time for a comprehensive review of the entire regulatory framework pertaining to the private sector. The rules have to be revisited. Holes have to be plugged. Procedures need to be established to ensure that the right regulators are appointed.

So far, the Prime Minister has not covered himself in glory with respect to his choices in personnel. Perhaps he would do better with the systems. As a first step he can decide to go beyond the rhetoric. Let us see.

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