This idiom – where just a few people are standing up for ‘Good against Evil’ – is a reflection of the state of affairs in Sri Lanka as another chairperson of the Sri Lanka Securities and Exchange Commission (SEC) quit in disgust on Friday in the face of the growing power of a mafia of powerful traders who have taken control of the market.
Thilak Karunaratne, a veteran politician, had taken an even tougher stand against alleged market manipulation than his predecessor Indrani Sugathadasa, who also pushed for reforms but was unable to withstand the pressure.The governing authorities including President Mahinda Rajapaksa and Treasury Secretary P.B. Jayasundera wilted under the pressure of this powerful lobby whose growing debts amounted to around two billion rupees from margin calls by investing in penny (cheap) stocks and the latest move has sent a negative signal to the international community. This is similar to the Government’s expropriation of private assets last year.
The crisis in the stock market is as bad as the fiasco at the ongoing GCE ‘A’ level examination where every paper has raised questions, ruining the future of generation of young people. In the words of our widely-read columnist Kajanga Kulatunga, “To lose one Chairperson is unfortunate. To lose two in under a year is downright disgusting.”
He said: “As a retail investor and small shareholder your interests are protected by a strong regulatory framework. The framework, when implemented, provides a degree of fairness to small investors who can’t have the execution power of institutional investors. Unfortunately, these protections have started to give way as thugs try to recoup losses from bad businesses to cover their dues to still other thugs. They see a strong regulator as a nuisance on their journey to steal from the little guy to cover their losses. Sort of like a perverse Robin Hood.”
Institutions like the Ceylon Chamber of Commerce (CCC) and the Sri Lanka Institute of Directors, forming the cream of the country’s corporate circuit among whom are big-time investors in the stock market, joined the chorus of protests and condemnation over the appalling sequence of events at the SEC – over the past two years – culminating with Karunaratne’s exit. The CCC hierarchy had also met the outgoing regulator a few months after he took office, promising their fullest support to ensure a clean and well-regulated market.
Over the past two weeks, scurrilous emails have been floating in the market accusing sections of the media who have been taking up the cause of a regulated market that would provide an equal platform and a level-playing field for all investors, big or small.
These poison-pen letters and mails in the SEC drama were sent to the Business Times (BT) being among media accused of bias. SEC administrators and independent journalists were accused of being ‘traitors’, ‘unpatriotic’ and ‘anti-government’ – echoes of the campaign against those raising their voice against alleged human rights violations during the last stages of the war against the LTTE. Then, any person who stood for freedom, civil liberties or the rights of individuals – whether of combatants or non-combatants – was labeled a traitor and risked persecution or abduction as proved later.
Obviously caught with their pants down in countering governance, transparency and ethics and in the desperation to make good their losses, this band of investors has as economist Harsha de Silva describes instituted a “regulatory capture’ where the regulator operates at the bidding of a chosen few investors – having got ‘rid’ of former Director General Malik Cader and Ms Sugathadasa, who despite being the wife of Presidential Secretary Lalith Weeratunga, was unable to withstand the pressure of this mafia.
nother tactic used by the group, again in desperation, is accusing journalists as being a mouthpiece of the opposition which has been raising the mafia control of the markets, in and outside Parliament. Little do they realize – in their arrogance – that every appointment at the SEC (Karunaratne and Sugathadasa) is made by the President himself. Thus calling for their removal which ultimately succeeded is directly accusing the President of not appointing the right (or their choice?) person for the job. Will they resort to the same tactics when the new chairperson is appointed unless that individual is ‘amiable’ towards these traders?
No decent and right-thinking Sri Lankan professional will now stick his or her neck out in taking up positions like this where musical chairs are played at the highest level, making Sri Lanka the laughing stock of the world.Those critics who blame the BT and other journalists for’ supporting the SEC’ in doing what is right, are either unaware or choose to ignore events in 2004 when a huge scandal hit the market. The SEC chairperson himself was under investigation for insider trading (those were the days when there was some independence) and the BT was of the view that he should resign and prove his innocence, if so, outside, rather than be in a position where an investigation could be scuttled.
The rough-house tactics (scurrilous mails included) used in the stock market is no different to the thuggery used in recent times in all spheres of public activity. Critics of the government have often referred to Sri Lanka as being a ‘failed state’. The country is heading down that path sooner or later if decent people fail to stand up and stop the collapse of democracy, good governance and the rule of law.