Features
Overall climate of sleaze
By Michael Patrick O’Leary
When asked about Conservative Party chairman Nadhim Zahawi’s £5 million payment to HMRC (His Majesty’s Revenue and Customs) by Labour MP Alex Sobel at prime minister’s questions (PMQs) on Wednesday, January 18, Rishi Sunak said his “honourable friend” had already addressed the matter in full, and there was nothing more Sunak could add. Nothing to see, move on. At prime minister’s questions on Wednesday January 25, 2023, Sunak’s line was that he had passed the matter on to Sir Laurie Magnus, his ethics advisor, for a full investigation so he was not able to discuss it. Move on.
Magnus found that Zahawi breached the ministerial code on seven separate occasions by repeatedly failing to declare his tax affairs. Magnus also decided that Zahawi had lied to the media by denying that he was under investigation by HMRC. Subsequently, he failed to correct the record.At PMQs on February 1, Sunak dodged jibes that the whole world knew about Zahawi’s tax dodging but he appointed him anyway.
Vigilante Man
Within hours of my article on this issue being published in the Sunday Island last week, Rishi Sunak sacked Nadhim Zahawi. I will not claim the sole credit for that. If any one man can claim credit for the toppling of Zahawi it is Dan Neidle. Who he? Neidle is a retired tax lawyer. Neidle spotted an item in the Independent newspaper which aroused his interest. The report claimed that Zahawi had been the subject of an investigation by the National Crime Agency, the Serious Fraud Office and HMRC.
Neidle started digging at Companies House and elsewhere and found that Zahawi was linked to a Gibraltar-based company called Balshore Investments, which held shares in YouGov, the polling firm Zahawi founded in 2000. Balshore was owned by a trust controlled by Zahawi’s parents. Balshore Investments held the founder shares in YouGov, which normally Zahawi would have received himself. Balshore had made a £99,000 gift to Zahawi out of its YouGov dividends — direct evidence that he benefited from the trust. Because Balshore was based in Gibraltar, about £24 million of gains on its YouGov shares, plus dividends, went completely untaxed.
Neidle also discovered that around the same time, Zahawi’s UK property business had received £26 million of unsecured loans from an undisclosed source. Neidle’s theory was that Zahawi did not want to be taxed on profits from his YouGov shares, so he put them in the company owned by his parents’ trust; he still regarded them as his assets, so he accessed the cash through gifts and (unsecured) loans. Neidle knew that “there are half-a-dozen tax rules designed to stop this sort of thing.” Neidle surmised, accurately as it turned out, that there was approximately £3.7 million in tax that Zahawi should have paid.
SLAPP in the Face
Neidle published his findings on his Tax Policy Associates website on July 10 and posted a thread on Twitter. He posted further findings on July 13. On July 16, he received a message from a libel partner at Osborne Clarke, who wanted to speak “off the record”. Later that day Osborne Clarke sent an email demanding that Neidle retract his allegation of “dishonesty” that same day and said that if he published the email there would be “serious consequences”.
The term SLAPP (strategic lawsuit against public participation) refers to a lawsuit issued with the intention of scaring off critics and publishers. Neidle is clearly no shrinking violet. On July 22, he alerted the SRA (Solicitors Regulation Authority) to the fact that Osborne Clarke were sending secret libel letters. On November 29, the SRA sent out a general note warning solicitors to stop sending libel letters that falsely claim to be confidential.
Neidle thinks that the libel issue is the most important in this case. He told Times Radio, “I had no idea that a senior politician could say things that were just not true and threaten to take legal action on that basis.” Neidle was not one to be cowed. “Zahawi and his advisers made the tactical mistake of accidentally SLAPPing someone with plenty of financial resources, time, litigation experience, and plenty of contacts and friends in the legal, tax and media worlds. I’m sure Zahawi spent a small fortune on advisers — but my team would probably have cost ten times as much (had they charged me). Goliath accidentally started a fight with a bigger Goliath.”
This is a government of bullies, con men and liars. Bad news about the deputy prime minister, “randomly rude Raab”, continues to surface.
Incompetence at the Heart of the British State
HMRC insiders said major blunders had led to its releasing incorrect information. Officials say the department failed to reveal to the Financial Times in response to a query that Zahawi was under investigation because they did not do a broad enough search. HMRC now admits that it failed to properly look into the issue. The organization responsible for collecting the nation’s taxes was too incompetent to answer a basic question.
The HMRC investigation into Zahawi began in April 2021, and he had a meeting with officials in June 2021. Did they fail to make it clear that he was under investigation? Zahawi told Magnus that he had failed to realize it was a formal investigation. Magnus said he should have realized it was an investigation and treated it as a “serious matter”. It looks as though Zahawi may have started negotiating a settlement with HMRC while he was chancellor, from July 5 to September 6, 2022. That is a monstrous conflict of interest. It is unbelievable that Sunak knew nothing about this. Every journalist in London knew that the man responsible for the nation’s taxes had paid a huge fine for tax dodging.
Careless People
Zahawi’s tried to downplay the HMRC’s fine by saying that they had not criticized him harshly because they said his “error” was “careless and not deliberate”. This is disingenuous on Zahawi’s part as he must be aware (as a successful businessman who was briefly chancellor of the exchequer) that HMRC are using technical terms. They are not absolving him in any way. If they had judged that his offence was deliberate the penalty would have been even higher. By any normal standards Zahawi’s efforts to avoid tax were premeditated and persistent not accidental.Zahawi was careless back in 2013 when he got caught up in the MPs’ expenses scandal and “apologized unreservedly” after it was reported that he claimed £5,822 expenses for electricity for his riding school stables and a yard manager’s mobile home.
A joint investigation by Open Democracy, Source Material and the Times has revealed further murky financial dealings by Zahawi. Crowd2Fund was set up by Chris Hancock, the brother of Zahawi’s political ally Matt Hancock (who was health secretary responsible for Covid restrictions until he was caught breaking the rules himself by snogging in his office) and has benefited from political decisions. It was, for instance, one of ten companies selected to take part in a Treasury and Department of International Trade programme aimed at giving fintech businesses the chance to profit from the Australian market.
One of Zahawi’s most significant moves in his brief period as chancellor was to introduce legislation to further deregulate financial services. He claimed the Financial Services and Markets Bill would “unleash growth” by replacing EU laws with “agile” regulation for the UK. That seems like a careful move to protect his own profits. This is not just carelessness.
The Zahawi affair gave Keir Starmer the opportunity to embarrass Sunak by referring to his own family’s tax affairs. Sunak’s wife, Akshata Murty, has £700m worth of shares in Infosys, the Indian tech company founded by her father. These have earned her tens of millions of pounds in dividends in recent years. In April last year, it was revealed that Murty saved millions of pounds while living in No 11 by using non-dom status to minimize her tax bill. News has just broken that Infosys is in dispute with HMRC over a corporation tax bill of about £20m.These are people who are careless about the sufferings of others but who take great care to maximize their profits.
Lack of Trust
A survey conducted by pollsters Omnisis, found that 65% of British voters now agree with the statement that Rishi Sunak’s party is “institutionally corrupt”, with just 18% disagreeing. Just 31% say the same of the Labour Party. Omnisis found that 72% also agreed with the statement that senior members of the Conservative party are “more interested in personal gain than serving the public” with just 16% disagreeing.
Sunak’s basis of support was and is shaky. His political skills are meagre and he has few allies. He appointed some dodgy characters in order to become leader and has clung on to some of them in a doomed attempt to unify the party. One of his dodgy allies is Dominic Raab, who is unlikely to survive the report into allegations of bullying against him. Starmer made strong challenges on this at this week’s PMQs and will continue the attack in coming weeks.
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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