Article 3 of the 1978 constitution declares that sovereignty is in the People. Also, it is inalienable. It includes the powers of the government. Accordingly, people have the power to govern the country. The people shall be exercised their sovereign power via three main bodies which are;
- Legislative ⇒ Parliament
- Executive ⇒ President
- Judiciary ⇒ Courts, Tribunals
Accordingly, the legislative power of the people vested in Parliament. So, it has the power to control public finance as declare in the Article 148 of the constitution. Neither Executive nor Judicial bodies have such power.
- For an example: Sri Lanka’s Supreme Court ordered to bring down the island’s retail price of petrol. Many of intelligence in country voices by saying judiciary cannot involve as it’s vested via Article 148 of the constitution.
- Executive of the government also is obliged to send the annual budget proposal to the Parliament to get Public Funds.
To ensure the compliance of financial discipline in Public Corporations and other Semi-Governmental bodies in which the Government has a financial stake, the Committee On Public Enterprises (COPE) is a parliamentary committee established on July 21, 1979, by the Parliament of Sri Lanka. COPE established under the Standing Order 126 at the beginning of each Parliamentary Session and the Chairman is elected by the Members of the Committee at its first session. It consists of 31 Members. Its quorum is four.
Central Bank Sri Lanka
Central Bank Sri Lanka is the sole authority to issue currency. The main task of it is to manage the public money and credit system. It is also the agency that sets interest rates that banks usually follow when setting their own rates. Also, it acts as the agent of the Treasury to raise loan funds.
Hence, COPE has the power to investigate each function of Central Bank. As it is one of the main institutions which control the public finance.
On 27th of February 2015, the issue of government bonds has raised an enormous controversy. Also, it questions as to the competence of the Government of Sri Lanka and the Central Bank of Sri Lanka. Further, there are allegations of insider dealing.
President has signed the warrant to inquire the matter under Section 8 of Commissions Of Inquiry Act. Section 14 of the Commissions of Inquiry Act applies to the COPE also.
The allegations of insider dealing involve a private company named Perpetual Treasuries. One of the major shareholders of this company is Arjun Aloysius, the son-in-law Arjuna Mahendran (recently appointed Central Bank Governor). The issues arising from the controversy can be briefly stated as follows:
- The amount of debt accepted by Central Bank at the auction was vastly in excess of the amount that had earlier been communicated to the primary dealers who would be bid at the auction. Whereas the original announcement was for Rs 1bn, the amount accepted at the auction was Rs 10bn.
- Whether there was any need to issue 30-year bonds as opposed to those of shorter tenor.
- The interest rate resulting from the auction was much higher than the rate indicated by Central Bank to the primary dealers before the auction and the country has quite arbitrarily been landed with sustaining a very large debt at an unnecessarily high rate of interest.
- That the pattern of activity of Perpetual Treasuries before, at, and after the auction gives rise to reasonable suspicion of that company having acquired some inside privileged knowledge.