No-faith motion against cabinet over hedging deal - Ranil

Monday, 01 December 2008 16:39The UNP will move a no-confidence motion against the entire government over the hedging agreement signed between Ceylon Petroleum Corporation and private foreign banks, said opposition leader Ranil Wickremesinghe.

He told the media today (Dec. 01st) that the cabinet-approved pact results in each Sri Lankan citizen getting into a Rs. 10,000 debt.

According to him, the CPC, already Rs. 200,000 million in debt, will have to be either sold or closed down, after the hedging agreement.

As the cabinet had given its consent to the paper presented by Petroleum Minister A.H.M. Fowzie on 24th January 2007, the no-faith motion by the opposition would be against the finance minister and all other members of the cabinet, he said.

The Mahinda Rajapaksa regime will definitely have to go for a general election to cover up the hedging agreement that takes the national economy to further ruin and squanders a massive amount of public funds, said Mr. Wickremesinghe.

Most media had been attempting to whitewash the government, without exposing corrupt deals like the hedging agreement, he charged.

The opposition leader said, "We accept the Supreme Court ruling that suspends the hedging agreement signed by the CPC that prevents a reduction of local prices when world market prices decline. However, according to what we have found out, not only minister Fowzie, but also the entire cabinet had known about it."

"We also have come to know about an attempt to destroy important documents relating to this hedging agreement. Therefore, I requested the Speaker today to take measures to protect all documents relating to this agreement at institutions like the Finance Ministry, Central Bank, Petroleum and Petroleum Resources Ministry and the CPC."

Mr. Wickremesinghe also said, "This agreement was based on a letter written by one Upul Arunjith on behalf of Concept Development Consortium of Canada to economic advisor Ajith Nivard Cabraal on 30th December 2005."

On 01st January 2006, another letter to Ajith Cabraal asked that the hedging agreement be implemented. This person called Upul Arunjith had again spoken with the Central Bank governor about this hedging deal on 05th October, 2006."

"Thereafter, Dr. H.N. Thenuwara, writing on behalf of the Central Bank, had informed him about the receipt of his letter, and that no outside help or advice is needed, since the Central Bank has all the knowledge needed to act in this regard."

"Then, Ajith Cabraal, on 06th September 2006, submitted to the Cabinet a proposal on how to maintain stability in the face of rising fuel prices in the world market."

"The cabinet decided to appoint a special committee to inquire into this. It comprised assistant governor of Central Bank Y.M.W.B. Weerasekara, Dr. H.N. Thenuwara, chief finance officer of Bank of Ceylon Saliya Rajakaruna, head of People's Bank's corporate banking Kapila Ariyaratne, Kanthi Wijetunga of the Ministry of Petroleum and Petroleum Resources, deputy director (finance) of CPC Lalith Karunaratne and finance management consultant of Finance Ministry V. Kanagasabapathi."

"This committee submitted its report in November 2006 to Dr. P.B. Jayasundara. In that, it proposed that hedging activities should begin and advised the use of 'zero cost collar' method for the purpose," Mr. Wickremesinghe said.

"Accordingly, the cabinet paper for its implementation was submitted by minister A.H.M. Fowzie in January 2007."

Before that, on 10th January 2007, Central Bank governor Ajith Nivard Cabraal had advised Asantha de Mel to begin the hedging activities with immediate effect."

"Thereafter, minister A.H.M. Fowzie submitted a cabinet paper on 13th January 2007 and the cabinet approved it."

"The cabinet said it had approved the agreement, to be implemented immediately, as the Central Bank had proposed."

"Therefore, the Cabinet, Petroleum Ministry, Central Bank, Finance Ministry and all others are involved in this deal."

"In the meantime, minister A.H.M. Fowzie submitted a cabinet paper on 17th November requesting the appointment of a committee to inquire into the situation that has arisen."

This committee comprised ministry secretary W.D. Ganegala, deputy secretary of the Treasury Dr. R.H.S. Amaratunga, director of the Public Accounts Department D. Widanagamachchi, CPC chairman Asantha de Mel, chief economics advisor to Central Bank Dr. P.N. Weerasinghe, additional director of Central Bank R.A.A. Jayalath, deputy general manager of CPC Lalith Karunaratne and others."

"As matters stand thus, it is clear that the entire cabinet is to blame for this. It is also clear that CPC is Rs. 200,000 m in debt."

"This Rs. 200,000 m has to be paid by the innocent, suffering people of this country. It is true the SC has ordered the suspension of payments to the banks. This hedging agreement is very disadvantageous for us."

"The president, as the finance minister, the entire cabinet, the Central Bank and the person who holds an unofficial ministerial portfolio are responsible for this agreement that brings massive loss to the country."

Responding to a question, Mr. Wickremesinghe said, "Under a UNP regime, such corrupt agreements will not continue. Everything will be terminated."

"Even after questioning about the steps under a future UNP regime, Kesara Gunawardena of 'Daily Mirror' writes that I am a weak leader. He writes that the UNP cannot gain power under my leadership. I would like to ask the media about what it had written about the hedging deal. After 'The Sunday' Times' reported about it, 'Daily Mirror' had to follow suit. 'Daily Mirror' has become the official newspaper of the JHU today," he added.