Sakwithi Ranasinghe is virtually crucified. Stable gates are tightened. That should make everybody happy – at least till next such event. Time to wipe out the entire episode from mass reminiscence and move to cricket, if not Kilinochchi.
So this might be my last post on Sakwithi. (BTW, I will appear in TNL’s Bihidora on Wednesday 9.30 pm to speak on the subject.)
Nalaka Gunawardene disrobes the media prostitution. The very media now chastise Sakwithi sir, once willingly slept with him to build his larger than life image. Media moguls could have been a bit more discretionary on advertisements to minimize the damage. Apparently they did not care and the gullible mice followed the Pied Piper. So how ethical is it for media to wash its hands and shed crocodile tears now? (Ironically, ‘Lankadeepa’ of Sept 28 simultaneously brands D. K. Udayasiri of Sakwithi’s ilk as a bogus or ‘hora’ investor in its lead news, and carries a half page ad for him inside!)
Let me take on the other puritan – The Central Bank of Sri Lanka.
I do NOT – repeat NOT – blame Central Bank for not playing the role of the regulator, it isn’t. Central Bank ‘s mandate is limited only to supervise registered finance companies, and Sakwithi sir was not within that category. He should have been taken care by the Police, but what use blaming a force headed by an IGP who expects video clips from rape victims? I hear few SPs and ASPs are among those who were taken for a ride by Sakwithi sir. I am not surprised.
I blame Central Bank for a different reason – creating the breeding ground for Sakwithis.
It is simple arithmetic. Inflation is as high as 25-30%. Maximum interest commercial banks pay for fixed deposits is 16-18%. Registered finance companies go a little further but still cannot catch the inflation demon. So even a fifth grader can figure out if you leave your money at a bank, by the end of the year you are worse off.
Investing in real assets is the only intelligent option to beat inflation, but not everyone is wise. Plus there are issues with real assets. Lands do not come in customizable sizes and gold is difficult to protect. So when Sakwithi says he offers Rs. 4,000 per month for a deposit of Rs. 100,000 (that is about 50% annual interest) they jump in without thinking twice.
It is not that they are greedy. They are made to run non-stop for mere survival. When the formal financial sector cannot address their needs they turn for informals. Sakwithi Ranasinghe, strictly speaking, might not have been a crook- he could have been an investor who failed by taking risks too high. (not that I endorse it) An interest rate of 50% is not as high it seems for an investor in construction industry. Minus inflation it is about 20% and building material prices escalate at a higher rate.
If Central Bank thinks they can stop Sakwithis by placing advertisements in newspapers and exposing few like him once in a while they are badly mistaken. It is like trying to control Dengue by killing mosquitoes. No matter how many killed, mosquitoes will be there as long as their breeding grounds exist. So do risky investments.
None other than W. A. Wijewardene, the very Deputy Governor of Central Bank, recently equated ‘Inflation’ to ‘terrorism’. If so, Sakwithi is a suicide bomber. Sheer vigilance is necessary, but not adequate to prevent him. Death of one suicide bomber does not prevent others. It is a larger game. Whether it likes or not Central Bank should take the inflation bull by its horns, sooner than later. Unless it does so, there is little use in blaming Sakwithi Ranasinghes.