-By Dr Piyadasa Edirisuriya (Former academic -Monash University, Melbourne, Australia)
(Lanka-e-News -17.Dec.2024, 8.00 AM) As Sri Lanka welcomes a new President and a new government, recent reports shed light on nationwide anti-corruption efforts. Throughout the election campaign, the current president emphasized the scrutiny of widespread bribery allegations once assuming power. It is crucial to recognize that addressing corruption and bribery requires evaluation within the existing system, which has not undergone significant changes despite the appointment of new officials. This system has been in place for many years, and the number of cases processed by it has not notably diminished instances of corruption. This indicates the system's limitations in effectively addressing numerous corruption allegations. Moreover, considering the new president's brief time in office, achieving a comprehensive reform may pose challenges in the short term. According to Transparency International's 2023 Corruption Perceptions Index, Sri Lanka scored a 34 on a scale from 0 to 100, indicating a high level of perceived corruption. This score has been declining steadily over the past few years, reflecting the worsening situation. The purpose of this article is to show the existing anti-corruption framework in Sri Lanka and propose a better corruption elimination organization structure.
Corruption refers to dishonest or unethical behavior by individuals, typically in positions of power or authority, for personal gain. This can include actions like bribery, embezzlement, fraud, nepotism, or the misuse of public office for private benefit. Corruption undermines trust in institutions, hinders economic development, and can lead to social inequality. It can occur in both public and private sectors and often involves a breach of legal or moral standards.
Corruption in Sri Lanka has been a significant and persistent issue, impacting various aspects of the country's political, economic, and social life. It is seen in many forms, including bribery, nepotism, embezzlement, and misuse of public funds.
1. Political Corruption
Misuse of Public Office: High-ranking officials and politicians have been accused of using their positions for personal gain, including the misallocation of state resources, favoritism in awarding contracts, and influence over judicial processes.
Nepotism and Cronyism: Family members and close associates of politicians often receive preferential treatment, leading to inefficiency and a lack of meritocracy in public administration.
Electoral Corruption: There have been allegations of vote-buying, manipulation of voter lists, and other forms of electoral fraud, undermining the democratic process.
2. Economic Corruption
Mismanagement of Public Funds: Corruption has led to significant financial losses for the state, with public funds being diverted for private use including extravaganza and self-glorifying events/activities. This has affected infrastructure development, public services, and social welfare programs.
Foreign Investment: Corruption has deterred foreign investors, contributing to economic instability and limiting opportunities for growth and development. There are many reports that incidents of politicians and bureaucrats openly demanding commission payments to approve projects.
Debt Crisis: Mismanagement and corruption have contributed to Sri Lanka's debt crisis, which has had severe consequences for the economy and the population.
3. Judicial Corruption
Influence on the Judiciary: There have been concerns about the independence of the judiciary, with allegations that political influence and bribery have compromised the integrity of legal processes.
Lack of Accountability: Corruption cases involving powerful individuals are often not prosecuted or are handled with leniency, leading to a culture of impunity.
4. Public Perception and Impact
Erosion of Trust: Corruption has led to widespread public distrust in government institutions and officials. This lack of trust has fueled social unrest and protests.
Impact on Poverty and Inequality: Corruption has exacerbated poverty and inequality, as resources meant for public welfare are often siphoned off for private gain.
5. Efforts to Combat Corruption
Anti-Corruption Agencies: Institutions like the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) have been established to combat corruption, but their effectiveness is often questioned due to political interference.
Civil Society and Media: Civil society organizations and investigative journalism have played crucial roles in exposing corruption, though they face significant challenges, including threats and intimidation. Apart from the journalists and activists, general public use social media in helping to expose corruption in many occasions.
6. Recent Developments
Economic Crisis and Corruption: The economic crisis that escalated in 2022 brought corruption to the forefront of public discourse, with mass protests demanding accountability and systemic change. The crisis highlighted the long-term consequences of corruption on governance and economic stability.
In summary, corruption in Sri Lanka is deeply entrenched and poses a significant barrier to the country’s development and governance. Efforts to address corruption require a combination of legal reforms, political will, and active participation from civil society.
The Bribery Commission in Sri Lanka is the leading agency on any-corruption activities, formally known as the Commission to Investigate Allegations of Bribery or Corruption (CIABOC). It is an independent body responsible for investigating and prosecuting cases of bribery, corruption, and other forms of public sector misconduct. CIABOC was established under the Bribery Act and is one of the key institutions in the fight against corruption in Sri Lanka.
Investigate Complaints: It can receive complaints from the public regarding bribery or corruption and can initiate investigations.
Prosecute Offenders: CIABOC has the power to bring cases before the courts and prosecute individuals accused of corruption or bribery.
Prevent Corruption: It also focuses on preventive measures, including awareness programs and recommending policy changes to reduce opportunities for corruption.
CIABOC operates independently of other governmental institutions, which is crucial for maintaining transparency and integrity in its operations. The commission plays a critical role in upholding the rule of law and ensuring that public officials and others are held accountable for corrupt activities.
CIABOC in Sri Lanka has faced several issues and challenges over the years that have affected its effectiveness in combating corruption. Here are some of the key issues:
1. Lack of Independence
Political Influence: CIABOC has often been criticized for its perceived lack of independence. Political interference is a significant concern, with allegations that the commission is sometimes used to target political opponents rather than addressing corruption impartially.
Appointments: The process of appointing the commissioners has also been questioned, with concerns that appointments may be influenced by the government in power, potentially compromising the commission's independence.
2. Limited Resources
Budget Constraints: CIABOC has faced financial limitations that have hindered its ability to carry out thorough investigations and maintain operations at full capacity.
Insufficient Staffing: The commission has also struggled with a lack of adequately trained personnel, including investigators and legal experts, which affects its efficiency and effectiveness.
3. Inefficiency and Delays
Prolonged Investigations: Investigations carried out by CIABOC have been criticized for being slow and inefficient, leading to delays in the prosecution of cases.
Backlog of Cases: A significant backlog of cases has built up over time, with many investigations and prosecutions pending for years, reducing public confidence in the commission's ability to deliver justice.
4. Low Conviction Rates
Challenges in Prosecution: CIABOC has a relatively low conviction rate, which raises concerns about the quality of investigations and the effectiveness of prosecutions. This can be attributed to various factors, including insufficient evidence, legal loopholes, and the influence of powerful individuals.
Judicial System Challenges: The broader judicial system in Sri Lanka, including long court processes and the potential for legal appeals, also contributes to the difficulties in securing convictions.
5. Public Perception and Trust
Lack of Public Confidence: Due to the issues mentioned above, there is a general lack of public confidence in CIABOC's ability to tackle corruption effectively. Many people view the commission as ineffective or as a tool of political retribution rather than a genuine anti-corruption body.
Awareness and Accessibility: There is also a need for greater public awareness about how to engage with CIABOC, and for the commission to be more accessible to the public, particularly in rural areas.
6. Legislative and Structural Limitations
Outdated Legal Framework: The legal framework under which CIABOC operates, primarily the Bribery Act, is considered outdated and in need of reform to address modern forms of corruption more effectively.
Coordination with Other Agencies: CIABOC sometimes faces challenges in coordinating with other law enforcement and governmental agencies, which can impede its investigations.
7. International Pressure and Standards
Global Expectations: As a member of international anti-corruption conventions, such as the United Nations Convention against Corruption (UNCAC), Sri Lanka faces pressure to strengthen CIABOC and align it with global standards. However, the commission has struggled to meet these expectations fully.
Apart from the CIABOC, there are several government organizations which are responsible for addressing and combating corruption. These institutions work together to promote transparency, accountability, and integrity within the public sector. Here are the key organizations involved:
1. Financial Crimes Investigation Division (FCID)
Role: The FCID, a specialized unit within the Sri Lanka Police, focuses on investigating financial crimes, including money laundering, fraud, and other corruption-related offenses.
Key Functions: Investigating complex financial crimes, gathering evidence, and collaborating with other law enforcement agencies.
2. Attorney General's Department
Role: The Attorney General’s Department provides legal advice to the government, represents the state in legal proceedings, and prosecutes criminal cases, including those related to corruption.
Key Functions: Legal representation, prosecution of corruption cases, and advising government agencies on legal matters related to corruption.
3. Auditor General's Department
Role: The Auditor General’s Department is responsible for auditing the financial accounts of government institutions and ensuring that public funds are used efficiently and in accordance with the law.
Key Functions: Conducting audits, identifying irregularities, and reporting on financial mismanagement and corruption in government agencies.
4. Commission of Inquiry
Role: Commissions of Inquiry are temporary bodies set up by the President to investigate specific issues, including allegations of corruption in particular sectors or incidents.
Key Functions: Investigating specific cases or sectors, compiling reports, and making recommendations for legal or administrative actions.
5. Parliamentary Committees
Committee on Public Enterprises (COPE):
Role: COPE is a parliamentary committee that examines the accounts and performance of public enterprises. It identifies mismanagement, inefficiency, and corruption in state-owned enterprises.
Key Functions: Reviewing financial performance, ensuring accountability, and making recommendations for corrective actions.
Committee on Public Accounts (COPA):
Role: COPA examines the financial reports of government ministries, departments, and other public institutions to ensure that public funds are spent properly.
Key Functions: Auditing government expenditures, identifying misuse of funds, and recommending improvements in financial management.
6. Public Service Commission (PSC)
Role: The PSC oversees the appointments, promotions, transfers, and disciplinary control of public officers. It plays a role in ensuring that public servants adhere to ethical standards and are held accountable for corrupt behavior.
Key Functions: Disciplinary actions, enforcing standards of conduct, and promoting transparency in the public service.
7. National Procurement Commission (NPC)
Role: The NPC oversees the public procurement process to ensure transparency, competition, and fairness in the awarding of government contracts.
Key Functions: Regulating procurement practices, preventing corruption in public contracting, and ensuring compliance with procurement guidelines.
8. Public Finance Department
Role: Part of the Ministry of Finance, the Public Finance Department manages the government’s finances and monitors expenditure to prevent misuse of public funds.
Key Functions: Budget oversight, financial management, and ensuring proper use of public resources.
These organizations are crucial to Sri Lanka's efforts to curb corruption and maintain good governance. They operate under various legal frameworks and often collaborate to address complex corruption cases and promote accountability in the public sector. However, irrespective of having a large number of organizations to combat corruption, results are not encouraging.
When Pandora Papers were obtained by the International Consortium of Investigative Journalists (ICIJ) and released in 2021, there were allegations against well-known Sri Lankans. It was alleged about an accumulated overseas wealth by a relative of a leading politician and her husband. According to the Pandora Papers, they have millions of dollars stashed abroad. Were there any investigations? If there were, what was the outcome? This is a clear indication that we need to do something to address the issue of corruption.
Financial intelligence is a critical tool in the fight against financial crime. Financial crimes include a wide range of illegal activities involving the theft or mismanagement of money, such as fraud, money laundering, terrorist financing, insider trading, and embezzlement. Financial intelligence involves gathering, analyzing, and utilizing financial data to detect, prevent, and respond to these crimes.
Anti-Money Laundering (AML) Programs: Banks and financial institutions implement AML programs that use financial intelligence to monitor transactions for signs of money laundering. Suspicious Activity Reports (SARs) are filed with authorities when suspicious transactions are identified.
Counter-Terrorism Financing (CTF): Intelligence agencies track financial flows to prevent funding from reaching terrorist organizations. This may involve monitoring donations, wire transfers, and other financial activities that could be used to support terrorism.
Forensic Accounting: In cases of corporate fraud or embezzlement, forensic accountants use financial intelligence to analyze company records and identify where funds were diverted or misused.
Global Cooperation: Financial intelligence units across different countries collaborate to tackle cross-border financial crimes. This cooperation is essential in dealing with crimes like tax evasion, corruption, and organized crime, which often involve complex international financial networks.
The Financial Intelligence Unit (FIU) of the Central Bank of Sri Lanka (CBSL) is a specialized agency responsible for the detection and prevention of money laundering, terrorist financing, and other financial crimes within Sri Lanka. It was established under the Financial Transactions Reporting Act, No. 6 of 2006, and operates as an independent entity within the CBSL.
Functions of the FIU of Sri Lanka.
Collection of Financial Information:
The FIU collects financial information from various reporting entities, including banks, financial institutions, insurance companies, securities firms, and other designated non-financial businesses and professions. These entities are required to report suspicious transactions, large cash transactions, and other types of transactions that may indicate potential money laundering or terrorist financing.
Analysis of Financial Data:
The FIU analyzes the data it receives to identify patterns, trends, and anomalies that could indicate illegal financial activities. This analysis helps in detecting money laundering, terrorist financing, and other financial crimes.
Dissemination of Intelligence:
Once suspicious activities are identified, the FIU disseminates financial intelligence to relevant law enforcement agencies, such as the Sri Lankan Police, the Criminal Investigation Department (CID), and other regulatory authorities. This intelligence is crucial for the investigation and prosecution of financial crimes.
Regulatory Oversight:
The FIU monitors compliance with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws and regulations in Sri Lanka. It ensures that reporting entities adhere to the requirements for customer due diligence (KYC), record-keeping, and reporting of suspicious activities.
Capacity Building and Training:
The FIU provides training and guidance to financial institutions and other reporting entities to help them recognize and report suspicious activities effectively. It also conducts awareness programs to improve understanding of AML/CTF obligations.
Collaboration with International Bodies:
The FIU of Sri Lanka cooperates with international financial intelligence units and organizations, such as the Egmont Group, to share information and intelligence on cross-border financial crimes. This collaboration helps in combating transnational money laundering and terrorist financing activities.
Policy Development:
The FIU contributes to the development of national policies and strategies to combat money laundering and terrorist financing. It also provides recommendations to the government on necessary legislative changes and improvements to the AML/CTF framework.
Risk Assessment:
The FIU conducts national risk assessments to identify and assess the money laundering and terrorist financing risks faced by Sri Lanka. These assessments help in prioritizing resources and efforts to address the most significant threats.
The FIU of Sri Lanka, which is just a department of the Central Bank, like many financial intelligence units globally, faces several challenges and issues in its efforts to combat money laundering, terrorist financing, and other financial crimes. Some of the key issues include:
1. Resource Constraints
Limited Personnel and Budget: The FIU may face limitations in terms of staffing and financial resources, which can impact its ability to effectively analyze large volumes of financial data and conduct thorough investigations.
2. Data Quality and Completeness
Inconsistent Reporting: Some reporting entities may fail to comply fully with reporting requirements or may provide incomplete or inaccurate data. This can hinder the FIU's ability to detect suspicious activities accurately.
3. Complex Financial Transactions
Sophisticated Schemes: Criminals often use complex and sophisticated financial schemes to launder money or finance terrorism. The FIU must constantly adapt to new methods and technologies used by criminals.
4. Coordination with Other Agencies:
Inter-Agency Collaboration: Effective combatting of financial crime requires coordination between the FIU, law enforcement, regulatory agencies, and other stakeholders. Challenges in communication and collaboration can impede the effectiveness of financial crime investigations.
5. International Cooperation
Cross-Border Challenges: Money laundering and terrorist financing often involve cross-border transactions. The FIU needs to work with international counterparts to track these transactions, which can be challenging due to differences in legal systems, regulatory frameworks, and data sharing protocols.
6. Regulatory Compliance
Enforcement and Compliance: Ensuring that all reporting entities comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) regulations can be challenging. There may be gaps in regulatory enforcement or issues with ensuring that smaller financial institutions and businesses adhere to the rules.
7. Public Awareness and Training
Educating Stakeholders: Continuous education and training are essential to help financial institutions and other entities recognize and report suspicious activities. The FIU must invest in training programs and awareness campaigns, which can be resource-intensive.
8. Legal and Structural Challenges
Legislative Gaps: There may be gaps or limitations in existing laws and regulations that affect the FIU’s ability to effectively tackle financial crime. Updating and strengthening legislation can be a slow and complex process.
9. Technological Advancements
Keeping Up with Technology: As technology evolves, so do the methods used by criminals to evade detection. The FIU must continually update its technology and analytical tools to stay ahead of emerging threats.
10. Public Perception and Trust
Maintaining Confidence: Ensuring public trust in the FIU's ability to handle sensitive financial information and effectively combat financial crime is crucial. Negative perceptions or concerns about transparency can impact the FIU’s effectiveness.
It appears that all those existing originations have not been able to address the corruption issue in Sri Lanka. According to the Transparency International Corruption Perception Index 2023, Sri Lanka has fallen 4 points, since 2017, to 34/100. In the year 2000, Sri Lanka had a ranking of 50 and it dropped to 40 in 2012. This shows that we have a deteriorating situation. So, I propose an independent broad based anti-corruption body giving powers to act without any interference and an establishment of a financial transaction reporting agency
1. Abolish or amend the Bribery Act of 1954.
2. Pass legislation allowing to establish a new independent broad-based anti-corruption commission.
3. Dismantle the current Financial Crimes Investigation Division (FCID)
4. De-link the Attorney General's Department from corruption/bribery cases.
5. Give powers to the corruption commission to monitor (including phone tapping), investigate, interrogate, and prosecute.
6. Establish a financial transaction reporting and monitoring agency
7. Establish a system to investigate the corruption commission if it engages in inappropriate activities.
Former academic -Monash University, Melbourne, Australia
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by (2024-12-17 02:53:15)
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