Good Governance and Corruption

Featured image courtesy Al Jazeera

LIONEL BOPAGE on 01/31/2017

Good Governance is a key challenge Sri Lanka has faced and
spectacularly failed to deliver for most of its modern history. This
challenge is not only about individuals, but is systemic, spread
across all spheres: socio-economic, political, judicial, cultural, arts
and science. Most countries across the world have also suffered
the scourge of corruption. Some have succeeded in partially
alleviating its pernicious influence; most, like Sri Lanka, have
failed.

In December 2014, the presidential candidate Mr Maithripala

Sirisena signed a Memorandum of Understanding (MOU)[1] with
49 political parties and civil society organisations. This MOU refers
to four immediate tasks and additional measures that are to be
initiated in the first hundred days since formation of the new
government. The first measure to be initiated was:
immediately prevent, through greater transparency and
accountability, the present unprecedented large scale fraud,
corruption, bribery and earning of commissions as well as the
wastage of public funds; take action according to law to deal with
abuses that have been committed.
At an Anti-Corruption Summit held in London, President Sirisena
assured the full commitment of the government of Sri Lanka in
taking firm action against corruption. He also added that
corruption was a factor in promoting political and other forms of
violence, as evidenced in Sri Lanka during the previous
administration, and that it was the people, who acted
democratically against corruption, by electing new leaders.
Once in power, President Sirisena appointed a new Director
General to the Commission on Bribery and Corruption. In the past,
this commission hardly probed any bribe-related cases due to
heavy political interference. Even under the new set up,
institutional and political obstacles to effective legal action have
been substantial. As evidenced by the Presidents displeasure
when the Commission brought ex-presidents sons, brothers,
particularly the former defence secretary and top officials of the
previous regime to court on corruption charges. The President
declared[2] that he will have to take action, if the Bribery
Commission and the two Police divisions investigating corruption
were working according to a political agenda, and implied that
these agencies were favouring the United National Party [3].

Following his allegations, the new Director General of the

Commission on Bribery and Corruption tendered her resignation.
Given corruption is an international phenomenon, it requires
global solutions. Certain countries have financial institutions with
systems designed to accept laundered black money. They are
abetted by certain lawyers, accountants and their consulting
companies that facilitate such corrupt transactions. It is wellknown that firms of wealthy nations offer large bribes to
institutions and powerful politicians in many developing countries.
Information available on international financial flow indicates that
money is moving from poor to wealthy countries in ways that
fundamentally undermine development[4].
Background
Corruption and bribery undermines the rule of law, impedes
development, and promotes bad governance. Therefore, in any
economy the greatest threat to development is endemic
corruption. Corruption-free government is believed necessary for
the development of a country. Corruption is considered a major
challenge to ending extreme poverty by 2030 and achieving the
sustainable development goals. According to the World Bank
Group, annually about $1 trillion is paid in bribes around the
world. The total economic loss is estimated to be many times this.
[5] In addition, empirical studies have consistently shown that the
poor pay the highest percentage of their income in paying bribes.
Every stolen rupee robs the poor of an equal opportunity in life
(World Bank, 2016).
Corruption diverts resources towards the corrupt entities and
individuals, both in the private and public sectors; and away from
the critical services needed such as education, healthcare,

drinking water and so on. Notoriously crooked leaders continue to

enjoy extravagance at the expense of those living in extreme
poverty[6]. Transparency International (TI) indicates that five of
the ten most corrupt countries also rank among the ten most
violent countries in the world. Even in countries where there is no
open conflict, the levels of inequality and poverty are extreme.
Countries in Northern Europe are found to be the least corrupt.
However, it does not mean they have no links to corruption
elsewhere in the globe. Half of all OECD countries are found to
violate their international obligations to crack down on corrupt
activities of their companies abroad.[7]
For the purpose of our discussion here, the terms bribery and
corruption are used interchangeably.
Corruption and Bribery
Corruption is generally defined as abuse of authority for personal
and private gain[8]. Corruption includes both offering and taking
bribes, civil servants dishonestly using their authority to influence
decisions; fraud, blackmail, election bribery and illegal gambling
(OTSI, 2010, 4)[9]. A bribe is a sum of money, services etc. given
or offered to somebody in return for some, often dishonest help.
A framework based on Corporate Strategic Responsibility (CSR)
[10] provides an opportunity to not only curb corruption, but also
benefit from managing the level of corruption. The degree of
reporting on anti-corruption is a strong indicator of the quality and
completeness of an entitys efforts in addressing bribery and
corruption.
According to TI, corruption can be classified as grand[11],
petty[12] and political[13], depending on the amounts of money
lost and the sector where it occurs. Corruption manifests itself in

diverse forms, such as embezzlement through theft of public

resources[14], extortion through threats and intimidations[15],
promoting favouritism[16], and bribery[17] in the form of
kickbacks, gratuities, pay-offs, grease money etc. Bribery is
defined as the act of promising, giving, receiving, or agreeing to
receive money or some other item of value with the corrupt aim
of influencing a public official in the discharge of his official duties.
When money has been offered or promised in exchange for a
corrupt act, the official involved need not actually accomplish that
act for the offense of bribery to be complete.[18]
The Anti-Corruption Summit held in London last May was intended
to deal with major global corruption issues including secrecy in
the movement of money around the financial system, fighting
corruption in public contracting, health and sports. [19] Recognising
the role of civil society and journalists in anti-corruption work, a
commitment was made to see that governments provide them
with greater protection. Despite forty countries signing up to
general principles and a global declaration, with some countries
making specific country commitments, many major economies,
like Brazil and China did not make serious commitments.
Corruption in Sri Lanka
TI has rated Sri Lanka very high in its Corruption Perception Index
(CPI).[20] Successive Sri Lankan regimes including the current one,
have demonstrated their disregard and/or purposeful sabotage of
any effective established frameworks to fight corruption. The law
enforcement mechanisms in Sri Lanka itself appear corrupt.
Successive governments have come to power pledging during the
elections to eradicate bribery and corruption; in spite of this,
corruption has penetrated the public sector from top to bottom.
Despite some media sources exposing corruption scandals at
times, authorities have not even bothered to respond to the

allegations. In Sri Lanka, for a citizen, resident or a visitor to get

anything done, it is credibly alleged that some form of monetary
inducement is essential. Nepotism and cronyism prevail in making
appointments to government and state-owned institutions.
Certain sources have also described the procedure for prosecution
on corruption charges is mostly difficult. [21]
Corruption is endemic. Such instances include getting a child
admitted to a school, for a person being investigated to be
treated leniently, for getting an application processed at a
reasonable time, for winning contracts, for taking part in or
securing a win in certain sports, for saving life during the times of
enforced disappearances, etc., the need to pay a ransom has
become the common experience. For six decades, major political
parties have been engaged in corrupt practices[22] and bribing
voters during election times by distributing food parcels, dry
rations and liquor, and more recently applications for jobs,
housing and bank loans, cement bags, zinc and asbestos sheets,
and sil redhi[23]. These political parties have vastly contributed to
making these corrupt practices reach the Olympian heights it has
now reached.
In 2014 and 2015 the situation in Sri Lanka was quite similar to
the above. In 2012 the CPI for Sri Lanka was 40 out of 100, in
2014 it was 38[24], and in 2015 it was 37[25]. It ranked 91 among
177 in 2013, 85 among 175 in 2014, and 83 among 168 in 2015.
Despite the marginal improvement shown during this period[26],
the CPI of Sri Lanka for 2016 has worsened to 95 among 176
countries.[27]
According to recent reports there are some 750,000 court cases
pending in the lower courts of the Sri Lankan judiciary. The regime
or its judicial bureaucracy do not appear to be interested in taking
measures to expedite these cases. Legal redress is also

expensive. There are many cases of land disputes running close

to half a century and suspects are held with no charges for many
years under the Prevention of Terrorism Act. One can say that this
is a corrupt system designed to make more money at the expense
of the poor. Judicial corruption has also placed the regime in an
uncomfortable situation internationally. At the UNHRC, the regime
conceded that the people have lost trust and confidence in the
justice system[28]. Thus the Sri Lankan regime had to agree to
set up a judicial mechanism with international dimension to try
serious crimes committed against humanity.
It is safe to say that corruption has become a way of life in Sri
Lanka, not only at the level of politicians and bureaucrats, but
also at the grassroots level. Therefore, the political will at the
highest levels of government to rectify the issues has been almost
non-existent. Whenever charges of corruption have been laid,
more often than not the cases do not succeed. In this
environment, blatant and grand scale corruption and financial
crimes carried out with impunity under the previous regime, does
not only continue, but has reached new heights[29] under the
new dispensation[30].
Management of Corruption in Sri Lanka
If we cannot eliminate corruption given its deep entrenchment in
the last six decades or so; we need to at least try and stop its
exponential growth. At an individual level, there are people who
at a high personal cost to themselves, do not engage in
corruption. If as individuals offering and accepting bribes can be
refused, and in work situations authority is not used to
dishonestly influence decisions through fraud and blackmail,
ultimately one could hold onto a good conscience of being free of
corruption. This is an extremely difficult task given that certain
professional organisations and individuals in the capitalist set up,

assist those corrupt entities and individuals to hide without trace,

their nefarious activities.
Bribery had been made a punishable offence in Sri Lanka under
the Penal Code since 1883[31]. In 1954, the Bribery Act was
enacted to contain bribery in Public Service. In 1958, the Act
No.40 established the Bribery Commissioners Department under
the Ministry of Justice, as the main body responsible for
investigating corruption allegations brought to its attention and
instituting proceedings. In 1994, the Act no.19 created the
Commission to Investigate Allegations of Bribery or Corruption
(CIABOC)[32]. It commenced its activities in December 1994, but
it had no noticeable effect on the level of corruption. However,
the CIABOC appears to have failed to conduct a credible and
independent investigation into complaints made against it in the
Supreme Court. The CIABOC was compelled to do so, when
Supreme Court directed it to initiate an inquiry into one such
complaint as expeditiously as possible[33].
Sri Lanka has ratified the UN Anti-Corruption Convention. It also
signed the UN Convention against Transnational Organized Crime,
but did not ratify it. Sri Lanka is also a signatory to the OECD-ADB
Anti-Corruption Regional Plan. In February 2015, the government
established the Financial Investigation Division (FCID) for
investigating major financial crimes, frauds, unsolicited mega
projects, major financial crimes against public property, money
laundering, terrorist financing, illegal financial transactions,
unlawful enrichments and offences on financial crimes against
national security.
Despite, being generally considered to have adequate laws and
regulations to combat corruption, the Country Report of the
Bureau of Democracy, Human Rights and Labor[34] indicated that
corruption exists in the executive and legislative branches of the

government. When previous regimes used anti-terrorism

legislation to gag debates on corruption, the governance system
degenerated. Even those who were usually critical of such issues
became extremely silent on the issue. Concerns were raised at
the time about promoting police officers accused of bribery,
corruption and fraud. Yet, when all police promotions were later
revealed to had been carried out on the Presidents advice
everybody went silent. Overseas firms identified corruption as a
constraint on foreign investment, though it was not considered a
major threat to operating in the country, at least once a contract
was won.
Social Bribes and Growth of Corruption
Effective anti-corruption measures such as Right To Information,
whistle blower protection and witness protection are needed to be
in place to control corruption. Recently enacted Right to
Information Act remain to be tested in practice to ascertain
whether it would ensure access to information to all stakeholders
in a timely manner and in sufficient detail. Elimination of
corruption in the public sector requires CIABOC to have adequate
human and infrastructure resources, be more independent and
empowered.
The causes and effects of corruption and the strategies to prevent
it have been in the agenda of government policy makers for a
very long time (Hoi and Lin, 2012)[35]. Historically governments
have been more powerful than business corporations, and could
regulate the limits to the exploitation by corporations. However, it
is a changed world now, where globalisation and corporatisation
are predominant. Currently the neo-liberal urge for lower
production costs to maximise profits drives the globalisation
trend. So lower costs of labour, raw materials, logistics have
become the prime driver. Consumerism heightened by artificially

created demand underpins this neo-liberal trend. This process has

swallowed up entire societies including most politicians. Those
who could inject capital investments have become to govern all
aspects of politics. Bribery and corruption have become one of
the central tools in manipulating governments, its systems and
politicians.
To elicit investment, national governments have to offer
inducements to large transnational corporations such as
guaranteed rates of return, viability gap financing[36], tax
exemptions, free land for projects, publicly developed
infrastructure and opportunities for capital gains and immunity
from labour laws in Free Trade Zones (FTZ), or Special Economic
Zones (SEZ). Abolition of long-term capital gains tax exempts
them from paying taxes on gains they make from stock-market
speculation. These demands from large transnational corporations
are becoming increasingly aggressive, for instance, the demands
for zero taxation in FTZs and SEZs and exemptions from paying
corporate income tax for manufacturing as a whole.
Simultaneously, offering tax concessions and other perks make
national governments lose their revenue. Thus, funds available for
spending on public education, public health, healthcare including
sanitation and rural infrastructure become less. The marginalised
are increasingly compelled to seek private sources to fulfil their
educational and healthcare needs. So, people start paying high
prices for such services.
National governments are compelled to turn to financial agencies,
who are in turn funded by large transnational corporations. Those
agencies start offering assistance packages conditional to
carrying out structural reforms. Hence, national governments
impose measures to further reduce welfare provisions and
introduce a user pays system, which penalises the poor.

At the same time, business corporations and local regimes have

become experts not only at manufacturing consent, but also in
manipulating dissent. So, corrupt cronies donate generously to
programs led by major political parties, and in turn the campaigns
of such political parties receive huge ICT backing. Thus, civil
society needs to become aware of this fact, and then they will be
able to pre-empt efforts to derail the anti-corruption movement
from within.
Conclusion
From the above discussion, it is clear that corruption is not simply
a moral question it is also political. It requires concerted
attention of governments and business firms, particularly in the
developed world. Successful anti-corruption efforts need to be led
by the joint efforts of both private and public sectors and the
public including politicians, senior public officials, citizens,
communities, and civil society organisations. For this to succeed,
capable, transparent, and accountable institutions need to be
developed at the national, regional and global level to build,
design and implement anticorruption programs.
Corruption thrives because those who are corrupt intimidate or
deceive the general public by manipulating information. Both
business corporations and governments extensively spin or frame
information to manage perceptions. On many occasions, they
have managed to convince the public not to question their
bribery, corruption and unethical practices. Hence, educating
ourselves to be vigilant is essential. When police officers ask for
bribes to perform routine services, when tender boards unfairly
and unethically determine the winners of government contracts,
when public officials make awards favouring their friends or
relatives, or when employees are simply paid for signing in a

register and being idle, they must be exposed. It is an essential

task for civic society.
This also requires a paradigm change in the orientation and
mechanisms used for both growth and governance. This struggle
needs to be directed not only against mega financial swindles like
the Central Bank scam and other macro issues, but also against
micro-level corruption that is all-pervasive in everyday life. This is
an uphill task given the insidious way corruption has infected
every layer of society and institutions both in the public and
private sectors in Sri Lanka.
The working people of Sri Lanka and civil society organisations
need to undertake this responsibility. Given the circumstances,
only they can gather the courage, commitment, strength and
momentum to fight the aggressive policies of large business
corporations. Working people have to counter corruption starting
at micro level against specific corrupt and fraudulent practices at
their own work places. Fighting corrupt onslaughts of capital
needs to establish participative democracy at work places. Yet,
this could happen only with a major qualitative social
transformation. If processes are transparent and open, corrupt
practices become exposed, which makes it easier to manage,
control and finally eliminate it. Hence the broad peoples
movement must become the backbone against corruption. The
working people need to become the most organised contingent to
fight against the onslaught of corruption.
So, it becomes our responsibility to demand the confiscating of
properties that politicians and bureaucrats have corruptly
acquired, and banning corporate lobbying. The working people
need to demand the establishment of effective anti-corruption
legislation and a credible institutional mechanism to prosecute
and punish the guilty. The people also need to demand

maintaining an open register of the entities that utilise black

money in their business transactions, using initiatives such as
Double Taxation Avoidance Agreements with other states. The
black money already stashed in foreign tax havens need to be
returned for public investment. The black money hidden locally
should be found and confiscated, and those involved in such
scams including those in the bureaucracy and professional
entities need to be brought to justice.
To quote Unmask the Corrupt[37]:
Grand corruption is the abuse of high-level power that benefits
the few at the expense of the many, and causes serious and
widespread harm to individuals and society. It often goes
unpunished. It concerns millions of victims around the world. Its
time the corrupt face the consequences for their crimes. Together
we can make that happen!
Those who enjoyed this article may find Dilrukshi Dias
Wickramasinghes resignation: The fallout and Are we
progressing towards good governance? enlightening reads.
[1] A Common Peoples Agenda For Just, Democratic And PeopleFriendly Governance: http://srilankabrief.org/2014/12/moucommon-peoples-agenda-just-democratic-people-friendlygovernance/
[2] In addition, when the Criminal Investigation Department of the
Police probed the allegations against military intelligence, several
military intelligence officers were remanded regarding certain
cases of disappearances and killings (including the 2010
abduction of journalist Prageeth Eknaligoda and the suspicious
2012 death of rugby player Wasim Thajudeen) that occurred
during and after the final stages of the war. The Rajapaksas were
critical of the regime for these arrests. The current President also

weighed in and most of the suspects, Rajapaksas and army

intelligence officials who had been in remand custody, were
released from custody.
[3] http://uk.reuters.com/article/uk-sri-lanka-corruption-probeidUKKBN12H2GA
[4] http://www.worldbank.org/en/topic/governance/brief/anticorruption
[5] http://www.worldbank.org/en/topic/governance/brief/anticorruption
[6] For example, 70 percent of the Angolan population lives on
USD 2 a day or less. One in six children dies before the age of
five. More than 150,000 children die each year. However, Forbes
consider that Angolas Presidents daughter, Isabel dos Santos
is the richest woman not only in Angola, but also the whole of
Africa.
[7] For example, Sweden is the third in the index; however, the
Swedish-Finnish firm TeliaSonera is alleged to have paid millions
of dollars in bribes to secure business in Uzbekistan, which comes
in at 153rd in the index. At the same time, half of all OECD
countries are found to violate their international obligations to
crack down on bribery by their companies abroad.
[8] Transparency International, 2015. Archive Link. Retrieved
from: http://archive.transparency.org/news_room/faq/corruption_fa
q

[9] OTSI, 2010. Fraud and Corruption Prevention Strategy. The

Office of Transport Safety. Retrieved
from: www.otsi.nsw.gov.au/access-to-info/OTSI-FraudStrategy.pdf
[10]https://www.researchgate.net/publication/309686425_Corrupti
on_Corporate_Social_Responsibility_and_Financial_Constraints_Int
ernational_Firmlevel_Evidence_Corruption_CSR_and_financial_constraints
[11] Acts committed at a high level of government that distort
policies or the central functioning of the state, enabling leaders to
benefit at the expense of the public good.
[12] Everyday abuse of entrusted power by low- and mid-level
public officials in their interactions with ordinary citizens, who
often are trying to access basic goods or services in places like
hospitals, schools, police departments and other agencies.
[13] Manipulation of policies, institutions and rules of procedure
in the allocation of resources and financing by political decision
makers, who abuse their position to sustain their power, status
and wealth.
[14] Such as state officials stealing from the public institutions
where they are employed, or regime leaders stealing from the
treasury. In Indonesia, when Suharto was in power, he allegedly
embezzled up to $US35 billion from the country (Hodess, Robin,
Tania Inowlocki, Diana Rodriguez, and Toby Wolfe, eds.
2004. Global corruption report. London: Pluto Press).

[15] When the rule of law is weak, this may be carried out by
mafia groups blackmailing state officials, or certain state officials
threatening to take sort of punitive action.
[16] Disposition to favour and promote the interest of one person
or persons to the disregard of others having equal claims.
Privatisation, exploitation of natural resources, regulations provide
ample opportunities to play favourites and extract personal gains.
Nepotism is another form of favouritism, for example, hiring and
promotion of individuals based on family or other personal
relations rather than merit. In the public sector, this may take the
form of authority to hire or promote someone, thus the person
abusing authority benefitting from it, although not necessarily in
monetary terms (Admundsen, Inge. 2000. Corruption: Definitions
and concepts. Chr. Michelsen Institute Working Paper).
[17] Individuals or organisations offering bribes to authorities who
can make contracts on behalf of the state or make decisions on
using public funds to influence their decisions regarding particular
issues.
[18] https://anticorruptionsociety.com/about/
[19] http://www.transparency.org/news/feature/anti_corruption_su
mmit_now_the_hard_work_begins
[20] The perceived level of public sector corruption on a scale of 0
to 100, where 0 represents highly corrupt and 100 very clean.
See http://www.transparency.org/whatwedo/publication/cpi_2015

[21] On September 20, the government indicted former Deputy

Defence Minister on charges of bribery. Allegations have been
levelled against the current Secretary to the Ministry of Defence.
At the time, there was no law that provides for public access and
retrieval of relevant government information. However, in June
2016, the Parliament enacted the Right to Information (RTI) bill.
[22] http://www.dailymirror.lk/article/Good-Governance-Deliverwhat-you-promised-120098.html#sthash.9GzufXkV.dpuf
[23] Fabrics Buddhists wear for their religious observations.
[24] https://www.transparency.org/cpi2014/results
[25] https://www.transparency.org/cpi2015/
[26] http://www.tisrilanka.org/corruption-perceptions-index-2015/
[27] http://www.transparency.org/news/feature/corruption_percept
ions_index_2016
[28] Promoting reconciliation, accountability and human rights in
Sri Lanka (A/HRC/RES/30/1)
at: http://ap.ohchr.org/documents/alldocs.aspx?doc_id=25680
[29] For example, the Central Bank Bond scam, where the very
institution supposed to safeguard Sri Lankas finances appears to
have been allowed to be robbed.

[30] http://www.sundaytimes.lk/161204/news/arjun-aloysius-thejames-bond-of-bond-business-218996.html
[31] http://www.ciaboc.gov.lk/web/
[32] The intent of the Act was to provide for the establishment of
a permanent commission to investigate allegations of bribery or
corruption and to direct the institution of prosecutions for
offences under the Bribery Act and the Declaration of Assets and
Liabilities Law No.1 of 1975.
[33] https://www.colombotelegraph.com/index.php/judicialcorruption-criminal-law-sets-into-motion/
[34] https://www.state.gov/e/eb/rls/othr/ics/2014/227229.htm
[35] Hoi, Y.H., Lin, C.Y., 2012. Preventing corporate corruption: the
role of corporate social responsibility strategy. International
Journal of Business. Behavioural Science. 2, 12 22.
[36] the amount of grants made available to them by
governments under the public-private partnership
arrangements.
[37] https://unmaskthecorrupt.org/#section-contest
Posted by Thavam