Cracking the whip against
fraud and corruption
By Sunil Karunanayake
Corporate scandals in the developed world and its consequent effects
on investors and public have seen the emergence of new laws and
tightening of the regulatory regimes and corporate governance.
Sri Lanka too, the Institute of Chartered Accountants of Sri Lanka
led the way with the creation of a Financial Reporting Faculty and
quite recently the Securities and Exchange Commission issued specific
guidelines to auditors on the audits of listed companies. However
all these were confined only to the corporate business sector.
Accountant Nihal Amarasekera who is heading the key public sector
reforms body PERC told a recent SEC seminar that the government
will soon be taking steps to set up a Anti Fraud and Corruption
Commission on the lines of the Singapore model.
somewhat late in the day this move is most welcome. Countries in
the region like India (Central Vigilance Commission), Hong Kong
(Independent Commission against Corruption), Bangladesh (Bureau
of Anti Corruption) and Singapore and other countries like Australia
(ICAC), UK, USA and even some of the African countries have already
enacted legislation to give strength to the fight against corruption,
a priority need.
Permanent Commission for Bribery and Corruption, declaration of
assets by public officers and the Parliamentary Select Committees
for parliamentarians and the Ombudsman are some of the existing
checks in the Sri Lankan system. Unfortunately these instruments
to date have failed to meet the growing civil society demand and
confidence for a corrupt free society with the only exceptions being
the enforcement of law against some ministers and MP's under the
Bribery Act in the late fifties.
the developed west and the industrialized East Asia, corruption
is treated with all the seriousness with prosecution and punishment
of the guilty. The World Bank and Transparency International along
with OECD have carried out extensive research in corruption in most
of the countries and are continuing with their action plans.
World Bank defines corruption as " use of public office for
private profit" while Transparency International defines corruption
as " misuse of entrusted power for private gains". Corruption
is a multi-facetted product coming under the form of bribes, kickbacks,
extortion, commissions, nepotism, favouritism, abuse of power etc.
Indian expert has identified five major players in the vicious cycle
of corruption working in harmony. They are the Corrupt politician,
Corrupt bureaucrat, Corrupt businessman, Corrupt NGO and the underworld
criminal, perhaps this combination is not uncommon in most parts
of the world.
is hoped that the government will give lot of thought before enacting
legislation for the proposed anti fraud commission by learning from
the past mistakes in similar situations where public aspirations
were not fulfilled.
commissioners need to be citizens of unquestionable integrity, with
proven track records and certainly without any political affiliations.
These attributes along with competent and adequate support staff
are necessary ingredients to combat this ever-increasing malady
involving public funds.
silent public has always looked forward to with sincere hope and
faith at every new government but sad to say that these expectations
have never been fulfilled. All what we have witnessed are politicians
accusing each other with no real benefit to the country. Legislation
should clearly provide for detection, speedy investigations and
prosecution and deterrent punishment.
the impact of technology by way of computer crimes, speedy money
transfers etc the proposed commission will also need to strengthen
the investigators and prosecutors with specialized knowledge and
modifications to the existing legal framework.
always involves two parties the giver and the taker. While there
has been much debate and focus on public officials and politicians
the searchlight on the business community has been somewhat light
although increasing pressure on business ethics and good governance
has added some consolation. It is reported that the quality and
quantity of direct foreign investment is directly related to the
ethical behaviour of both private and public sectors.
power in the hands of politicians (further complicated through electoral
systems), delayed justice and weak enforcement, scarcities of goods
and services, complicated, rigorous rules and procedures, quality
of public servants, poor accountability and the network support
flowing from the socio political relationships more commonly labelled
as the old boys clubs are the key reasons for corruption to flourish.
are some of the food for thought for the proposed commission to
look into. Corruption brings a disproportionate amount of monetary
returns to those who are involved in it without much fear or risk
of being prosecuted.
legal provisions have not been strong enough to pose a deterrent
nor has there been much of public response due to a non-conducive
environment. We could draw some knowledge from India where steps
have been taken to enact legislation to forfeit property of the
wrongdoers through the Corrupt Public Servants Act which extends
its jurisdiction to politicians too.
apart, Indian legislation also provides for Independent criminal
action to be taken against corrupt politicians. We also need to
create an anti corruption culture, and this could be best achieved
by moulding the children from their schooldays.
will naturally build up a youthful force who will be able to bring
a tremendous amount of influence on the rulers with their ideological
attitudes. Professional associations and in particular the Bar Association
and the Accountants Institutes too will have a crucial role to play.
not related to the subject strong lobbying by youth activists have
resulted in a reduction in cigarette smoking among young people.
In combating corruption, the commission needs to act with courage
to fight pressure groups that will oppose any measure to prevent
Sri Lanka we've often witnessed agitation against dismissals of
corrupt employees, protests and lightning strikes by private Bus
operators against punishment to law breakers. This means the commission's
scope needs to be widened to cover an extensive area of public life.
writer holds fellowships in the ICASL (FCA) and Chartered Institute
of Management Accountants UK (FCMA) and a MBA. He retired from Unilever
Ceylon Tea division as the Commercial Controller and was also a
director at Brooke Bond. He continues to serve as a consultant at