The government lost a staggering Rs 322 billion in 2007 in income, because of corruption while the country lost Rs 80 billion in terms of GDP losses because of corruption says the latest ‘Sri Lanka Governance Report’ by Transparency International of Sri Lanka (TISL).
The report shows that the government would have a lot more money at its disposal for economic development and national welfare, if it can control corruption. Economists say corruption exists because of a distorted incentive system.
“If the incentives are in favour of stealing, rather than working, of course people will steal rather than work,” said lecturer of economics at the Colombo University, Dr Sirimal Abeyratna, speaking at a recent discussion on the Governance Report.
“But the direct costs and long term costs of corruption are eventually borne by the entire population,” said Dr Abeyratna.
Sri Lanka Customs for instance, is noted for preventing the country from benefiting from an EDI (Electronic Document Interface) system, simply to sustain a system of internal corruption.
“EDI would speed up processing, reduce workloads, improve documentation, save time and result in much greater efficiency for all parties. But it would also undermine prevalent and predictable form of corruption that has long existed in the Customs Department,” notes the Governance Report.
The TISL report also identifies other types of corruption.
Corruption with theft
Corruption with theft for instance, robs the government of revenues it is due. Officials of the Inland Revenue Department robbing the country of Rs 3.5 billion through a VAT scam, is just one example.
What is even more disturbing is that these officials get off unpunished. “The Inland Revenue has not changed even after getting caught to the VAT fraud in 2006. The Commissioner of Inland Revenue, in October 2008, had said at a special committee to investigate the fraud, that the officials concerned are still employed at the Inland Revenue. This is over 2 years after the discovery of the fraud,” said Media officer, TISL, Ananda Jayasekera.
Corruption without theft
Another form of corruption, corruption without theft, does not reduce revenue to the government, but increases the cost of doing things in the country. This cost is borne directly by the people and not the government. An example is, having to pay a bribe or ‘greasing’ a state official to get something done even when all the documents are in order.
“Greasing is bad for so many reasons. To start with, it is an offence. It is also unethical because if you are paid a salary by the people to do a job, to take more money from them is not fair and it is an abuse of power. It also eats into the incomes of the poor,” said the Executive Director of TISL, J C Weliamuna.
Corruption without theft can also indirectly impact government revenues. For instance, government licences are often priced at below market rates. So on paper, there is no loss by selling licences but there is a loss to the government because the income from selling licences is lower than it should be. Radio and TV broadcasting licences are noted for this type of corruption.
“The absence of a transparent bidding process in the issuing of licences for such premium business activities such as broadcasting and telecommunication, prevents revelation of the true market price and creates opportunities for large bribes and private profits through the issuing of licences,” says the report.
Social conscience
TISL notes that in Sri Lanka corruption is a social problem and is not limited to any particular income group, institution or sector. “Poverty is not the main reason for corruption because if this is the case the poor must be more corrupt, but rich and powerful people are also corrupt. Also corruption is not limited to the public sector, it is found across all classes and institutions of our society,” said Mr Weliamuna.
The opportunities to benefit through corruption also create incentives not to change the system. Therefore, TISL says that people must not wait for the government to deal with corruption. TISL is calling for a social conscience to control corruption.
“Corruption is a social responsibility. The government is very important in giving leadership to fight corruption. But in any democracy, unless there is public demand, governments will not act. So we need to develop a social conscience to fight corruption,” said Mr Weliamuna.
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