The World Bank recently donated US$50,000 to the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) to improve financial infrastructure in this profession.
At the event to launch this project, both the CA Sri Lanka President and a World Bank official emphasized the need for transparency, accountability and oversight and said this project was aimed at strengthening some of these areas in the accountancy field.
Haven’t we heard these words before ad nauseam? And isn’t there often more words than deeds being said about this in progressing towards a corrupt-free Sri Lanka in both the public and private sectors?
For example how often do we hear of conflicts of interests in the accounting profession of companies handling audits and also being head-hunters for the same firm? How often do we hear of instances where accusations (with often strong evidence) against corrupt accountants are swept under the carpet? How often are there cases of corrupt accountants being struck off the list?
How often do we hear of auditors in cahoots with companies and dis-regarding the pleas of minority shareholders for more accountability? Ask K.C. Vignarajah, a top investor and the biggest promoter of governance and transparency, who has loads of issues on governance and the way listed companies are run.
Though discussing these issues in many previous editorials, we are compelled to return to the topic given the continuing and increasing levels of corruption and conflicts of interest in the corporate sector.
In today’s business environment, nothing can be done without money changing hands.
When the Sri Lanka Tourism recently issued a statement praising its ‘One-stop Shop” concept where officials of key ministries and state institutions come under one roof to fast-track proposals for hotels and leisure-related activities (in the absence of an effective Board of Investment), one hotelier noted that, ‘nothing moves if you don’t have political patronage’.
Citing an example, he said in a certain hotel project the sponsors ‘swear’ by the rules and go by the book in seeking approvals from local authorities. This has led to long delays and cost escalation.
However in a nearby site an influential businessman is speeding ahead with his hotel project disregarding all rules (including permits from local authorities) because he has access to the powers-that-be. His strategy: Complete the project and then fast-track the approval through these high-level contacts. “How can you do business like this and at the same time claim the process is transparent and accountable,” the first hotelier asked.
Sri Lanka’s top-end corporate sector professes a Corporate Social Responsibility (CSR) culture in the way they do business. Such a culture means being honest, transparent, sticking to the book of rules and governance and running a business devoid of seeking special favours and giving bribes to get things done.
Recently a powerful government official, when told about the emphasis paid by the private sector in CSR and their constant grouse about corruption in the public sector, had this to say:
“These corporate bosses are corrupt themselves. Whenever I speak at a public event, they’ll surround me after the event and seek favours, make special requests. Is this the transparency and governance they practice in their companies?”
One of the few conglomerates to put honesty, governance and accountability ahead of profit is Hayleys, until the exit of Rajan Yatawara and ‘Tanky’ Wickremaratne at the helm.
The company suffered immensely, not able to win tenders owing to the flawed, corruption-controlled process.
In a July 10, 2011editorial, the Business Times said that both Yatawara and Wickremaratne, as former chairmen, did not bow to the dictates of politics in the game of tenders and found the company being distanced from some of the big contracts.
“Hayleys, a staid company following age-old values a lot ingrained during the late, much-respected D.S. Jayasundera’s tenure as chairperson in the early 1980s, has come a long way from those heady days of governance, values and disciplined management but its culture has changed dramatically after the entry of new, powerful directors with a different business culture,” the report said, reflecting on the change of command, power and influence at this conglomerate.
Being honest doesn’t work in Sri Lanka anymore and many companies, big or small, are forced to ‘pay’ to get contracts. “If we don’t do it, someone else will, and we don’t get the business. How can you survive by being honest?” asked one small entrepreneur.
Bribery and corruption grew with the advent of the open economic policies of the governing party in the late 1970s. If it was then a slow and steady rise, despite the creation of the Bribery Commission (very ineffective and going after individuals like constables or Grama Sevakas accepting small bribes of Rs 50 or Rs 1000 while the sharks go scot free or resorting to politically motivated arrests), corruption now is galloping; such is the pace of growth of the ‘most vibrant’ sector in recent times.
Is Sri Lanka capable of developing and attracting foreign investors with this kind of you-scratch-my-back-I-scratch-yours policy”? Furthermore what lessons are we providing to the younger generation though this kind of corrupt, devil-may-care culture?