Neglected and derelict public property, fraud and corruption
There is no effective control over properties belonging to the government and semi-governmental and other statutory bodies. Some buildings have been abandoned and trees have grown over them but it is of little concern to most to see at least whether the exist or have been encroached by others. There are instances where certain expensive equipment is allowed to deteriorate and remain inside packing without being put into any use. Certain vehicles ditched outside institutions are deteriorating due to negligence. Today, management of public property is a national catastrophe.
Inventory
To take care of public property and ensure its custody, safety and maintenance there is an urgent and immediate requirement that a comprehensive National Inventory of Public Property (NIPP) be prepared encompassing all lands, buildings, equipment, facilities, etc belonging to government, semi-governmental and other statutory bodies stating ownership, possession, location, current utility and value. The NIPP should be completed as soon as possible which can be fast-tracked with the use of information technology. After the completion of the inventory, it must be made mandatory for all governmental agencies to register all new acquisitions or constructions of assets in the NIPP. It should be prepared in such a way so that multiple user access is possible, for example, for an interested party to find a building or a conference facility to suit his specifications (for example something like 50 seating capacity within a radius of 10 km from the city of Badulla).
NIPP is essential for the effective discharge of duties entrusted to the proposed National Performance Monitoring Authority (NPMA) in its evaluations and reviews of the performance of Ministries, Departments and other Public Institutions. One of the crucial matters the NPMA should address is the full utilisation of assets owned by and under the command of each Ministry, Department or Public Institutions attached to them. Its scope should cover underutilisation, misappropriation and waste of assets which are normally not taken into account by a traditional audit. It is evident that without a comprehensive register of assets such a review would not be effective.
The NIPP can pave the way for the optimum utilisation of public property. Right now there are assets obtained or constructed for some particular purpose but abandoned subsequently after that particular objective is fulfilled. A substantial amount of public funds are wasted this way. There are facilities built at very high cost but are not properly utilised. With the NIPP in place, asset/facility sharing can be implemented with substantial cost saving to the country. Take conference hall/auditorium facilities, for example. In most cases these facilities are not used daily. If information as to the location, seating capacity and facilities of conference halls/auditorium by area is readily available those who do not have such facilities can make use of them by paying a fee.
Government vehicles –cause of innumerable waste
A great deal of money is spent on government vehicles. A separate colour assigned for use on the number plates of official vehicles could, to some extent, curb the misuse of state-owned vehicles. Fuel and vehicle repairs are two big outflows of government expenditure. Some high ranking government officers change their vehicles very often. They need the latest model at the expense of public funds. When this is allowed, proper maintenance of vehicles cannot be expected because they can change the vehicle to a new one at short intervals. This practice should be stopped immediately.
Fraud and Corruption – Real cause of poverty
To get a clear idea of fraud and related issues, it is worthwhile learning what the Fraud Triangle is all about. Fraud, deception and corruption are vices which are interwoven. The triangle shows three factors which lead to fraud. A person may make a false representation about a material fact, if he thinks that he could lose some benefits if the actual facts are reported. He would get pressure from within, to declare something not achieved as achieved, simply in lieu for a cash bonus. At times, he may be driven by outside pressures too. The greed to obtain what you need is an incentive to distort facts to serve your purpose. This kind of fraud leads to manipulation of statistics and factual reports.
Lack of consistent supervision and follow-up, badly designed internal control systems, allowing one person to complete a transaction from beginning to end, unscrupulous supervisors and situations where the person originating a transaction and checking or reviewing it is one and the same or under the influence of one dominant person, can create room for fraudulent activities to occur. An attitude, character or set of ethical values may exist that allows those in charge or their subordinates to intentionally commit a dishonest act or they could be in an environment that imposes pressure that causes them to rationalise committing a dishonest act. Fraudulent activities are sometimes rationalised and treated with frivolity on the premise that ‘after all these things happen everywhere’ or when such untoward activities are approved by no less than the highest in the organisation.
Corruption is infectious! : Even the best can fall victim
If enough vigilance is not exercised to curb fraudulent activities, there is room for even the best team to get corrupt at some time or the other. Hence, it is imperative to include a built-in set of checks and balances in the proposed constitutional reforms and good governance procedures. Thefts- lies- frauds- corruption as described in the Fraud Triangle take place in the private sector too. In this area our attention should be focused on the intensely corrupt practices conducted by some who have risen to the top, passed high level academic or professional exams and now misuse that very power, officially assumed or bestowed by charter. Sincethey hold privileged positions in society and enjoy acquired or assumed authority, the chances are high that their action can cause injustice to millions of people.
Very high positions make it possible to misuse their participation as members in tender boards involving massive financial transactions for personal gains. Manipulating quoted tender prices, changing initial tender conditions, ordering superfluous goods and quoting below average amounts when handing over state assets and business opportunities are some avenues that lead to misappropriation of power for personal gains.
This manipulation and misappropriation turn more evil in instances when those state officers who have excelled in high jumps and long jumps corroborate with politicians adept in the most polluted practices. Business enterprises which collect public funds by issuing shares or accepting deposits commit financial crimes by paying extravagant salaries to directors and top executives, awarding contracts at above reasonable prices and prodigal spending.
The disgraced Golden Key Company is only one such example that surfaced because it couldn’t carry its own weight. It acted as a ‘five star laundry’ for black money. Some small timers too with hard earned money were deceived and had fallen victims. It was revealed in the courts that the higher officers of this company had extracted large amounts of money of the depositors as their salaries, allowances and dissipated them even on foreign trips. Finally the company faced bankruptcy while the depositors paraded streets asking for justice. This serves as a reminder to all of us that those who are seriously concerned about the economic development and living standards of the people of this country should be cognizant of the financial discipline of both the private and public sectors.
It is not only the financial loss to government that matters when government contracts , especially high value civil construction contracts carrying exorbitant profits over and above normal business profits are awarded to contractors very often to cronies, and goods and services are bought by the government at unusually high prices. Not only that, these evil practices lead to a few personas becoming unduly rich. The greatest disaster emanates out of their substandard work ethos. They do not require good management practices which in turn entails breakdown of work ethos in all the state and private enterprises due to the influence of indiscipline and careless handling of resources by those enjoying extravagant super profits. The whole economy gets infested with indiscipline. It is an economic tsunami.
Forced setting the hands of the clock
It has been noted with despair that investments which are inappropriate and untimely and therefore fall into the category of bad investments are made carrying massive super profits to the implementers. Mooted minus discerning priorities most of these investments are in the long run utterly wasteful, bringing into mind the popular Sinhala adage of donning the span cloth, seven miles this side of the ocean. Some projects entail procuring loans at high interest. The General Treasury doles them out through sheer obeisance while it is the public who gets victimised by all this. Such projects act as Special Purpose Vehicles to siphon out public funds.
It develops to the episode of being generous at others’ wedding feasts. Those beneficiaries of the Special Purpose Vehicles now play tricks with the market signals of the national economy. They begin to manipulate it, set the hands of the clock the way they want and the ordinary businessman operating according to the tunes of the market is forced to dance according to the new tunes set. They find existence uneasy and profits diminishing and taxes getting into arrears. All this lead to market shrinkage and erosion of purchasing power in general. It is a challenge to local businesses.
Here the role of professionals who have much influence on both the state and private sector is critical. The malpractices of some professionals without doubt influence evilly the whole socio – economic fabric of the country. We have had the experience of not getting any warning signals from those professionals who had been assigned to do so and paid heavily for undertaking to do so, with regard to collapsed companies, especially those who had collected public funds by way of shares or deposits. Regulators and Auditors have failed in their jobs. Whistle blowers just stayed inactive letting the victims suffer.
Many a man out to make money via government contracts has the following excuse for bribing and bestowing other offerings in order to secure a contract. “He does it. If I don’t follow there just is nothing for me”. Everybody is well aware of this deceitful game but no one wants to intervene. It is certain that if this fraudulent activity is stopped that the capital expenditure of the government can be reduced by 25-35 per cent. This is an arena that has to be trodden with care to avoid getting trapped by those who have climbed the summit in the field.
(The writer is a Chartered Accountant and former
Additional Secretary –
Ministry of Cultural and
Religious Affairs in 1994-2000)