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Democracy and Corruption in Sri Lanka: A Realistic Perspective

By
Dr. H. M. Gunatilake,
Former Director, Asian Development Bank

The telephone recordings of Mr. Ramanayake, a Member of Parliament, which revealed deeply entrenched corruption across Sri Lankan society overwhelmingly shattered the confidence about the entire governance system in the country. It also highlighted the utmost importance of reinvigorating dialogue on corruption and empowering people to demand for a corruption free society. In this context, the upcoming parliamentary election is very good platform for making corruption the major issue of election debate. As I mentioned in my previous face book article on Presidential election, finding an election wining alternative to two major parties, which are competing to be the most corrupt, is not possible at this time. The newly elected president seems the only hope left for Sri Lankans in this regard.

Those who seek alternative to mainstream political parties should continue to raise their voices against corruption. If we can avoid some highly corrupt politicians going to Parliament in the upcoming election, it would be a major achievement to begin with. Understanding why corruption prevails in democratic governance system is the initial step in combatting corruption in the long run. It helps forming realistic expectations of reducing corruption. This article attempts to shed some light on prevalence of corruption in democracies. It also provides some suggestions for immediate actions to reduce corruption.

What is corruption?

Amongst many definitions, one simple way to define corruption is the abuse of entrusted power for private gains by political leaders, or public officials. It is a form of dishonesty or criminal activity undertaken by a person or organization to acquire illicit benefits. Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, parochialism, patronage, influence peddling, graft, and embezzlement. Corruption occurs in both the public and private sectors and media personnel and civil society actors can also be involved in corruption. Actors can be individuals, companies, or organisations such as a political party.

Sometimes the ‘advantage’ gained through corruption may not be ‘undue’ or clear-cut, but is nonetheless an advantage. For example, in some highly corrupt societies people can only secure access to public health or education if they pay bribes. In this example, the bribe-giver’s ‘benefit’ is merely his or her rightful due but without the bribe the public can’t exercise that right. The brib-takers receive an advantage for carrying out functions that are anyway their duty. School admission is a clear example in Sri Lankan context where, those who can afford to pay have an advantage over others to get admissions in few popular schools in the country. Here the bribe takers actions prevent the rightful students admitting to the nearest schools.

Types of Corruption

There are many different types of corruption. One useful way to classify corruption is to consider ‘grand’ and ‘petty’ or ‘administrative’ corruption. Grand corruption typically takes place at the public sphere’s top tiers, and within the highest levels in private business. The well- known central Bank Bond Scam is an example of grand corruption. Grand corruptions are the acts by elite persons in the society who either make laws or responsible for implementing rules, policies and executive decisions. It often involves large sums of money. Grand corruption is also often called political corruption, highlighting the direct or indirect involvement of political leaders in such corruption. Grand corruption can also be acts of large private corporations.

One good example is Volkswagen’s violation of emission reductions. It was found out that Volkswagen has been using a software program to activate emission control only in laboratory test but not in usual running of its cars. This excess of NOx emissions has affected human’s health and US and Europe imposed multiple financial sanctions on the company; a US federal judge, for example, ordered Volkswagen to pay a $2.8 billion criminal fine.

Petty or administrative corruption are small-scale, everyday corruption at the interface between public institutes and citizens. The petty corruption is the bribery linked to the implementation of existing laws, rules and regulations. For example, civil servants deliver services, only if they receive a private payment that is in addition to the institutionalized official price for this service. There are many examples of petty corruption In Sri Lanka. Bribery paid to get the house construction plans approved, obtain the timber transport permits, get school admissions, get route permit for private bus, get the driver’s license, avoid the delays in pension payments initiation are only few examples of a widespread petty corruption. In many situations service receivers are legally entitled for the service but when bribery is not paid government servants find various reasons not to deliver the service or delay it for very long time.

In some other situations the entire transaction is illegal; obtaining forged passport, using timber transport permits to harvest timber from forest reserves are two good examples. Petty corruption also refers to the abuse of power in daily lives of citizens. For example, traffic police take payments from drivers in return for not officially charging them for the breach of traffic rules. Usually, modest sums of money change hands in each case. However, when petty corruption is widespread, it can create many inefficiencies, public nuisance and even discourage foreign investments in a country. Even if the payments are modest in perry corruption, poor can be disproportionately affected by petty corruption.

What Causes Corruption?

The causes of corruption are always contextual, rooted in a country’s policies, bureaucratic traditions, political developments, culture and history. Generally, the corruption tends to flourish when institutions are weak and when the government policies which support generate economic rents are in place. A defining feature of the environment in which corruption flourishes is the divergence between the formal and the informal rules governing the behaviour of the public officials. The World Bank asserts that it is unaware of any country that does not have rules against corruption, although not all countries have all the necessary rules. The existing measures range from laws making it a criminal offense to bribe public officials, regulations dealing with the expected behaviour of public officials, conflicts of interest provisions, prohibition to acceptance of gifts, and the duty to report fraud.

Government agencies—police and army, tax and customs departments, local governments, and public enterprises— generally have their own regulations and codes of conduct. Organic laws often embedded in constitutions related to budgeting, accounting, and auditing, supported by laws and regulations on public procurement and safeguarding of public assets are in place in many countries. In addition, there are laws on the conduct of elections and the appointment of judges, and codes governing the conduct of legislators. A cursory look at the legal and regulatory provisions in Sri Lanka reveals that there is no paucity of anticorruption measures, though there may be some gaps.
The problem, however, is that the formal rules either not implemented or superseded by informal rules. It may be a crime to bribe a public official, but in practice the law is not enforced or is applied in a partisan way, and informal rules prevail.

Government tender boards may continue to operate even though the criteria by which contracts are awarded have been superseded by other considerations. Seen in this light, strengthening institutions to control corruption is all about shifting the emphasis back to the formal rules. This means that a strong legal framework to control corruption requires more than having the right legal provisions in place. Addressing the sources of informality, first by understanding why the informal rules are at odds with the formal rules and then by tackling the causes of divergence. In many countries the primary reason for divergence may be political, a manifestation of the way power is exercised and retained. In some other countries the reason may be weak public management systems and inappropriate policies. Often the combination of these two make the matters worse. While there is a need for careful examination of adequacy of public management system sand appropriateness of policies in Sri Lanka, my own view is that the divergence between formal rules and their actual implementation is largely due to political manipulations.

Amongst many causal factors, excessive regulatory regimes, such as timber transport permits, provide powers to government officials creating opportunities for petty or administrative corruption. Such opportunities combined with low and declining real value of government service salaries, promotion unconnected to performance, and compelling expenditures such as children’s education result in administrative corruption. In addition, dysfunctional government budgets, inadequate supplies and equipment, delays in the release of budget funds and gradual erosion of organizational purpose also may demoralize staff. The motivation to remain honest may be further weakened if senior officials and political leaders use public office for private gain and those who resist corruption lack protection.

In Sri Lanka the public services have long been dominated by patron -client relationships, in which the sharing of bribes and favors has become entrenched. My own research shows that one lorry load of timber from Monaragala district carries about Rs. 20,000 worth bribes (in the year 2000 value) which are distributed amongst all the officials (forest department, divisional secretariat and Gramaniladhari) involved in issuing timber transport permits. This system is well organized so that timber traders who pay this bribe only will get timber permit, other will encounter numerous bureaucratic red tapes and endless delays. Timber traders who are part of this cartel have excessive bargaining power and they reduce the farmgate price of timber substantially.

Thus, private land owners are discouraged by the low prices and excessive bureaucratic red tapes to grow timber. Permit related bribes and the artificial scarcity add to the timber price – consumers pay excessive price for timber. Thus, both the consumers and producers loose benefits of the timber and the traders and government officials extract a big portion of the value of timber.

The transport permit requirement was removed for Jack for about few months and Jack timber price dropped significantly. It was reintroduced due to pressure from the interested parties. Lots of timber from the natural forest also come to the market pretending that they have been harvested from private lands. Distribution of the bribes to all the officials involve make such actions possible. Government officials in such situations have incentives to maintain the excessive regulatory regimes and resist related reforms. The forestry Master Plan (1993), for example, proposed the removal of timber transport permit for the species that are grown in private lands (Teak, Mahogany, Jack Lumumidella etc.) but this was never implemented due to pressure from the public servants who share the benefits of corruption related to the timber permit system.

The resistance came in the guise of the dedication for protection of forests but by now all the evidence show that timber permit system failed to avoid illegal logging of timber from natural forests in Sri Lanka. This trend continues, there are already some newspaper article only highlighting the negatives of removal of san permit system by the new government. To my knowledge removal of sand permit system is not fully implemented and the expected benefits only reached partially to the public.

As the Word Bank illustrates, the dynamics of corruption in the public sector can be depicted in a simple model. The opportunity for corruption is a function of the size of the rents under a public official’s control, the discretion that official has in allocating those rents, and the accountability that official faces for his or her decisions. Rents can be large in highly regulated economies and, as observed in many countries, corruption breeds demand for more regulation. Timber permit issue described above is a good example for this. The existing regulations require to measure diameter of the stump and compare it with the harvested logs, every piece of log need the emblem of two government officials and the timber permit is issued only for 24 hours. This is done after all the documentary requirements are met and multiple layer, multiple agency approval is obtained. In addition to such detailed and heavy controls, recent introduction of registration of saws is a clear example for the love of public servants (both political and bureaucratic) for heavy regulatory regimes.

The discretion of many public officials may also be large in developing and transition economies, exacerbated by poorly defined, ever-changing, and inadequately disseminated rules and regulations. Finally, accountability is typically weak in these settings. The ethical values of a well-performing bureaucracy may have been eroded or never established. Rules on conduct and conflict of interest may be unenforced, financial management systems (which normally record and control the collection of revenues and the expenditure of budgeted resources) may have broken down, and there may be no formal mechanism to hold public officials accountable for their conduct. The watchdog institutions that should scrutinize government performance, such as ombudsmen, external auditors, and the press, may be ineffectual or receive part of the benefits of illegally acquired wealth so they become party to it. And special anticorruption bodies may have been turned into partisan instruments whose real purpose is not to detect fraud and corruption but to harass political opponents. Recent political history in Sri Lanka provide ample evidence for this practice by both major political parties.

The above described causes of corruption can be considered as supply side factors which breed corruption. To fully comprehend the prevalence as well as to design measures to reduce corruption, one needs to understand the demand side too. In the case of petty or administrative corruption, low salaries and unsustainable living styles together with prevailing impunity generate the demand. The more significant grand corruption need special attention as its economic impacts are large and sometimes can be devastating in terms of derailing the entire development process of a transition economy. One of the most pertinent demand factors for corruption is the election campaign finance. Actual and accurate campaign costs are very difficult to find. One of the estimates appeared in one newspaper quote Rs 3563 million as the cost for electronic and print media advertisements, and other expenses in the last year presidential election (by all the major parties). Given that the three categories only include formal and accountable expenses this is clearly an underestimation of campaign costs. If one assume that the unaccountable or informal expenses are the same, then it would be Rs. 7126 million. With the assumption of similar expens in presidential, parliamentary, provincial council and local government elections, the total election campaign cost in one cycle of election would be about Rs 28504 million. Where does this large sum of money come from?

As per the official website of Parliament (updated on March 2019) monthly salary of a Minister is 54285. Once all the allowances (sitting allowance, committee allowance, office allowance, fuel allowance, telephone allowance and stamp allowance) are added with plausible assumption on number of sitting and committee meeting etc, total monthly income is approximately about Rs. 320,000 per month. Many of the allowances are not real incomes of the Ministers. Allowances such as fuel and telephone allowance may be spent for the allocated purpose. In addition to these legitimate incomes some parliament members sell their vehicle permit and earn sizable income of about Rs. 10-15 million. Since only some members of parliament sell the permits, I excluded this from my calculations.

It should be clear from above approximate numbers that the legitimate incomes of parliament members/ministers are not sufficient for meeting even their lavish living standards let alone the election campaign finance. Just for the purpose of illustration, if election campaign cost is evenly allocated amongst about 175 members of the main parties, one member should generate about Rs. 163 million for one cycle of election whereas the legitimate income in a five-year cycle is about Rs. 20 million, which is not sufficient even to meet the consumption expenditure Politicians families.
The above numbers are not accurate but sufficiently reasonable to make my point; election campaign costs are enormous and the legitimate incomes of members of parliament/ministers are not sufficient for meeting the campaign costs. Sometimes a wealthy politician may spend his own money but consider it as an investment and he will recover it with profit after getting elected. This is the biggest demand factor for corruption in a democratic governance system, though the corrupt acts will not confine only to meet campaign financing needs. Part of the campaign costs are covered from the donations of the big businesses but elected governments should return the favor in terms of big contracts, helping to evade taxes etc. These favors have their own development impacts; big government contracts should go to the campaign finance donors despite they are not the best in a competitive bidding process.

Poorly constructed infrastructure by such contractors, for example, need to be accepted to maintain the donorship for next election. The rest has to be earned through various means of corruption. No matter how much of promises made to be clean, every elected political party will have to be corrupt to remain in politics and contest in next election. Comprehending this bitter reality is necessary to make pragmatic expectations about reducing corruption.


Impact of Corruption on the Economy

Apart from the ethical and moral considerations, why should one be worried about corruption? Generally, ccorruption undermines economic development and threatens state security. It also undermines democratic values. UN member states acknowledged the threat of corruption to the development process and have included Goal 16 into the 2030 Agenda for Sustainable Development – calling on states to ‘substantially reduce corruption in all their forms.’ While this signifies the importance of reducing corruption, one may still argue that if the corrupt gains are being circulated within the economy, it may not affect economic growth in a country and it will only have distributional implications. Most often the corrupt gains may be circulating within the economy in petty corruption but in grand corruption, very often, ill gained money flows out of the economy. Following are some of the ways in which corruption affect the economy and the society:


• Public spending on wrong projects:
Priority in allocation of government or borrowed funds should be given to high development impact and quick return projects. Politicians distort the order of public spending, disregarding economic principles applied to prioritize projects and allocate budgets for activities that lead to larger bribes. Corrupt politicians’ love for some large infrastructure developments, such as roads, power plants, harbors, etc. are because of opportunities for larger bribes. Funds are eventually allocated for slow return projects with less or no development impacts. Amongst the many impact of this practice, countries will experience debt traps such as the one we experience in Sri Lanka now due to inefficient allocation of borrowed funds prioritizing bribes and other political considerations, not the timeliness and the magnitude of the benefits.

• Excessive costs of infrastructure: Grand corruption lead to higher cost for infrastructure development. It has been claimed by independent transport experts that cost per km of a highway in Sri Lanka is much higher than the international cost norms . It seems that escalated cost of a project allows collusion between contracting companies and politician/top bureaucrats (hereafter public servant) so that contractors gain excess profits even after paying bribes. This is win-win situation for contractors and the public servants. In such cases quality of the infrastructure may or may not suffer depending on other factors but the economy bears the burden of excessive costs.


• Poor quality infrastructure:
Higher costs of infrastructure can also be manifested in terms of poor-quality infrastructures. Public servants influence competitive bidding process, and contracts are awarded to less qualified companies to receive bribes. Poor quality infrastructure, with huge maintenance cost and frequent repairs is the end result.


• Long delays of projects:
Bidding process is sometimes delayed for years until the politicians cut a lucrative deal from the contractor. There are reasonable suspicions that the delay in awarding contract for proposed gas fired power plant in Sri Lanka is due to two topmost politicians favoring two different companies, no one having enough power to override the other. The end result is the delay in constructing the power plant and purchase of power with excessive costs. Sri Lanka was the only country in South Asia which got rid of power cuts. Now the power cuts are back. Ramification of this, in terms of Sri Lanka’s appeal for much needed foreign direct investments, is enormous.

• Good project may never get implemented: Some development projects with good development impacts are never implemented because of failure to agree on the bribe. Often, this happens when the public servants request a bribe that is too big given the project costs. Imagine a fish processing project that costs about $ 100 million and requested bribe $50 million for approving it. With this 50% cost escalation, the investing company cannot compete in the international market. The private investor who already spent couple of millions of dollars for feasibility study has no option other than giving up the project. A good investment project that generate sizable employment was never implemented.


• Discourage FDI:
Grand corruption discourages or even prevents foreign direct investments (FDI). Simply when the imposed bribes are so large, private companies cannot make a reasonable profit. Therefore, private investors avoid highly corrupt countries. It is worthwhile to undertake a detail study as to why Sri Lanka failed to attract FDI despite comprehensive incentive package of Board of Investment. One of the obvious reasons for low FDI in Sri Lanka may be larger bribes unaffordable to investors.

• Life risks: When people cannot get access to healthcare, clean water, and safe places to live without paying bribes, their lives are at risk. Corruption in approving buildings eventually resulted in collapse of them killing many workers, for example in Bangladesh. In Nepal many buildings which had construction permits that certify as earthquake proofed collapse during the earthquake in 2015. These are good example as to how the corruption put people’s lives at risk.


• Non-financial costs of corruption:
Corruption has more than just financial costs. It reduces public trust and citizens’ willingness to participate in society. For example, citizens who perceive politicians as corrupt may not bother to vote in elections, get engaged in politics, or pay taxes. Recent revelation on corruption by the telephone records will have a highly significant impact amongst the public in Sri Lanka. Accelerated erosion of trust on the governance system and the unwillingness to participate in the democratic process can be the end result.

• Human right violations: Human rights are violated as a result of corruption. For example, courts violate the fundamental rights if parties involved in a case can bribe staff and judges. Recent revelations of political interferences in court cases in Sri Lanka raises the alarms and highlights the need to strengthen checks and balances in the legal and regulatory systems in the country.

• Perpetuates inequality. As found in many countries, poor people suffer disproportionately from corruption. In modest income households, petty bribes to access a government service can cut deep into a family’s disposable income. When access to good quality education is only limited to non-poor, poor peoples’ only chance to improve their lives will be lost. Compared to other South Asian countries, access to health and education is relatively free from corruption in Sri Lanka, except school admissions. In countries where corruption is widespread in getting access to health, education and other basic services can have long term negative impacts for economic growth.


• Nurture organized crimes:
Corruption is often linked to organised crimes. It thrives in conflict and war. High levels of corruption can make prolonged conflict more likely, and push post-conflict societies back into war. Wide-spread drug problem continue all over the world mainly because of collusion of law enforcement agency officials and political leaderships with organized crime syndicates.

• Promote environmental degradation: Corruption can also undermine climate change and other environmental management initiatives, as powerful actors bribe their way out of environmental responsibilities in pursuit of profits. Moreover, corruption undermines the responsible management of natural resource. Depletion of forest resources despite heavy regulatory measures in Sri Lanka is a good example.

As a combination of the above impacts, widespread corruption causes macroeconomic instability mainly due to loss of government revenue and excessive spending. Corruption in tax and customs departments, excessive debt allocated to contracts that are awarded to high-cost bidders and the general erosion of expenditure control contributes to macroeconomic instability. As explained above, excessive debt may be incurred through “white elephant” investment projects which provide opportunities for larger bribes.

Macroeconomic stability may also be threatened by fraud in financial institutions, leading to loss of confidence by savers, investors, and foreign exchange markets. In many developing countries like Sri Lanka corruption may reduce revenue collection from large corporations which also provide a moral justification for widespread tax evasion by others. The costs of macroeconomic instability are borne by all elements in society but especially by the poor. According to an ADB estimate the global losses to corruption, money laundering, and tax evasion is estimated at $800 billion to $2 trillion every year—an amount that could instead be used by developing countries to achieve their Sustainable Development Goals commitments. The lower bound of this estimate is about three to four times the total development assistance provided by both multilateral and bi-lateral donor agencies for all the developing countries.

Measures to Reduce Corruption

The above discussion on the causes of corruption should have given the reader the impression that reducing corruption, which is well entrenched across the society from the top to the bottom, is a daunting task. Sri Lanka being a lower middle-income country which is facing the imminent threat of middle-income trap should pay urgent and special attention to reduce corruption. Otherwise its development journey will be derailed and it will remain as a lower middle-income country for a very long time. The country needs to go through an institutional transformation to avoid middle income trap and corruption related reforms should be a major component of this transformation. Successful anti-corruption efforts should be supported by a cross section of the society, not only politicians and senior government officials, but also the private sector, communities, and civil society organizations.

Increasingly, successfully addressing corruption will require attention of both governments and businesses, as well as the use of the latest advanced technologies to capture, analyse, and share data to prevent, detect, and deter corrupt behaviour.

More importantly, citizens of the country should explicitly express demand for reducing corruption. In election campaigns frequent promises are made by candidates to reduce corruption but corrupt politicians repeatedly get elected and continue their corrupt practices. So long as the pressure from the citizens for reducing corruption is absent, corruption will prevail.

Therefore, citizen’s awareness and their active participation in promoting anti-corruption measures is essential. But this is only necessary, not a sufficient factor to achieve any success because reform to reduce corruption will not take place without the support and active participation of the top most layer of politicians and government officials. Unfortunately, the topmost layer in any corrupt society are often the beneficiaries of corruption and this segment of the society doesn’t have any incentives to change the system.

Breaking this vicious cycle is a must in reducing corruption but this is probably the most difficult task in any society, and Sri Lanka is not an exception in this regard. History of some successful efforts to reduce corruption in countries such as Singapore shows that top political leadership can break the vicious cycle of corruption, that breed more corruption. Can Sri Lanka’s newly elected President break the vicious cycle of corruption?

Time will answer the question but majority of people in Sri Lanka have great hope at this time for a significant change. President’s Independent day speech explicitly mentioned about the urgent need to change uncoordinated, old and irrelevant legal and regulatory measures and unwanted permit systems which contribute to the poor service delivery and corruption in the public services. The President’s emphasis on this aspect and his apparent commitment to reduce corruption enhances hopes of the public.


The following are some of the measures to reduce corruption in Sri Lanka


Honest and committed political leadership:
Sri Lanka faces a unique opportunity to take decisive measures to reduce corruption under the new President. New President’s approach to make the government services more efficient and transparent seems promising and strengthening his hands to consolidate his powers to launch anticorruption measures is the need of the hour.

People can use the upcoming parliamentary election to send a message to the corrupt political leaders by rejecting the most corrupt candidates. Civil society and educated middle class, and the media should actively take part in the campaign to reduce corruption and they should ensure corruption is a major issue in the upcoming election campaign. An honest leader who punishes his own supporters who are involved in corruption will send a very strong positive message across the society about determination and commitment to reduce corruption. How the great leaders like Le Kuan Yew let the enforcement of the law to punish his own party members when they were involved in corruption should be taken as a best practice in this regard.


Empowerment of people:
Strengthening citizens demand for anti-corruption and empowering them to hold government accountable is a positive initial step in reducing corruption. Voters need to understand what the officials they elected is doing while in office. Education and awareness building are vital to achieve this goal. Therefore, making the citizens of the countryy understand their political rights is key to reducing corruption. This approach also helps build mutual trust between citizens and government.

Towards this end active participation of people in anticorruption campaigns play a crucial role at macro level. At more decentralized level, for example, community monitoring initiatives have in some cases contributed to the detection of corruption, reduced leakages of funds, and improved the quantity and quality of public services in some African countries. Students’ participation in political debates in recent times (for example in “Nadia” program in Swarnawahini ) has had a significant impact as to how the new generation detest corrupt politicians. Such innovative approaches should be increasingly used to enhance people’s participation in anticorruption campaign.

Electoral reforms: As discussed above, election campaign financing is a major demand factor for corruption. Every politician faces four elections in one cycle and regardless of his or her own election they have to ensure their party wins these elections. For example, in a presidential election only one member of the party is contesting but all parliamentarian’s, provincial councilors and local government members should actively campaign and spend on election. Given the maturity and educational achievements of Sri Lankan society, three elections – presidential, parliament and provincial council – can be conducted the same day. In my assessment, citizens are matured enough to vote for all three elections in one day. People have successfully expressed their choices in the last presidential election despite the complications due to unprecedented large number of candidates. Having three election the same day will significantly reduce campaign financing need and together with other anti-corruption measures it can help reduce corruption significantly. It will also cut down the election cost of the government enhance the democratic process.


Ending the impunity:
Punishing corruption is a vital component of any effective anti-corruption effort. In Sri Lanka some of the petty corruption is met with harsh punishments but top political leaders hardly ever get punished. Effective law enforcement is essential to ensure the corrupt are punished to break the cycle of impunity. Successful enforcement approaches should be supported by a strong legal framework, law enforcement agencies and an independent and effective court system. Civil society can contribute to the process with initiatives to detect and disseminate the corrupt activities. For a variety of reasons such as leaked telephone conversations, clear evidence of some grand corruption such as Central Bank Bond Scam, and the public’s interests shown in the last two presidential elections, this may be the opportune time to end the impunity that lasted throughout the post independent history in Sri Lanka.


Reforming public administration and financial management system:
Reforms focussing on improving financial management and strengthening the role of auditing agencies have in many countries achieved greater impact on curbing corruption. There are very old and irrelevant rulesare in place. For example, if a citizen wants to change his name, he/she need to provide evidence to prove the proposed new name has been used in the past. How can one use a new name before obtaining the official permission to use new name? This rule forces people to produce forged documents. This paper did not systematically analyze the needed reforms in public services but the above example shows that there are various useless old regulation are in operation. A comprehensive study should be undertaken before launching such a reform program.

Promote transparency and access to information: Countries successful at curbing corruption have a long tradition of government openness, freedom of the press, transparency and access to information. Access to information increases the responsiveness of government bodies, while simultaneously having a positive effect on the levels of public participation in a country. Recent enactments of a law on right to information is a positive step towards this end but its proper enforcement is yet to accomplish.

Make bureaucracies more efficient: Corruption thrives when government officials can take advantage of inefficient bureaucracies. Poorly managed public sectors with complex regulations make sidestepping rules easy for these officials. Reducing corruption means, above all, streamlining bureaucracy. This can be done in multiple ways. Some studies suggest that simply condensing agencies reduces corruption. In some cases agencies with smaller number of personnel reduces the opportunity for them to collect bribes. Another strategy is to make tax codes easy to understand and computerize simple procedures. According to some estimates, these two measures alone reduced fraud within the public sector by 85 percent in Senegal,.

Deregulation: Variety of regulations and permit systems such as timber permit system creates enabling environment for corruption. A quick and but comprehensive study should be undertaken to find the necessity of such measures and all unnecessary permits should be removed. Removal of sand transport system has not been fully implemented and the expected full cost reduction is yet to occur. But this is definitely a positive development and such removal should be extended to other relevant sectors.

Use information technology: As observed in many countries digitizing the processes in public services make it easy to detect and curb corruption. The power of technology to build dynamic and continuous exchanges between key stakeholders – government, citizens, business, civil society groups, media, academia – is the way out of corruption in the modern society.

Rely on markets: Letting the market forces to work unhindered in appropriate situations as a useful anti-corruption measure. Market forces, together with new technology, can play a significant role in combating corruption. Deregulation of the telecommunication industry in Sri Lanka provides a good example. Thie deregulation and introduction the competition eliminated inefficiency, tremendously increase access to telephones and in fact significantly contributed to economic growth in the country. It also reduced the corruption in this sector. Before deregulation applicants had to wait years to get a telephone land line and often had to bribe to expedite the process. In one case known to me an applicant in a suburb of Colombo had to wait nearly about 10 years to get his telephone. Reforms in the sector together with the mobile phone technology completely changed this and made it a vibrant, less corrupted and market driven process.


Get the incentive right:
Poor salaries in the public sector is a main factor for petty corruption and salaries of politicians are far below the requirements for a decent living. Salaries or allowances of the board of directors, chairperson of state own enterprises (SOE) are very low and one can’t expect them to devote and improve these institutes with such unreasonably low payments. In the long run, these factors should be taken into account to sustainably reduce corruption. Mimicking the private sector in SOE reforms to provide right type of incentives (such as giving a share of profit to the management) should be given serious consideration to make then efficient, profitable and corruption free.

Build capacity: Building capacity of the public servants, civil society organizations and the public should be a strong components of an anti-corruption campaign. International organization such as UN, World Bank and ADB allocate reasonable amount of resources for this purpose and identifying the ways to leverage international resources can improve the capacity building to support corruption reducing efforts

Concluding Remarks

Corruption, which could derail entire development process, is a major challenge for Sri Lanka. In a broader sense, corruption is a characteristic of underdevelopment and many types of corruption disappear when countries develop. Unfortunately, corruption can also be a major constraint for development. Being a lower middle- income country, Sri Lanka faces the urgent need to undertake reforms to curb corruption to avoid the imminent middle- income trap. While there is a need to take vast array of measures to reduce corruption which is well entrenched across all the layers in the Sri Lankan society, some quick and less cumbersome measures can be taken immediately.

First, the electoral reforms to conduct presidential, parliament and provincial council elections in one day can reduce demand for grand corruption by politicians substantially.


Second,
the old, irrelevant and corruption enabling permit systems and regulations can be removed.

Third, incentive structure of the SOEs should be studied and performance based incentives should be initially provided to the management. In the long run all the public servants and politicians should be provided with reasonable salaries to ensure decent living. In order to achieve that an efficient public sector with reasonable number of employees, commensurate to the size of the economy, should be maintained. The current practice of producing unemployable graduates from the public universities and dumping them in the public services with low salaries should be stopped.


Fourth,
the positive steps of providing right incentives should be complemented with better law enforcement. Ending the impunity enjoyed by the political leaders is the urgent and immediate need towards this end.


Fifth,
use of the information technology, which provides many more co-benefits should be given priority to curb corruption.

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1. This may be partly due to high resettlement costs of some transport projects, too.