What Will It Take To Pass the Sri Lankan Audit Bill?

Regular, effective auditing of public programs by an independent body is widely recognized as a crucial anticorruption tool. Yet in Sri Lanka, the legal framework that would enable such effective auditing is still not in place. Although Sri Lanka’s Auditor General’s Department (AG) has been in operation for more than 200 years, it derives most of its functions from executive practice and regulations, rather than legislation. For this reason, the office is largely toothless: It cannot take any action to enforce its findings beyond submitting reports to two parliamentary committees, but these have little to no impact, as any follow-up actions are largely dependent on executive discretion. For years, experts and citizens alike have recognized the urgent need for a National Audit Law to govern and empower the Auditor General’s Department.

Yet despite repeated efforts and a constitutional mandate, the government has still not succeeded in enacting such a robust statutory framework to govern public audits. A National Audit Bill has been in the process of “being drafted” since the early 2000s, but an actual draft bill didn’t appear until 2013. No further action was taken on that bill. When President Sirisena took office in January 2015, he declared that the government would pass a National Audit Act by March 2015 as part of his 100-day programme. But although a new Audit Bill was proposed to Cabinet in April 2015, the proposal was deferred by the Cabinet a shocking 24 times, up until October 2017. Eventually, there were encouraging reports that the “impasse” had ended and that the Audit Bill had been approved by the Cabinet. But it was not to be: it turned out that what had been approved were amendments to the proposed bill, and not the bill itself. Subsequently, the government stated that it will not be submitting the Bill to Parliament – back to square one.

Why the seemingly interminable delay? It appears that the main reason for the impasse, at least since 2015, is a contentious section which vests the AG with the power to impose a surcharge—that is, to disallow public expenditure and require monies found to have been used improperly to be refunded by the guilty parties. This has met with resistance, mainly because it would take decisions concerning enforcement out of the hands of politicians. (Opponents of the bill also claim that it would hinder the carrying out of public duties by politicians, such as when urgent funds are required to respond to natural calamities.) Yet many reformers insist that giving the AG the surcharge power is necessary and non-negotiable.

If progress on the Audit Bill is to move forward, something has got to give. In my view, despite all the policy arguments for granting the AG the surcharge power, it’s better to move ahead and enact an Audit Act that lacks this provision, rather than allowing this sticking point to further hold up its passage. This is one of those situations where we can’t let the perfect become the enemy of the good. Continue reading

Can Sri Lanka Clean Up Its Elections?

Schools bags, school books, seed and fertilizer, clothes, sewing machines, clocks, calendars, and mobile phones – these are just some of the items that were distributed to the public during the 2015 Sri Lankan Presidential election campaign as “election bribes”. Indeed, this election was plagued by widespread violations of election law and the blatant misuse of state resources, including the illegal display of cut-outs, distribution of money during political meetings, the use of vehicles belonging to state institutions for propaganda purposes, and the construction of illegal election offices. Moreover, overall spending on election activities by the two main candidates was colossal. Incumbent Mahinda Rajapaksa (the losing candidate) is reported to have spent over 2 billion Rupees (approximately US$13 million) of public funds on his advertising campaign alone, excluding the cost of production, while the winning candidate, Maithripala Sirisena, is reported to have had a budget of 676 million Rupees (approximately US$ 4.4 million) for electronic and print media.

In this context, reports that the Cabinet of Sri Lanka has unanimously approved a proposal to amend the country’s election laws in order to place more controls on campaign-related expenditures is good news. Such reform would address a gaping void in the existing legal framework: although Sri Lanka has laws prohibiting vote-buying and similar practices, there are currently no laws regulating campaign finance. The specifics of the approved Cabinet Memorandum are still not publicly available, and it is therefore not yet possible to offer a detailed evaluation of the proposed changes. Nonetheless, given what we already know about election campaigns in Sri Lanka—especially regarding the corruption risks associated with the lack of adequate regulation—it is possible to offer a few general observations and recommendations. Continue reading

Guest Post: Global Forum or Global Farce on Asset Recovery?

GAB is delighted to welcome back Susan Hawley, Policy Director at Corruption Watch, to contribute today’s guest post:

The global record on recovering assets looted from public treasuries is not good. The World Bank and UNODC estimate that between $20-40 billion is stolen each year. Between 2006 and 2012, $2.6 billion stolen assets were frozen in so-called “destination” countries, and $423.5 million was returned. That means of the roughly $120 billion (taking the lowest end of the World Bank and UNODC’s estimate) thought to have been potentially looted globally in that 6 year period, only 0.3% was actually recovered.

To strengthen international efforts to combat this problem, the 2016 London Anti-Corruption Summit called for the creation of a Global Forum on Asset Recovery (GFAR); the World Bank and UNODC’s Stolen Asset Recovery Initiative organized the inaugural Global Forum on Asset Recovery (GFAR), in December 2017 in Washington, D.C., with the US and UK governments as co-hosts. The GFAR, which welcomed over 300 participants from 26 jurisdictions, focused on four countries: Nigeria, (thought to have to have lost $32 billion to corruption under previous President Goodluck Jonathan); Sri Lanka (where former President Rajapaksa allegedly stole up to $5.38 billion); Tunisia (where former ruler Ben Ali and his family are thought to have amassed wealth of over $13 billion); and Ukraine (where former president Yanukovych and his associates are thought to have stolen around $7.5 billion). These countries were selected for their political will to recover stolen assets and the considerable assets they have to recover.

The stated objectives for the GFAR were “progress on cases achieved by the four focus countries, increased capacity through technical sessions, renewed commitment to advancing asset recovery cases, and increased collaboration among involved jurisdictions.” As measured against these objectives, was the GFAR a success? Should it be a regular event? More generally, do asset recovery forums like this have sufficient positive impact to justify their cost? Continue reading

London Anticorruption Summit–Country Commitment Scorecard, Part 2

This post is the second half of my attempt to summarize the commitments (or lack thereof) in the country statements of the 41 countries that attended last week’s London Anticorruption Summit, in four areas highlighted by the Summit’s final Communique:

  1. Increasing access to information on the true beneficial owners of companies, and possibly other legal entities, perhaps through central registers;
  2. Increasing transparency in public procurement;
  3. Strengthening the independence and capacity of national audit institutions, and publicizing audit results (and, more generally, increasing fiscal transparency in other ways); and
  4. Encouraging whistleblowers, strengthening their protection from various forms or retaliation, and developing systems to ensure that law enforcement takes prompt action in response to whistleblower complaints.

These are not the only subjects covered by the Communique and discussed in the country statements. (Other topics include improving asset recovery mechanisms, facilitating more international cooperation and information sharing, joining new initiatives to fight corruption in sports, improving transparency in the extractive sector through initiatives like the Extractive Industries Transparency Initiative, additional measures to fight tax evasion, and several others.) I chose these four partly because they seemed to me of particular importance, and partly because the Communique’s discussion of these four areas seemed particularly focused on prompting substantive legal changes, rather than general improvements in existing mechanisms.

Plenty of others have already provided useful comprehensive assessments of what the country commitments did and did not achieve. My hope is that presenting the results of the rather tedious exercise of going through each country statement one by one for the language on these four issues, and presenting the results in summary form, will be helpful to others out there who want to try to get a sense of how the individual country commitments do or don’t match up against the recommendations in the Communique. My last post covered Afghanistan–Malta; today’s post covers the remaining country statements, Mexico–United States: Continue reading