Overcoming bribery and corruption in public sector

According to an extensive investigation by the Washington DC-based Global Financial Integrity, importers and exporters intentionally falsify the declared value of goods on invoices filed with Sri Lanka Customs, to make an average of $ 4.093 billion (Rs 1.471 trillion) evaporate every year. They have, accordingly, plundered $ 36.833 billion (Rs 13.246 trillion) over nine years through intentional, dodgy invoicing, and stashing the foreign exchange earnings offshore

Definition

According to the International Monetary Fund (IMF) the most popular and the simplest definition of bribery and corruption is the one used by the World Bank ‘abuse of public power for private benefits’. This does not mean that bribery and corruption cannot exist outside the public sector.

According to Transparency International, bribery and corruption can happen anywhere, in the open or in the shadows, involve anyone and evolve in response to changes in rules, legislation and even technology. Not all acts of corruption are taking/making bribes only. An officer taking sick leave to enjoy a vacation, getting a distress loan to purchase some luxuries, misappropriation or misuse of public funds, inaction, failure to remain alert, misinterpretation of and shielding behind regulations, taking delayed, ill timed, injurious, unfair, unjust, harmful, wrong, immoral and unethical decisions as well as not taking decisions are all forms and acts of corruption.

The Economic Times refers to corruption as misusing public power for personal gain by anyone in authority. Bribery and corruption is deceitful behaviour that people in positions of power exhibit for personal gain. It is commonly seen among government officials or managers. There are different forms of corruption, including bribery, embezzlement, extortion, networking, under-the-table transactions, manipulation, money laundering, and more

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Bribery, corruption and the public sector

The topic itself suggests and admits that bribery and corruption prevails in the public sector. Is the public sector corrupt? Is only the public sector corrupt? Is the entire public sector corrupt? Why is the public sector corrupt?

The public sector alone is not responsible for an offence of corruption. The giver of a bribe is equally at fault as the taker. The public sector official is the agent of the state who executes the mandate and functions of the state. He is the conduit between the state that delivers and the public that receives. He is paid, maintained and trained with public funds. Public sector is large and can influence all segments and many actions of the society. Public sector makes laws and regulations. It creates institutions; delivers certain goods and services; provides grants, concessions, incentives, exemptions and facilities. German scientist, Max Weber defines bureaucracy as a highly structured, formalised, and also an impersonal organisation.

When the word corruption is heard one thinks of bribery, commissions and greasing someone’s palm. But, corruption in the public sector covers a wide range of actions starting from making a bad decision to taking a sizable commission, covering failure to deliver and play the expected role and avoidance, aiding and abetting and turning a blind eye to corruption, inefficiency, indecisiveness, delays, lethargy.

But, corruption in the public sector covers a wide range of actions starting from making a bad decision to taking a sizable commission, covering failure to deliver and play the expected role and avoidance, aiding and abetting and turning a blind eye to corruption, inefficiency, indecisiveness, delays, lethargy

The cost of corruption

The cost of corruption is several fold. Deterioration and/or loss: of freedom and rule of law (political cost), of opportunity for participation and trust in decision making (social cost), of healthy environment and a sustainable future (environmental cost), of opportunities for growth/development (economic cost).

An IMF report in 2016 estimated the cost of bribery alone to be between $1.5 to $2 trillion per year. This represents a total economic loss of approximately 2% of global GDP.

In 2018, the IMF adopted a Framework for Enhanced Engagement on Governance. The framework aims to promote more systematic, effective, candid, and evenhanded engagement with member countries on governance matters, including corruption, that impact macroeconomic performance.

At the press briefing on the Extended Financial Facility (EFF) program for Sri Lanka, the IMF representatives stated that the EFF arrangement is built on strong policy measures and prioritises five key pillars. The fifth pillar was structural reforms to address corruption vulnerabilities and enhanced growth. 

The UN Human Rights Office report published in September 2023 states: “Sri Lanka suffers from a continuing accountability deficit - be it for war crime atrocities, more recent human rights violations, corruption, or abuse of power - which must be addressed for the country to move forward…………” 

The World Bank Country Director in May 2023 stated, “The real cost of corruption lies in sub-standard infrastructure or medicines, often bringing both health and economic consequences. …… Corruption dissuades investment, and when corruption allows certain firms or interest groups to control the economy, rather than market efficiency and fairness, the result is weakened competition and sluggish growth. Corruption rots the social contract between the people and the government, and this can lead to loss of trust and instability”.

World Bank Country Director in May 2023: “Discretionary approaches to decision making are rife in many important areas in Sri Lanka. For example, there are complex and discretionary trade policies; tax advantages provided to certain industries, firms or interest groups; and conflicts of interest and opaque decision making regarding the oversight of state enterprises.”

Hence, bribery and corruption is robbing us of our future as well as our present.

Overcoming bribery and corruption

In Sri Lanka, since independence, every successive government has added one or more to the existing legal arrangements and institutional structure to combat and overcome bribery and corruption in the public sector. In addition to the establishment of several state agencies, parliamentary committees, presidential commissions, committees, legislations and amendments new legislations were passed. There is a host of agencies, opinion makers, whistle blowers, political parties, INGOs, national movements, civil social organisations and chambers talk and work to overcome corruption. Sri Lanka may be the only country that elected a Government of Good Governance.

The Anti-Corruption Bill recently passed by Parliament is the latest piece of legislation added with high expectation and noble motive of overcoming corruption. It is “An Act to give effect to certain provisions of the United Nations Convention against corruption and other internationally recognised norms, standards, and best practices; to provide for the establishment of an independent commission to detect and investigate allegations of bribery, corruption and offences………………….”

All such arrangements basically deal with bribery, corruption and related offences happening in the public sector. The majority if not all of these interventions take the nature of post mortems aimed at penalising a few individuals who are caught or reported. These processes are time consuming, lengthy, cumbersome less results oriented, and ending up as futile exercises. A recent news item that appeared on the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) under the title, ‘Auditor General slams CIABOC for poor prosecutions; hundreds of cases languishing for over five years’ speaks for itself.

The UN Human Rights Office report published in September 2023 states: “Sri Lanka suffers from a continuing accountability deficit - be it for war crime atrocities, more recent human rights violations, corruption, or abuse of power - which must be addressed for the country to move forward

Overcoming corruption would be a distant dream if the state allows happening corruption and launch only post mortem operations to catch a culprit occasionally. By the time the gates are closed the horse has already bolted.

Identification and elimination of the causes is equally or even more important and effective than post mortem interventions in the process to overcome bribery and corruption in the public sector. A paper prepared by Vito Tanzi, an economist of international renown, for the IMF in 1998 on ‘Corruption around the world: causes, consequences, scope and cures’ sheds light on this. Although the Paper is 25 years old the views are valid and relevant today.

As Tanzi says, corruption is a complex phenomenon and cannot be explained by a single cause and therefore, overcoming corruption cannot depend on intervention in a single area. The establishment of an independent commission to detect and investigate allegations of bribery, corruption and offences related………………” alone would not help to overcome bribery and corruption.

Bribery and corruption take place due to not taking timely swift action, excessive complicated documentation, age old Acts, presence of too many layers and too many officers, absence of coordination, bureaucratic lethargy, delays, inefficiency, lengthy procedures, time-consuming approaches, the list goes on. Particular aspects of government activities, processes, provisions, procedures create fertile grounds for corruption.

In any country, especially, in developing countries, state functions are carried out according to rules and regulations. However simple or complicated the activity is, the public has to get authorisation, permits, licences and documents from various offices. Regulations are not transparent; they are complicated and are not in the public domain. Officers can refuse, delay or not attend certain functions. Only bribery would oil the machine.

The procedures in tax administration in Sri Lanka provide opportunities for corruption. Tax regulations are complicated, difficult to understand, vague and leave room for interpretation. Exemptions, incentives, limits, liabilities are not clear. Government procurements lack transparency, clarity, simplicity and effective institutional controls. The Government provides some goods and services free or at subsidised prices, social security grants and concessionary credit facilities. There is discretionary power in important decisions, such as in investment, land allocation, granting approvals, tax concessions. These are the breeding grounds for bribery and corruption in the public sector. The lack of transparency in rules, laws and processes, the existence of too many regulations, frequent introduction of regulations and absence of some regulations distract the focus, giving space for corruption. Some documents are lengthy, complicated, with too many cages calling for unnecessary information, dating back generations.

 Bribery and corruption take place due to not taking timely swift action, excessive complicated documentation, age old Acts, presence of too many layers and too many officers, absence of coordination, bureaucratic lethargy, delays, inefficiency, lengthy procedures, time-consuming approaches, the list goes on. Particular aspects of government activities, processes, provisions, procedures create fertile grounds for corruption

News reports are published daily on bribery and corruption in the procurement process, school admission, obtaining documents such as the identity card, passport or driving licences. In procurements Technical Evaluation Reports are not prepared in time; in some cases, they are purposely delayed allowing for so-called ‘emergency procurement’ to suit identified suppliers.

Likewise, issuing important documents in a single place has compelled people from all walks to visit Colombo. The public who travel from distant areas, undergoing much inconvenience and hardship are keen to get back home soon. The easiest way out would be bribery. With facilities available and an over staffed public service, decentralisation of these services to the districts would close the avenues for bribery and corruption.

According to circulars issued on school admission, proof of residence within close proximity for admission to national schools is widely known. It is also common knowledge that parents start preparing forged documents since the day a child is conceived. The result is passing bribes in cash, kind and sexual favours, and depriving admission to genuine children within the approved limits. The introduction of a more transparent and less complicated procedure, by admitting children through an aptitude test would seal the opportunities for corruption. Simplification of documents, decentralisation of essential services and minimising duplication and overlapping could be done within a short time, perhaps with a single stroke of the pen.

Furthermore, low wages attract less honest and incompetent people to the public sector. Corruption is discovered by chance or by outsiders, the media and whistle blowers and only among a fraction. Due to the concern for fundamental rights, civil rights and human rights the government takes lackadaisical actions against offenders. Many archaic Acts create opportunity for bribery and corruption. A few such Acts in Sri Lanka are: the Fauna and Flora Protection Ordinance -1937, Excise Ordinance – 1912, Forest Ordinance -1907, UGC Act 1978, BOI Act 1978, Paddy Land Act, Land Reform Act, Tea And Rubber Estates (Control of Fragmentation) Act and Tea, Rubber and Coconut Plantation Land Fragmentation Board. These Acts need to be revisited and revised to suit modern day development and eliminate grounds for bribery and corruption.

The Anti-Corruption Bill is “An Act ……………... to provide for the establishment of an Independent Commission to detect and investigate allegations of bribery, corruption………………; to promote and advance the prevention of corrupt practices; to educate and raise awareness among the public to combat corruption;”

Five of the 10 objects of the Act are related to the prevention of bribery and corruption. Unfortunately, only one clause (Clause 40 - Measures to prevent corruption and proper discharge of its functions etc.) out of 164 clauses and one page out of 150 pages of the Bill is allocated for prevention.

According to an extensive investigation by the Washington DC-based Global Financial Integrity, importers and exporters intentionally falsify the declared value of goods on invoices filed with Sri Lanka Customs, to make an average of $ 4.093 billion (Rs 1.471 trillion) evaporate every year. They have, accordingly, plundered $ 36.833 billion (Rs 13.246 trillion) over nine years through intentional, dodgy invoicing, and stashing the foreign exchange earnings offshore.

There are instances that some corporate sector players have used the Corporate Social Responsibility (CSR) to evade payment of taxes. Black money comes in the form of investment. Bribery and corruption can close the eyes of the public sector to such operations.

But the public sector turns a blind eye on these operations. The only explanation comes from bribery and corruption.

Despite all arrangements made, institutions established, Bills passed, bribery and corruption goes on in the public sector. The lack of coordination, bureaucratic lethargy, ignorance, excessive and confusing documentation, rules and regulations, centralisation of services and functions are only a few instances that lead to bribery and corruption. Post mortem operations give space for corruption. Overcoming bribery and corruption and holding the offenders to account could only happen if we understand the way corruption works and the systems that enable it. The manner of overcoming corruption can be found in the causes for corruption. Some actions introduced to curb corruption have turned into digging one’s own burial ground. Some incentives are inducements to corruption rather than for investment.

As Vito says the fight against bribery and corruption cannot proceed independently from the reforms of the state. Bribery and corruption would be reduced in countries where governments introduced: Regulatory reform; deploying complaint-handling platforms and systems for citizens to lodge complaints; reforming public health procurement with tech-based, open contracting, and monitoring; online course to train anti-corruption officers; the use of Artificial Intelligence, block chain and big data analytics in the area of anti-corruption, reflecting the support that the ethical and responsible use of technology provides to preventing, tackling and finally overcoming bribery and corruption.

(The writer is former Secretary of the Ministry of Plan Implementation. He can be reached on [email protected])