Cancerous menace of corruption: Part II

UN Convention Against Corruption – Encompassing both private and public sectors

Chapter I of the Convention – ‘General Provisions’, comprising Articles 1 to 4, sets out the purposes of the Convention, the use of terms therein, the scope of application of the Convention, whilst protecting the sovereignty of the countries, essentially to promote integrity, accountability and proper management of public affairs and public property, and to prevent and combat corruption, by facilitating international co-operation and mutual technical assistance for such purpose, including co-operation to recover assets siphoned out to other countries by corrupt persons of a country.

Chapter II of the Convention – ‘Preventive Measures’, comprising Articles 5 to 14, sets out preventive anti-corruption policies and practices, the setting up of preventive anti-corruption bodies, dealing with corruption in the public sector, with codes of conduct for public officials, procedures for public procurement and management of public finances, public reporting thereof, measures relating to the judiciary and prosecution services, dealing with corruption in the private sector, involving the participation of society and measures to prevent money-laundering.



Chapter III of the Convention – ‘Criminalisation and Law Enforcement’, comprising Articles 15 to 59, mandates the making as criminal offences - bribery of national public officials, bribery of foreign public officials and officials of public international organisations, embezzlement, misappropriation or diversion of public property, trading influence, abuse of functions, illicit enrichment, bribery in the private sector, embezzlement of property in the private sector, laundering of proceeds of crime, concealment, obstruction of justice, including the participation in and attempting, with knowledge, intent and purpose, of any such offence set out in the Convention – defining the liability of persons for such offences and the criminal or non-criminal sanctions, including monetary sanctions, extending statute of limitations, where an offender has evaded the administration of justice.



Chapter IV of the Convention – ‘International Co-operation’, comprising Articles 43 to 50, stipulates international co-operation procedures for extradition from a country, and for the transfer of sentenced persons, procedure for ‘mutual legal assistance’ for investigations and prosecutions, transfer of criminal proceedings, law enforcement co-operation, joint investigations, and for developing special investigating techniques, including electronic forms of ‘surveillance’ and ‘under-cover’ operations.

Chapter V of the Convention – ‘Assets Recovery’, comprising Articles 51 to 59, provides for international co-operation of the widest measure, for the prevention and detection of transfer of proceeds of crime, including monitoring customers and the identity of beneficial owners of funds, conducting enhanced scrutiny of accounts sought or maintained by or on behalf of individuals, who are or have been entrusted with prominent public functions, and their family members and close associates, referred to as ‘politically exposed persons’ (PEPs).



Chapter VI of the Convention – ‘Technical Assistance and Information Exchange’, comprising Articles 60 to 62, provides for training and technical assistance, the collection, exchange and analysis of information on corruption, implementation of the Convention through economic development and technical assistance.

Chapter VII of the Convention – ‘Mechanism for Implementation,’ comprising Articles 63 and 64, provides for an Annual Conference of the State Parties i.e. countries, who are parties to the UN Convention Against Corruption to further promote and review the actions taken to prevent and combat corruption, receiving inputs even from non-governmental organisations, with the Secretary General of the United Nations providing a Secretariat to facilitate the implementation of the Convention.

Chapter VIII of the Convention – ‘Final Provisions,’ comprising Articles 65 to 71, provides for the implementation of the Convention, settlement of disputes, ratification and acceptation of the Convention and for making of any amendments thereto, through regular Conferences of the States Parties.



UN Convention Against Corruption – Fulfilment of duties and obligations of state parties

The UN Convention Against Corruption has quite correctly gone beyond the historic offence of ‘Corruption and/or Bribery’ perceived to be only in the public sector. ‘Corruption’, as spelt out by the entirety of the UN Convention Against Corruption, encompasses ‘Corruption and/or Bribery’ in several forms, both in the public and private sectors, and include offences of economic crimes, in financial or commercial activities, money laundering, et al.

Since the UN Convention Against Corruption has been in operation only since the beginning of 2006, the offences coming under the ambit of the Convention, to be combated and prevented, are likely to come under the ambit of several Statutes in the respective countries, with different State Agencies dealing with investigations and prosecutions thereof, or invariably there would be necessity to amend and/or modify and/or update existing legislation and/or enact new legislation, to comply with the stipulations in and/or obligations under the Articles of the UN Convention Against Corruption; wherein the word used repeatedly has been “shall”, whereby the State Parties are compelled to duly observe and perform the duties and obligations on their part.



Also since the ratification of the UN Convention Against Corruption by State Parties had been staggered and/or protracted, the commitment of the statutory authorities of the respective State Parties, and the amendment and/or modification of and/or updating existing legislature and/or enacting new legislation, would be in progression, with such chronology of ratification of the UN Convention Against Corruption. Sri Lanka ratified the UN Convention Against Corruption on 31 March 2004, as the second country to do so!

Thus, the necessity arises for the State Parties to develop accountability vis-à-vis the implementation of the UN Convention Against Corruption, through a continuous recording and reporting system of achievement and/or implementation of the objectives of the UN Convention Against Corruption, broken down into relevant segments of implementation of the necessary legal frameworks, establishment of mechanism and law enforcement authorities and/or agencies for the enforcement of and compliance with the Articles of the UN Convention Against Corruption.

Such a record in respect of each State Party ought not only comprise of progress of compliance, but more importantly a time based plan to give full effect to the obligations to be performed under the Articles of the UN Convention Against Corruption, if corruption is to be combated successfully in the world, for the well-being and benefit of humanity at large.



UN Convention Against Corruption – ‘Implementation Review Mechanism’

Excerpts from the Statement made to the Plenary Session of the 3rd Seminar of the International Association of Anti-Corruption Authorities by Dimitri Vlassis, Chief, Corruption & Economic Crime Branch, Division for Treaty Affairs, United Nations Office on Drugs & Crime (UNODC) on 4 July 2011, in relation to the progress of the ‘Implementation Review Mechanism’ by UNODC, which is the host to the UN Convention Against Corruption, and which is the Secretariat to the Conference of the State Parties, are set out below:

“Moving to the work of the Mechanism, the Implementation Review Group held its first meeting in June 2010 and kicked off the first year of the current review cycle. Every State Party to the Convention will have an opportunity in the next three years to review its implementation of the Convention through a peer review process. As the Convention is the only global legal instrument against corruption, many States in regions that do not have regional or sectoral instruments in this area are being engaged for the first time in this work. This has contributed in turn to shrinking the safe havens for proceeds of crime and to raising awareness of the detrimental effects of the diversion of resources.



“The Conference decided to review Chapters III on criminalisation and law enforcement and IV on international cooperation in the first review cycle. The domestic implementation of Chapters III and IV is reported on through a self-assessment and then discussed through active dialogue with the peer reviewers. States may request country visits or joint meetings in order to complement the reviews. Final reports are drafted by the experts assisted by the Secretariat, and agreed to by the countries under review.

“The selection of States parties participating in a given year is carried out randomly through a drawing of lots. At its first session, the Implementation Review Group drew lots for countries under review in the first cycle, thus providing all countries with the year in which they will undergo review and enabling them to plan ahead and prepare for their reviews. The Group also drew lots for the reviewing countries for the first year. Each country is reviewed by another country in the same regional group and one from any regional group. A quarter of States parties are under review every year, with two reviewers for each of them, thus involving dozens of countries from all regional groups in implementation work.



“26 countries were under review in the first year, a number slightly less than a quarter of total States parties due to the fact that several countries deferred their reviews to the following year. For the second year of the cycle however, we have a full complement of 41 countries under review, only 2 having chosen to defer to next year. At the second session of the Group that met just recently in June 2011, the reviewers for those 41 countries were drawn by lots.

“As the outcome of the reviews of the first year are being finalised and we embark on the second year, we have been able to provide the Group with an overview of how the review process worked in the first year and some lessons learned for the coming review. Countries that participated in the first year as being under review or performing reviews reported on their experience to the Group and largely welcomed the work that had been undertaken and the positive and constructive spirit of the reviews as well as their highly technical and detailed character.”



Corruption at highest political levels

One of the most cogent issues, which demand to be reckoned, is that the very implementation of the UN Convention Against Corruption, on the part of State Parties, require the commitment of the political leadership and political will of such State Parties, to effectively combat corruption, with a policy of zero tolerance.  The foregoing may in reality not be easily forthcoming, since the obligations to be performed by the State Parties, affect political leaders and politicians, themselves, and their close political associates, defined as ‘politically exposed persons’ (PEPs) in the UN Convention Against Corruption. As to how such ‘phenomenon’ is to be dealt with, is an issue beyond the powers of authority of State Agencies.

If State Parties to the UN Convention Against Corruption, not only do not perform the obligations on their part to be performed and fulfilled under and in terms of the Articles of the UN Convention Against Corruption, and give effective enforcement thereto, but on the other hand, flagrantly act in blatant violation of the very spirit, principles and stipulations of the Articles of the UN Convention Against Corruption, then the cogent question arises, as to how State Agencies could deal with such calamitous situations ? The only forum for any meaningful action in such context would be the Conference of State Parties to the UN Convention Against Corruption.

It is in such circumstances, that the role that could be played by non-State Organisations and Individuals, who are anti-corruption activists of such State Parties, could come into reckoning, particularly taking cognisance of Article 13 of the UN Convention Against Corruption on the Participation of Civil Society.

The World Bank President, James D. Wolfensohn addressing a Meeting of the IMF and The World Bank, focusing upon corruption and transparency, emphatically asserted that if there was corruption, The World Bank would ‘black ball’ any project, emphasising, that eliminating corruption has to commence at the highest levels – “it needs to be cured at the top or that it will not be cured at all”.



Lord Nolan Report to the British Parliament – 1995

The Seven Principles of Public Life

Selflessness: Holders of public office should take decisions solely in terms of the public interest. They should not do so in order to gain financial or other material benefits for themselves, their family, or their friends.

Integrity: Holders of public office should not place themselves under any financial or other obligation to outside individuals or organisations that might influence them in the performance of their official duties.

Objectivity: In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choices on merit.

Accountability: Holders of public office are accountable for their decision and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.

Openness: Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.

Honesty: Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.

Leadership: Holders of public office should promise and support these principles by leadership and example.



Code of Conduct for Members of Parliament – vide Lord Nolan’s Report 1995

General principles

It is the personal responsibility of every Member of Parliament to maintain those standards of conduct which the House and the electorate are entitled to expect, to protect the good name of Parliament and to advance the public interest.

Members should observe those general principles of conduct which apply to all people in public life.

The primary duty of Members is to their country and their constituents. They should undertake no actions in Parliament which conflict with that duty.

Because Members of Parliament enjoy certain privileges in law, which exist to enable them to fulfil their responsibilities to the citizens they represent, each Member has a particular personal responsibility to comply fully with all resolutions and conventions of the House relating to matters of conduct, and when in doubt to seek advice.



Financial interests

A Member must not promote any matter in Parliament in return for payment.

A Member who has a financial interest, direct or indirect, must declare that interest in the currently approved manner when speaking in the House or in Committee, or otherwise taking part in Parliamentary proceedings, or approaching Ministers, civil servants or public bodies on a matter connected with that interest.

Where, in the pursuit of a Member’s Parliamentary duties, the existence of a personal financial interest is likely to give rise to a conflict with the public interest, the Member has a personal responsibility to resolve that conflict either by disposing of the interest or by standing aside from the public business in question.

In any dealings with or on behalf of an organisation with whom a financial relationship exists, a Member must always bear in mind the overriding responsibility which exists to constituents and to the national interest. This is particularly important in respect of activities which may not be a matter of public record, such as informal meetings and functions.

In fulfilling the requirements on declaration and resignation of interests and remuneration, and depositing of contracts, a Member must have regard to the purpose of those requirements and must comply fully with them, both in letter and spirit.

The UK Audit Commission in its evidence before the Lord Nolan Committee succinctly stated thus: “Public scrutiny of what people do is probably the most powerful pressure towards probity of conduct.”



Reality in Sri Lanka

Multiplicity of Statutes in Sri Lanka, sans a centralised multidisciplinary capable investigation and prosecution independent agency, and sans a competent and knowledgeable judiciary, with unquestioned integrity, and with collusive and compromising professionals

• Companies Act No. 7 of 2007
• Financial Transactions Reporting Act No. 6 of 2006
• Convention on the suppression of Terrorist Financing Act No. 25 of 2005
• Inland Revenue Act, under which the Department is statutorily bound to report suspected cases of Bribery, Exchange Control violations, Customs Offences, which are blatantly not enforced + other Revenue Statutes, particularly VAT with attendant frauds
• Customs Ordinance enforcing a multitude of other relevant Statutes
• Commission to Investigate Allegations of Bribery or Corruption Act No. 19 of 1994, under executive direction and control, with retired Superior Court Judges and Inspector General of Police, who are too old for contemporary needs, sans independent multidisciplinary investigation and prosecution capability.
• Public Contracts Act No. 3 of 1987 – enforcement?
• Outdated Bribery Act of 1954, with subsequent amendments, covering only the public sector, with Clause 70 generally defining corruption enacted in 1994.
• Declaration of Assets and Liabilities Law No. 1 of 1975 – enforcement?
• Offences Against Public Property to Act No. 12 of 1982 applicable to both public and private sectors, but only in respect of State property, but hardly enforced.
• Excise Ordinance of 1956
• Outdated Exchange Control Act of 1953, with amendments, supplemented by the Monetary Law of 1949, with amendments, and Banking Act No. 30 of 1988, with amendments + Finance Companies Act No. 78 of 1988, with amendments. Finance Leasing Act No. 56 of 2000.
• Prevention of Money Laundering Act No. 5 of 2006
• Payment Devices Frauds Act No. 30 of 2006
• Securities & Exchange Commission Act No. 36 of 1987, with amendments

Supported by the Penal Code, Criminal Procedure Code and Civil Procedure Code



Contemporary realties

In the foregoing background the following contemporary realities ought to be pondered upon:

• Denying the impoverished helpless vast majority of poor people equitable social justice, does it not ultimately lead to disillusionment, alienation, frustration, social unrest, insurrection and justifiable rebellion?
• Despite the adoption in December 2005 of the United Nations Convention Against Corruption, specifically identifying as culprits, ‘politically exposed persons’, do not such persons unabashedly continue to peddle fraud and corruption, and are shielded through socio-political influences, and publicly sanctified by religious leaders seeking the ‘limelight’?
• With the cancerous menace of rampant fraud and corruption, does not the unbridled pillage and plunder of the resources of the already impoverished vast majority of poor people, by few persons socio-politically powerful, influential and affluent, further impoverish them?
• Is it not a curious paradox, that schemes and designs to replace such pillaged and plundered property of the poor people, through ‘poverty alleviation programs’, ironically are financed from the very funds of the poor people or by debts to be re-paid by them or their future generations?
• Should not the pillage and plunder of the property of the poor people, referred to as ‘economic terrorism’, perpetrated by ‘economic terrorists’, condemned internationally in contemporary times, be first dealt with, as the root cause for the germination of terrorism?
• Does not therefore, the pillage and plunder of the resources of the poor people, consequently result in armed struggles and armed terrorism, with brutal counter offensives by the international community, to destroy such terrorism?

nIronically, do not such brutal counter-offensives, with the utilisation of further resources of the poor people, which consequently give rise to despicable violations of human-rights, with concerns of humanity righteously transcending parochial interests of nationality justifiably raise international concerns, however, at a very belated stage?

 

(The writer, F.C.A., F.C.M.A., C.M.A., C.G.M.A., C.F.E., is a Certified Fraud Examiner, Associate Member, American Bar Association, Member, International Consortium on Governmental Financial Management – ICGFM, Individual Member, International Association of Anti-Corruption Authorities – IAACA.)