Building on Pandora

The explosive revelations in the Pandora Papers of offshore asset-hoarding by the world’s rich and powerful has seen the spotlight being shone on two prominent Sri Lankans – Nirupama Rajapaksa and her husband Thirukumar Nadesan. 

The documents reveal that Rajapaksa and Nadesan together controlled a shell company which was used to buy luxury apartments in London and Sydney and art, using these entities to make investments. Based on the Pandora Papers, Nadesan is said to have set up other shell companies and trusts in secrecy jurisdictions and used them to obtain lucrative consulting contracts from foreign companies doing business with the Sri Lankan Government, and to buy artwork.

If Nirupama’s name rings a bell, it’s probably because she was Deputy Minister of Water Supply and Drainage under President Mahinda Rajapaksa. She is also the cousin of the current Prime Minister and President, Mahinda and Gotabaya Rajapaksa.

Since the papers were released, both Nirupama and her husband have refuted any wrongdoing and called on the Government to conduct a full investigation. President Gotabaya Rajapaksa has responded by directing the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) to investigate the allegations.

However, the allegations and the way they have been handled so far bring up several concerns. The first is with regard to the independence of CIABOC; since the 20th Amendment was passed, the independence of the commission has been brought into serious question, seemingly culminating in the fact that it was necessary for the President to direct them into action – a truly independent body would not need any such direction.

Further, questions need to be raised as to why neither the Central Bank’s Financial Investigation Unit nor the Inland Revenue Department have seen fit to look into or even comment on the revelations thus far, considering the potential implications of tax evasion and the country’s ongoing foreign exchange crisis.

The other point of concern is the questions this raises over how little we know about politicians’ financial assets. Nadesan is believed to have amassed his wealth in the same time period that his wife was serving in Mahinda Rajapaksa’s Government. In this context, the need for politicians to declare their assets going forward cannot be understated.

In 2018, there were allegations that a Chinese State-owned company provided campaign finance to former President Mahinda Rajapaksa ahead of the 2015 presidential election, and there were also similar allegations that controversial primary dealer Perpetual Treasuries had funded the campaigns of politicians.

For several years, election watchdogs have urged lawmakers to be mindful of the importance of publicly disclosing sources of campaign funding as a minimum requirement. The unregulated use of finances could have an adverse impact on the conduct of free and fair elections. The disclosure of campaign contributions, both monetary and in kind, including payments by a contributor to a third-party supplier, will significantly reduce avenues for election campaigns to facilitate illegal activity, principally money laundering and undue influence in the electoral process.

That said, asset declaration law, bribery law and the CIABOC law have existed for the last 35 to 40 years without amendments.  

In 2017, CIABOC was given powers to amend these three pieces of legislation – the Declaration of Assets and Liabilities Law, Bribery Act, and Bribery Commission Act – which were last amended in 1994. However, just as it was due to be tabled in Parliament, there was a change in Government, and along with the subsequent passing of the 20th Amendment, it likely means that these much-needed amendments will likely never see the light of day.

But nevertheless, these are important steps and it is important that stakeholders and the public continue to push for these changes and then stage fresh battles to implement the law – especially when journalists risk so much to shine a light on such unscrupulous dealings. Good governance and accountability is an uphill battle in most countries around the world. The real challenge is to never give up.