Loss from inefficiency and waste far exceeds corruption losses: Eran W

Member of Parliament Eran Wickramaratne speaking on the ‘Financial Impact of the Findings of the COPE Report’ at a seminar on ‘Good Governance’ organised by Women for Good Governance (WGG) on Monday at the OPA Auditorium stated that the loss from inefficiency and waste far exceeds the losses on corruption in Government institutions.

He called on economists to undertake research in estimating the loss of revenue and also the impact on economic growth. He opined that if the loss from corruption was 5% of GDP, then the loss in revenue would be as high as 15% (300 billion) of the Government’s budgeted expenditure, but the losses on wastage and inefficiency would be much greater.

Wickramaratne stressed that there was widespread institutional failure and that the prevailing culture encouraged activity around personalities rather than institutions which can sustain economic and business activity. He illustrated that when the Police fail in their duty, rather than building the institution of policing, we replace the police with the military.

Government institutions are rapidly losing its managerial and professional class due to politicisation, poor remuneration and non-conducive work environments. The public service is caught up in a low-pay model, where it cannot retain its professional cadre. Government does not invest in training in any significant manner to redress this trend.

COPE report

The Parliamentary Committee on Public Enterprises (COPE) investigated 229 institutions over the past 18 months. An analysis as to whether these institutions were loss making or profit making was not that important. But the reasons for underperforming were many.

Amongst the many findings were the lack of corporate plans, ineffective audit systems, lack of independent investigations into fraud, and non-punishment of those who have breached the public trust and the lack of sound management.

He pointed out that the Auditor General’s queries were lightly regarded and often ignored by the institutions. There was a need to strengthen the role of the Auditor General, and also the Parliamentary office of the COPE. There are only eight officials to follow up on the findings of PAC and COPE, which is an impossibility. He also argued that the chief accounting officers of the State, who are the secretaries of the ministries, should take responsibility for initiating corrective action as has been suggested by COPE Chairman D.E.W. Gunasekera.

It was Wickramaratne’s view that chairpersons and directors of boards should be held responsible when management in Government institutions do not reply audit queries on time, and do not submit annual accounts to Parliament within six months of the closure of the financial year. He said they should be barred from holding government positions and advocated the development of a ‘blacklist’ for barring people from holding public office. At present there is nothing to prevent an offender in one public institution taking up an appointment in another.

Lack of political will

Eran pointed out that the lack of political will was the main cause in our inability to arrest the deteriorating situation in public institutions. As an example he cited the sorry state of affairs of Sri Lanka Cricket (SLC) where gift monies had not been paid, salaries of cricketers unpaid, unauthorised bonus payments to selected employees, excessive legal fees, non-transparent hiring, financial mismanagement of the World Cup, and unbudgeted expenditure relating to the construction of three stadiums, notwithstanding, and as a slap on the face of good governance, the members of the Interim Committee have been appointed to new positions on the Board.

It was his view that the nominations to SLC could not have escaped the Executive. He urged civil society not to lose hope despite the corrupt system, but to exercise vigilance and agitate as there are still upright individuals in all institutions, including the judiciary.

To a question posed to him on what can civil society do, he replied that politicians and public servants could be brought to answer questions in a court of law if they do not uphold the rule of law. Like in India, civil society should take responsibility in doing so. He concluded that despite the limitations of the Parliamentary Committee systems, COPE has been able to reveal facts to the public on which the Government and civil society can act.