Sri Lanka’s looming IMF review spotlights anti-corruption drive

Lotus tower in Colombo, Sri Lanka

Photo credits: unsplash

Sri Lanka is under pressure to show it is serious about eradicating corruption, as the bankrupt South Asian nation prepares for the first review of its International Monetary Fund bailout package in September.

About a month ago, Sri Lanka’s Parliament took a critical step in approving new anti-corruption legislation. But experts and the political opposition note that the country had such laws on the books for years but was still plagued by graft. The huge protests that brought down the government of former President Gotabaya Rajapaksa last year focused, in part, on allegations that endemic corruption contributed to the economic crisis that caused a sovereign debt default and severe shortages of essentials.

Now many observers say that even with the new law, the proof of the government’s commitment will be in implementation.

Sankhitha Gunaratne, deputy executive director at Transparency International Sri Lanka (TISL), said the law has many laudable provisions — recognition of a wider range of offenses, including private-sector bribery and bribery for sexual gratification, increased fines, as well as mandatory public declaration of assets. She said late-stage changes to the draft could also make it possible for voters to see the asset declarations of electoral candidates prior to voting.

“There are many good things about the bill, and TISL welcomes it,” Gunaratne said. “But from the start, we have maintained that the lack of law has not been the weakness in addressing the problem of corruption in Sri Lanka. We always had laws that were poorly enforced and implemented.”

During the parliamentary debate on the law, opposition lawmaker Anura Kumara Dissanayake made similar points. The leader of the National People’s Power party argued that existing laws were sufficient, but that authorities only went after small fish due to political influence.

“Laws alone will not end this problem,” he said. He noted that in 2021, the bribery commission filed 69 cases, but withdrew 42. In 2022, the commission filed 71 cases but scrapped 43 on technical grounds, according to Dissanayake. “The truth is that even the bribery commission is held prisoner to politics.”

With the IMF team due to visit Colombo from Sept. 14 to 27 to review Sri Lanka’s progress in following through on its nearly $3 billion bailout deal, the government of President Ranil Wickremesinghe will be keen to show that things are changing. The IMF is understood to have pressured the government to root out corruption.

Sri Lanka’s ranking in Transparency International’s 2022 Corruption Perceptions Index stood at 101 out of 180 countries, with its low score little changed from a decade earlier.

Corruption is so entrenched that whistleblowers who have exposed major scandals have fled the country. One such person is the former executive director of the Consumer Affairs Authority, Thushan Gunawardena, who left for Australia.

Gunawardena had accused Rajapaksa’s trade minister, Bandula Gunawardene, of numerous frauds, including one involving the importation of faulty gas cylinders despite “multiple written warnings.” The cylinders were blamed for several deaths. The former minister denies all wrongdoing.

Gunawardena claimed that he was subsequently harassed to the point that he could no longer work, and that after resigning he received death threats and was repeatedly summoned by police.

“Corruption is a way of life in Sri Lanka and mostly the fault of the business leaders in the country, who are robbing the resources by not paying the due taxes,” Gunawardena said. “That is partly the reason why we have large companies posting profits quarter after quarter, yet the host economy is continuously underperforming.”

Many experts question whether the IMF’s demands alone will be enough to ensure the problem is addressed. Bhavani Fonseka, a constitutional lawyer, has her doubts.

“What is critical is for all stakeholders, including the opposition, civil society and media, to monitor this process and pressure the government to implement the framework,” she said, stressing the key is whether Sri Lanka will continue to be plagued by a lack of political will, insufficient capacity, limited expertise and other obstacles that have undermined the functioning of the bribery commission.

Activist Melani Gunathilaka is even more skeptical. While she said the law looks good on paper, it was passed by a parliament that includes politicians facing corruption allegations. “Without ensuring transparency across the whole process, and without strict measures, I don’t think the bill would work,” she said. “There needs to be a monitoring mechanism not just by a committee appointed by the president or ministers but by a committee appointed by the people.”

Still, others are more optimistic, as they say the new bill tackles some issues.

“For example, it was then not possible for the bribery commission to engage in joint investigations, or even share information with the police or the Financial Investigations Unit of the central bank,” said professor Rohan Samarajiva, founding chair of the think tank LIRNEasia. “Now such joint investigations are explicitly permitted.”

Samarajiva said the previous asset declaration procedure, which required hard copies to be filled out every year and submitted to designated bureaucrats — who may or may not have kept them in secure conditions — was dysfunctional. “The new act introduces online asset declarations that cut out the questionable intermediaries,” he said, adding, “Provisions to make public asset declarations stripped of sensitive personal information have been introduced.”

He also explained that under the old law it was up to the bribery commission to conduct all prosecutions, and that their lawyers were inexperienced and paid less compared with peers in the Attorney General’s Department. The new law allows the commission to seek the assistance of the attorney general.

Samarajiva agreed that implementation is what matters, but said the new law “has created the necessary conditions” for success.

(Source: Nikkei Asia – By MUNZA MUSHTAQ)