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Megadeals and corruption: Will the crooks ever be found

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By Vidushan Premathiratne, CFA

The advent of the Coalition Government led by President Maithripala Sirisena and Premier Ranil Wickremesinghe was an endorsement by the people to prioritise anti-corruption and improve governance. Despite corruption being the main reason behind the rejection of President Rajapaksa, the Government has yet failed to convict anyone of high level fraud. The present Government in untitled-3the meantime has taken refuge by blaming all its inefficiencies on the byproducts of the poor decisions of the previous administration. 

The corruption quandary

It is funny to note that most corruption inquiries have been directed at the members of the Opposition who have used their visit to the FCID, PRECIFAC or other anticorruption institutions to portray their patriotism and enhance their claims of international conspiracies.

Certain key figures of the of the Joint Opposition have been forced to make the prison their second home, while the whole episode resembles a pre-shoot scene of a film with a gathered audience escorting the accused to court followed by his resounding statements after being sentenced to prison. 

Why would anyone be scared if they have nothing to hide or be accompanied by such crowds in their visit to such institutions? It is even more shocking to hear of a surprising statement made by a so-called advocate against corruption, President Sirisena, against the Commission to Investigate Allegations of Bribery or Corruption, the CID and FCID, alleging that they could be carrying out their work according to a political agenda when the Commission filled a case against the former Defence Secretary and navy commanders.

The move has been severely criticised in political circles and has led to the Director General of the Bribery Commission handing in her resignation, citing the President’s statement as a response to the commission filling a case against the supporters and allies of the ruling coalition. 

All megaprojects carried out over the last ten years are billion-dollar projects, most of which are yet to bring in the required revenue to pay off their cost through borrowings. The projects were ambitiously done on the principle ‘we build, you come’ rather than through a proper feasibility procedure. 

This is the only way to explain how Sri Lanka ended up with the world’s emptiest airport, a southern port with little or no ship traffic and a coal power plant that frequently breaks down.

The majority of megaprojects, including high-cost expressways, were awarded through unsolicited proposals and non-competitive tenders which lacked transparency and financial accountability. The alleged acts of corruption in these projects could extend to billions of dollars and the resulting debt trap is such that the present Government does not even know how much was borrowed to finance these projects. 

Only the people will pay

The extent of the irregularities in those megadeals mandates a review of the process and a reassessment of individual projects. The perceived drive towards many benefits that the core individuals of the current Government could receive by continuing with corrupt affairs is such that the incumbent Government has failed in its promise to change its direction for the betterment of the country. 

The ‘Yahapalanaya’ mantra does not seem to be working as far as the understanding of certain Ministers of the present Government is concerned. The controversial bond issue and the results of a justification behind the probe are yet to be presented. The end result has been that the people have been punished by the Government by having been left to pay for these acts through the increase of VAT, capital gains and other taxes, while Ministers enjoy duty free concessions on their vehicles.  Even if a future Government is formed by the Joint Opposition, it will be no different.

These actions have placed Sri Lanka 83rd in the 2015 ranking of the corruption perception index published by Transparency International. This is on par with China, but below India, the big brother who was perceived to be more corrupt a few years ago. High corruption ratings will repel many investors from considering Sri Lanka, leading to many unsavoury outcomes.  

Why is it difficult to catch the crooks?

A key reason for the slow pace of corruption investigations is the lack of human resources required to look into complaints against corruption. The Bribery Commission alone faces a severe shortage in human resources. Currently, it has only a quarter of the police officers required to investigate thousands of complaints received by the commission. 

Effective law enforcement is essential to ensuring the corrupt are punished. However, questions can be raised about the independence of the legal framework, law enforcement branches and an independent and effective court system. Sri Lanka also lacks a budget reporting mechanism which prevents the waste and misappropriation of resources. The Right to Information Bill has to a large extent increased the level of transparency but requires a more open Government which supports the freedom of the press. 

A major accusation that is floating around is the lack of stringent measures that prevent money laundering as many of the corrupt tend to deposit their looted money in offshore accounts. Without access to the international financial system, corrupt public officials would not be able to launder and hide the proceeds of stolen state assets or illicit transactional commissions. Financial centres and regulators must urgently put in place ways to stop their banks and cooperating offshore financial centres from absorbing illicit funds. 

It can also be perceived that the Government and the Opposition have an understanding to waive off any corruption inquiries rather than seek punishment. 

In the end the most corrupt will never be found

There is a saying, “If you steal, always steal big, then you will be in a better position to build a case for you innocence.” If history is any guide, then it is certain that the corrupt will not be found. Many individuals have escaped corruption charges due to weak technical reasons. Technical faults have helped the crooks get off the hook in most instances through deliberate measures. Also, some cases have dragged on till the death of the accused. 

The respect the people once had for politicians is fast eroding with most of them perceived as crooks and cronies. People tend to be the victim of their malicious intentions. It is true that corruption, the world over, takes years to prove. Since Sri Lanka is not used to such complex investigations, it will require a degree of patience to find answers. However, that being said, it does not create a vacuum where politicians dawdle on the emotions of citizens to retain or obtain power. Despite, the Government’s promise in their manifesto to probe megaprojects and punish the offenders, only the petty cash offenders seem to have been caught in their net. 

(The writer is the Managing Director at LTC Ltd., a financial and investment banking services firm operating in Sri Lanka. He has a BEng (Hons.) in Chemical Engineering degree from the University of Nottingham, United Kingdom and an MBA from the University of Colombo. He is also a Chartered Financial Analyst. He can be reached via email on vidushan@ltcsl.com or www.ltcsl.com)

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