The scope of expenditure by a State corporation

Tuesday, 25 August 2015 01:12 - - {{hitsCtrl.values.hits}}

By R.M.B. Senanayake

In our country’s financial theory and practice, the study of public spending has been weak. Emphasis on income and expenditure under the traditional system of financial management concepts and practices are still prevalent, but limited to public expenditure by government departments. They are governed by the Financial Regulations and the Establishments Code.

But only Government departments have to conform to the Financial Regulations and the Administrative Regulations including the Establishments Code. But limited liability companies are governed only by their Memorandum of Association. Current Company Law legislation has done away with the requirement for a Memorandum of Association which used to define the scope of expenditure by a company.

What about the expenditure by State corporations? Some are set up under a specific Act applicable to them. But many are set up under the Industrial Corporations Act.

Many State corporations under the previous regime but even before have spent Corporation funds which are public money, on matters totally unrelated to their functions and purposes such as to further the election campaign of ruling party candidates. They may violate the Elections Law.

But apart from expenditure on elections they also spend money on many extraneous functions and purposes. Are such expenditure legal? Will a lawyer versed in Public Administrative Law clarify the position? If illegal does the public have a right to recourse to the law to recover such expenditure? What is the view of the Auditor General who audits public accounts?