By Rajeewa Jayaweera –
In the English language, the definition of three words corruption, fraud, and cronyism in broad terms are;
Corruption; dishonest or fraudulent conduct, typically involving bribery.
Fraud: unfair and unlawful gain through intentional deception.
Cronyism: appointment of friends, associates, and family to positions of authority, without proper regard to their qualifications.
Prime Minister DS Senanayake’s decision to appoint his son Dudley as his successor overlooking many party seniors was perhaps one of the earliest acts involving all three aspects shortly after independence. He supposedly agreed to recommend the appointment of Sir Henry Monck-Mason Moore as the first Governor-General. Sir Henry would return the favor when the time arose. It was an act of corruption, deception, and cronyism.
It is convenient to blame politicians for all acts of corruption. That is a fallacy. We all lament of politicians being corrupt, frauds, and guilty of cronyism. However, politicians are only part of the problem. Less spoken, are of public servants and civil society at large.
All three elements of this circle of evil are prevalent in all walks of life in Sri Lankan society from the very top down to the bottom. There is a tendency to make excuses for offenders at the bottom, based on reasons of poverty, hunger, and more prominent offenders getting away unpunished.
A long-accepted theory in fraud prevention circles is the 10-10-80 rule applied in the Corporate world relating to workplace fraud. According to the theory, 10% will always steal, while 10% will never steal. The balance 80% will steal provided they feel they will get away with the act.
This theory, as a concept, is equally applicable to corruption in societies in countries the world over. However, percentages will vary depending on a gamut of financial and social factors. In this writer’s subjective opinion, the percentage of incorruptible citizens in Sri Lanka would not exceed single digits.
The fear of being discovered, named, shamed, and punished is a powerful deterrent. But that is dependent on checks and balances in place, and the difficulty or ease circumvention of laws is possible. Strong deterrents backed by the rule of law prevails in countries such as Singapore. Sri Lanka has weak deterrents and no rule of law. It leads to mass-scale corruption.
A typical case of corruption, fraud, and cronyism surfaced during the recent Committee on Public Enterprise (COPE) hearings of the Auditor General’s Report of the Peoples Bank. The culprits were top bureaucrats and not Ministers and politicians.
The use of this example is with no intent of malice nor animosity towards any of the officials involved. It is only due to the availability of detailed recordings in the public domain.
The situation in Ministries, Parliament, Provincial Councils, LG Councils, Corporations, and State-Owned Enterprises (SOEs) is no different.
The former Director/General Manager (D/GM) of the People’s Bank, after eight years of service, had been granted a six months service extension upon reaching retirement age. The then Chairman of the bank had requested the extension. He was subsequently appointed Defense Secretary but remained a Director. The justification for the requested extension was to train the new General Manager, a career bank official with 32 years’ experience. He had already functioned as Deputy General Manager for some time.
According to Sunil Handunneththi, JVP Parliamentarian, and Chairman COPE, on August 17, 2018, COPE had advised former Chairman against requesting a service extension as it would set a precedent. The D/GM was due to reach retirement age in October 2018. In addition to the Chief Principe Accounting Officer (Secretary Finance), being advised during proceedings, the COPE Secretary was also directed to communicate the same to Secretary Finance.
Nevertheless, on August 21, 2018, former Chairman had written to ministers Lakshman Kiriella and Mangala Samaraweera recommending a service extension of six months. The justification given was to train the Deputy General Manager taking over as General Manager. The Chairman failed to state in his communication to the two Ministers, COPE’s advice, four days previously against a service extension. When questioned by Handunneththi of recommending a service extension already deemed unsuitable by COPE, the former Chairman who was present at the sittings claimed he was unable to recollect details.
On August 29, 2018, Advisor to Finance and Mass Media Minister in a ‘Note to Minister’ recommended the extension. Based on approval from both Ministers, Additional Secretary to Treasury had informed the bank’s Chairman of the approval for the requested service extension.
The D/GM had resigned on April 15, 2019. The Board of Directors, vide Board Paper 487/2019, had directed the return of an official vehicle bearing registration KM 9238 to the bank. It further approved the release of a BMW vehicle bearing registration CIA 4646 purchased five years earlier at the cost of Rs 16.6 million to him upon payment of the book value of Rs 113,698 to the bank. However, the departing employee had taken both vehicles. Details of payment for the BMW vehicle was neither asked nor stated. The D/GM had also received a sum of Rs 15 million for an additional six months service plus salary arrears of Rs 3.7 million. His employment contract specified a 10% annual salary increment.
Both current Chairman and General Manager insisted the vehicle bearing registration KM 9238 remained the bank’s property despite the removal of the vehicle by former D/GM. They defended the former employee as a highly competent officer. They also maintained, no irregularity had taken place and gave their assurances; no such occurrence will take place in the future!
COPE Chairman, too, failed to ascertain reasons for the bank’s failure to lodge a Police entry of the illegal removal of bank property by the former employee.
A response to the charge of misleading two Ministers from both Chairman and General Manager was not forthcoming.
Another issue taken up by COPE was the Digitalization Program of the bank. The cost of the project awarded to a company named Silverlake amounted to Rs 11 million. Subsequently, in addition to the agreed amount, payments had been made on several occasions to three companies amounting to Rs 452 million for changing modules, hardware equipment, and additional services. A sum of Rs 84 million thereof had been approved vide Board Paper 149/2018 and paid to a company name JIT. The invoice stated, it was for retaining inventory, accommodation, air tickets, per diem for expatriate staff, and included a 10% discount! However, other than an invoice, no supporting documents such as hotel bills, receipts for air tickets, vouchers, etc. were available. The General Manager stated payment was made based on the certification of the invoice by former Head of Information Technology of the bank and approval by former D/GM and Board of Directors.
The former Chairman had previously informed COPE, the delay of the project due to the bank’s shortcomings. During this period, expatriate staff had supposedly remained in Sri Lanka.
The Auditor-General had not found any invoices from the remaining two companies despite the payment of a further Rs 368 million to them.
The amount of money involved in both instances amounts to hundreds of millions. Those involved are not politicians. They are public servants and senior administrators with many years’ experience in government service. Others are bankers, professionals, and lawyers. Their failure to carry out duties diligently amounts to a breach of public trust. Their responses to questions raised were evasive, and at times downright lies as in the case of misleading two Ministers despite the advice by COPE four days earlier against a service extension for the D/GM.
COPE Chairman opined, the service extension would have been obtained to facilitate payments such as that paid to JIT and the other two companies. He further stated officials would have received commission payments for facilitating such payments.
Chairmen, both present and past, remained silent.
Even a person with average intelligence would take necessary steps to find a suitable replacement and commence training if needed, six months before the retirement date of the incumbent.
Directors are appointed based on expert knowledge they possess in different spheres such as law, finance, marketing, administration, HR, IT, and banking in this instance.
It would be reasonable to question the expertise of this set of Directors. They failed to identify the need to appoint and train a General Manager six months before the incumbent’s retirement. Besides, they approved payments amounting to Rs 452 million without relevant documentation.
Corruption and fraud in Sri Lanka begin very early in life, in fact, even before a child is born. Due to different standards in state schools, many parents plot and plan their choice of school for their yet to be born fetus. The child is then made to memorize an address and details of a household of known persons living close to the desired school. The child is trained to lie to school authorities during the admission process. We then wonder about the reasons for widespread corruption in the country. The fact is, the process begun at the fetus stage, is in their blood.
Sri Lankans will shortly elect the 8th Executive President of the country. Several leading personalities and over a dozen nonentities have joined the contest. The populace receives a daily dose through print, electronic, and social media of contestant’s agendas. They bellow how they plan to revive the economy, create jobs, ensure national security, increase salaries, and many other plans. None reveals how they propose to raise funds to finance their grandiose ventures intended to make Sri Lanka a paradise on earth.
Not a single candidate has spoken of a program to curb corruption, fraud prevention, and eradicate cronyism.
Going back to the 10-10-80 rule, do we have a candidate with a team in the country belonging to the single-digit incorruptible category? If such a candidate comes forward, would the vast numbers of the corrupt and fence-sitters vote for such a candidate and an agenda to eliminate corruption, fraud, and cronyism?