Lessons from China or Tunisia?

Just few months ago, in response to a public outcry for more accountability and transparency in the use of public funds, the State Council, which is the Cabinet in the Chinese government, directed 98 public institutions including ministries to make public their budgets and expenditure on  official receptions, official overseas visits  and public vehicles. Why these three items? China has recognized these as the most abused items of public expenditure, which have long been viewed as major sources of squandering and corruption. Though the nature of lavish and wasteful expenditure varies from country to country, one can see similarities of the operation of such expenditure.

I begin this article on extravagance on public expenditure, with this Chinese example to demonstrate that criticism on extravagance is not a Western concept, as probably our coteries of political advisors and self-serving propaganda experts would always say.  Those great people who have found solutions for their own countries have always identified the problem first.

There is nothing in Sri Lanka without lavishness. From birthday celebrations of the Head of the State or a Minister to an insignificant event, waste of public finance becomes so obvious.   Inauguration of the second term of the President marked two weeks of celebrations with specific instructions being given by the Presidential Secretariat itself to heads of departments and public corporations to engage in various activities,  such as planting of millions of  trees, decorating and illuminating  public institutions at night, having over 10,000  flexed-hoardings and bill boards with specifically designed artwork  and having bodhi pujas at temples – all expenses being met with State funds. Detailed arrangements were made through security establishments to ensure that celebrations are not disturbed. The entire State mechanism worked on the celebrations for one whole week. Though the costs were obviously more than what one could imagine, no head of a public institution dare oppose such wasteful expenditure for fear of the repercussions. Even if a minimum Rs. 1 Million (much below than actual figures) was spent on an average by each Ministry and Corporation the cost would be over 1000 million for this extravaganza, in addition to direct expenditure from the President’s office and defense establishments and waiving off of numerous costs.

Consider the waste of State funds when over a hundred and fifty handpicked people including the Governor of the Central Bank of this economically ailing country, are taken to the Caribbean island, St. Kittes,  to bid for the Commonwealth Games.  Only a mere 20 had arrived from Australia, a country, which is over 117 times larger than Sri Lanka, but has about the same population.(http://www.srilankabrief.org).

Take the foreign visits by our Head of State even when he goes to address the UN General Assembly – free passage for hundreds of politicians, state officials, supporters, relatives, beauticians etc. at public cost. The costs include accommodation in five star hotels; possibly they also enjoy other perks like transport and being invited to official parties.  Usage of Air force helicopters for local holiday travel, together with state protection, for even political appointees such as Central Bank governor is just acceptable.

Look at the public purchases. Sri Lanka Air Force has received two Bell 412 helicopters in December 2011 from USA and, according to media; these helicopters have been configured for VIP passenger travel. This is obviously not for security concerns but purely post-war luxury. Who pays for them? Are we dreaming of the fallen Tunisian dictator Ben Ali’s collection of private jets here in Sri Lanka?  Whatever the counter arguments may be; let us not forget that the money spent are ours – money that belongs to you and to me.

One of the six key globally recognized principles of public expenditure is “the principle of economy”.

The principle of economy requires that government should spend money in such a manner that all wasteful expenditure is avoided. Economy does not mean miserliness or niggardliness. By economy we mean that public expenditure should be increased without any extravagance and duplication. If the hard-earned money of the people, collected through taxes, is thoughtlessly spent, the public expenditure will not confirm to the cannon of economy.” (http://www.economicsconcepts.com)

In that context we need to understand what is extravagance? The dictionary meaning is “excessive outlay of money; wasteful spending”.

To enter the discussion on this topic, let me place before you the thoughts of Samuel Johnson, who lived in 18th Century and who is considered by many to be the most distinguished man of letters in English history.

“As to the rout that is made about people who are ruined by extravagance, it is no matter to the nation that some individuals suffer. When so much general productive exertion is the consequence of luxury, the nation does not care though there are debtors; nay, they would not care though their creditors were there too.”

From Parliament to Finance Ministry and then to Individuals 

There is a difference in extravagance at public expenditure and lavish expenditure by those who have accumulated wealth by corrupt means. This article only deals with the former.   It does not discuss how some of the corrupt individuals have become billionaires overnight with political power or resorting to other means. How did the elected leaders, officials and their families get the authority to spend public money lavishly?  To answer this question, “the public expenditure element” must be understood with basic principles of accountability of public finance. As in many other democracies, Article 148 of our Constitution states,   “Parliament shall have full control over public finance”. This is a fundamental constitutional principle since parliamentary democracy was born. The often quoted words of Gladstone summarize the basic principle of British parliamentary accountability of public finance thus, which is worth reflecting again and again:

The finances of the country is ultimately associated with  the liberties of the country. It is a powerful leverage by which English liberty has been gradually acquired. If the House of Commons by any possibility lose the power of the control of the grants of public money, depend upon it, your liberty will be worth very little in comparison.”

According to constitutional conventions and the law, the Parliament is mainly responsible for the protection of public finance. This includes the responsibility of the parliament to prevent abuses such as extravagance and waste of finances.  However, we need to find out why Parliament is so weak in Sri Lanka in this regard. I can cite FIVE main reasons for the present  status.

Firstly, its Constitutional position – Parliament has been placed subservient to the Executive. There is nothing that the Executive cannot get done through Parliament.

Secondly, Parliament is distorted in today’s context. Does anyone know who is in the Government and who is in the Opposition?

Thirdly, there is no strong and transparent financial committee system that is capable of holding the Chief Accounting Officers (the Secretaries of Ministries) accountable, let alone the Ministers.  A good example is to ask whether any of the parliamentary committees would summon the Secretary to the Ministry of Defence and question him effectively?

Fourthly, the quality of parliamentarians matter for the protection of public finance and liberty. Today, most of the parliamentarians are motivated by perks and they are themselves responsible for a lavish lifestyle; Extravagance is part of their life and except for a few, they are unwilling to go back to their roots.

Finally, there is no effective and genuine follow-up action on any findings of a finance committee.

Let me move on to the responsibility of the Ministry of Finance. It is the Ministry of Finance, or the Treasury,  that is the guardian of expenditure because the Treasury is entrusted with the authority to disperse the funds, once funds are allocated by Parliament.  In any respectable democracy, the Finance Minister is a Member of Parliament but in our country for more than a decade the President has been the Minister of Finance. In other words, the Minister in charge of the Treasury is not available for questioning by Finance Committees.  The Minster in charge of Finance (the President) is the main spender through other Ministries such as Defence, and how can such an authority act with responsibility in the case of a conflicting expenditure.   In my view, prior to a post auditing exercise by the Auditor General, it is the Treasury that has some idea about what goes wrong in expenditure.  Chapter III of the Government Financial Regulations gives sufficient directions for the Treasury to supervise management and accountability of “government monies” and “general oversight of all financial operations of the government”.  There may be a few weaknesses but in my view, if the Financial Regulations are given effect to by the Treasury, some of the extravagant spending could be minimized.

I would be failing in my duty, if I do not touch upon the individual responsibility because, none of these institutions can operate with accountability without individuals – whether politicians or officials.  Not all individuals do have the authority to control public finance or to get anywhere near a revenue source.   The knowledge or qualifications neither make great institutions nor great countries; unless those who run them have their own integrity.  Qualifications and integrity are two distinct values; one does not necessarily depend on the other.  If those who run our finance, including the Ministers, Parliamentarians, Treasury officials and other public officers cultivate integrity in their own lives and respective professions,  the political leadership might reform. Why shouldn’t they be taken to task in the normal course of law enforcement?   If such honest people are present in higher positions, no power can overcome the liberty of the citizens. No abuse or extravagance of any Ministry including the Ministry of Finance or the Ministry of Defence would then be tolerated.

Acute & Corrupt Extravagance

Admittedly, Sri Lanka is not the only country which has resorted to extravagance at public expenditure, for many decades, not to mention the present status when it is absolutely appalling.  Swindling of public resources under the guise of a perfectly justified expenditure can easily be recognized. Acute and continuous extravagance has its own uniqueness.  There lies deception and corruption at highest levels, particularly when extravagance continues with impunity.  It is no secret that such acute extravagance is covered under a conspiracy of silence, generally coupled with bad governance.   To me, the following deadly realities and features emerge, wherever such large scale corrupt extravagance exists, particularly, where there is virtually state capture:

  1. Coteries of corrupt political and bureaucratic network create or find an event, assignment or project,  suited for such expenditure.  They have a common element – vested interest in the government, economy or business.
  2. An identified and trustworthy mastermind plans the expenditure under the guise of “national” or “economic” advantage, with the support from a state propaganda machine. Without exception these groups exploit the ego and megalomania of the political leadership.
  3. Political leadership, if not directly involved in such operations, will be convinced of two things; firstly, that their names will not be dragged into an unsuccessful operation and secondly, that they will have the comforts of the outcome of such extravagance.
  4. All avenues of a challenging probing are effectively blocked – from parliamentary level to law enforcement levels – through manipulation of institutions and appointments into key positions.
  5. In case of a backfire of exposure resulting in street protests or unmanageable criticism, another strong public resources is kept ready to deal with it – that is the military, that is prepared to execute unlawful orders of a political master!

I request the readers to apply these principles carefully to the major areas of extravagance of the Government of Sri Lanka today, be it buying of Bell Helicopters, construction of Cricket stadiums, Hambantota airport, all types of projects ending with the word “Neguma”   or unsuccessful attempt to win Commonwealth Games busting public money. Wayne White, an adjunct scholar with the Washington-based Middle East Institute, cited  the fall of the Gadaphi regime for his extravagance and says he will be remembered for waste, misgovernment and corruption. Should our political leadership be worried? Is there a lesson to learn for the New Year?

The core of the issue of corruption, extravaganza and abuse of power lies in the hearts of the people, who either tolerate it or fight it. Some of them believe that the Constitution and  the law alone can find solutions to these deep seated problems;  for some,  the judiciary  is the forum to address all the issues. As Gladstone pointed out (quoted earlier,  the finances of the country is ultimately associated with the liberties of the country. However, the hearts of the ordinary man and woman matters to protect them. Let me wind up by quoting Judge Learned Hand on this very point and urge you to take the responsibility to realize a dream for our country – a country free of corruption and extravagance at least in the coming year.

What do we mean when we say that first of all we seek liberty? I often wonder whether we do not rest our hopes too much upon Constitutions, upon laws and upon courts. These are false hopes; believe me, these are false hopes.

Liberty lies in the hearts of men and women; when it dies, there, no constitution, no law, no court can even do much to help it. While it lies there it needs no Constitution, no law, no court to save it.”

  • A very commendable article exposing the extravagance of the Government of Sri Lanka. It brought to my mind the events that preceded the French Revolution. Will there be such a revolution in Sri Lanka soon? Will the guillotine be the fitting response to these unscrupulous politicians in power and their minions who keep them happy ? God forbid. It is my view that soon, the people would realize that there is no other alternative to save our country.

  • It is sad and unfortunate that endemic corruption by our politicians has now reached its pinnacle. I explained in my article “Bribery & Corruption with impunity” (Sunday Island, 23.5.2004), that while no country is immune from this scourge of corruption, it is a key element in economic under-performance and a major obstacle to poverty alleviation and development. Mr. Weliamuna emphatically points out that “If those who run our finance, including the Ministers, Parliamentarians, Treasury officials and other public officers cultivate integrity in their own lives and respective professions, the political leadership might reform.” With due respect to the writer, my personal feeling is that our greedy politicians have now reached a point of no return.

    When Sri Lanka signed and ratified, in 2004,the landmark UN Convention that outlaws corruption the United Nations Secretary-General Kofi Annan hailed it as a “remarkable” achievement, and asserted that “corruption hurts the poor disproportionately — by diverting funds intended for development, undermining a government’s ability to provide basic services, feeding inequality and injustice, and discouraging foreign investment and aid”.

    The UN Convention is a formal framework for domestic actions to prevent, fight, prosecute, and control corruption and the problems stemming from such corruption. Under its terms, ratifying countries were required to enter into legally binding obligations to:
    – establish criminal offences to cover acts of corruption;
    – develop national institutions to prevent corrupt practices and to prosecute offenders;
    – aid in asset recovery through the prevention and detection of transfers and the recovery and return of assets; and
    – take the first step toward tackling corruption: prevention, in both the public and private sectors, through the establishment of anti-corruption bodies, enhanced transparency and accountability, and due diligence programs.

    It is perhaps still not too late to adhere to guidelines presented by Mr. Weliamuna, and also to draft the national laws conforming to the UN Convention. However, nothing will ever happen until our apathetic voters wake up to the reality that our corrupt politicians have plundered our national wealth, and demand accountability and transparency in the use of public funds. We can only hope.

  • John Wayne

    Many thanks for this! The [edited out] so-called Central Bank Governor – Nivard Cabraal is to blame for much of the borrowing and spending on international markets to further his ego and corporate greed. Sri Lanka is headed for DEFAULT and huge currency depreciation at this time while the post-war economic dividend has been wasted on the extravagance.
    1. Nivad Cabraal should be held accountable and interdicted on the demand of professionals and civil society. He must be held accountable for the Common Wealth Games junket. We need to start a campaign against the politicization of the Central Bank – Cabraal’s flights to Trincomjallee in military helicopters for lunch with this family etc.
    2. A campaign to set the right paradigm for post war social and economic development should also be launched by civil society. The so-called Minister of Economic Development has not got a basic degree and knows nothing about development or economics and only talks about tourism, name brand stores opening in Colombo and car races.
    3. What has happened to Shangri La? They are still watching and waiting given that Lanka is a high political and economic risk environment for investment.
    4. The welfare state (mainly education and health care) is being eroded due the the Govt’s extravagance and debt. Poor parents who live in slums in Colombo (Arunoda Mawatha, Obeysekere pura, Rajagiriya) found that their children would not be accepted to schools which used to be free without payment. Children were turned away from Govt. schools on Jan 2 , 2012 in this neighbourhood and the parents went to the HR Commission.

  • John Wayne

    Almost forgot, as you point out the Opposition and Ranil Wickramasinghe in particular needs to be held accountable for accepting Rajapakse’s Bribes in the form of 10 million bullet proof Mercedes Benz and other perks — instead of refusing it and calling for austerity until the IDPs in the north east are properly settled.
    RW has been the darling of Colombo civil society for too long and he needs to go. Civil society needs a boycott RW campaign and to hold ALL politicians accountable. A campaign for Rosy for a new voice, vision and a woman for UNP leader must begin since Sajith Premdasa the pretender to the throne is a Sinhala nationalist who does not represent the values of the grand old party which were multiethnic and pluralist and anti-militarist. Sajith agrees with Rajapakse’s policies and should join them. Ranil is also becoming increasingly racist and following Sajith’s example – in order to cling to power. Civil society must speak out about the mess in the UNP which does not belong to either Ranil or Sajith and the need change in it.

  • dinuk

    The bank of ceylon is planning an issue of $500 million ten year bond in 2012 no doubt at Nivard Cabraal’s bidding, to pay off already astronomical dollar denominated debt which all Sri Lankan citizens carry due to Rajapakse and Nivard Cabraal’s extravagance.
    The Bank of Ceylon one of Lanka’s oldest banks is being pushed into the RED by an irresponsible Central Bank which does not provide sound analysis but rather spin to cover up the regimes excesses.
    A campaign to demand the resignation and an investigation of Nivard Cabraal on the Commonwealth Games fiasco and other lies that he has told is necessary at this time. He has stated that he would make another bid for the Commonwealth games in 2020 and miss led the business community by asking them to fund the bid to the tune of $9 million. He must be held accountable for misrepresentation of facts and waste of public funds.

    • @ dinuk

      like I said in an earlier comment to John Wayne that did not appear here…it’s no use blaming Cabraal or Basil or the Honourable Dr.Mervin Silva or Duminda Silva because they were all appointed by the PresiDunce of this Utopian Paradise. The buck stops with the PresiDunce. Blame him. And when his six years is up, throw him out by using your vote. If enough people go and vote, a computer Jilmart will not be possible.

  • PresiDunce Bean is an optimist indeed.
    With the passing of the 18th Amendment to the Constitution Mahinda has arrogated unto himself all the powers he and his dynasty need to continue in power. The Judiciary, the Election Commissioner, the Police, the Military. the Human Rights Commissions and all other key institutions and positions have his henchmen at the helm. These will never ever be independent institutions in the future. In the circumstances, there is no chance whatsoever that there will ever be a fair and just elections in Sri Lanka in the years to come. The only hope we have for a change of government is with the awakening of the people, not with the ballot but by a revolution of the kind that happened in Tunisia or Egypt. Already there are signs of the germination of such a revolution. Lets hope it will come sooner than later.

    • @A Concerned Citizen

      YES I am the eternal optimist, but I agree with you whole heartedly in the comment you made. Sadly in this land of kiribath/lotus eaters it will take some time for them to wake up from their blind patriotic stupor. But I am sure that it wont take 42 or 43 years like it did in Libya.
      Oh my God! If we had oil then it would have been a 1000 year family Reich. 10 years at the most. But not if we sit on our butts.Lets you and me do the cyber activism and let the younger people do the revolution.

  • dinuk

    Time for a citizens campaign clean up political culture, get rid of the old guard of dictators in ALL parties, end ‘money politics’ and enable a NEW GENERATION of political leaders in the isle of the lotus eaters and dunces!
    The LRRC was right and should have asked the current politicians not just to apologize to the people for the mess they made of the country, but more importantly – to resign. It’s time for the next generation to take over from this generation of politicians (Rajapakse, Ranil W, the JVP jokers) that raped and despoil mother Lanka! And we need women leading in politics in post-war Lanka!