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:
- 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.
- 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.
- 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.
- 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.
- 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.”