SRI LANKA: The Interim Report of the Parliamentary Committee on NGOs is flawed from the point of view of policy, science and law

Basil Fernando

(This is the first part of an article which is a comment on the Interim Report of the Select Committee of Parliament for investigation of the Operations of Non-Governmental Organizations and their Impact, which was presented to parliament on December 8, 2008) 

The purported aim of the committee and its report is to prevent the abuse of funds by non-governmental organisations (NGOs), a very laudable aim. If this be the actual aim there is a very easy and simple solution which is to improve the law, and the implementation of the law, relating to bribery and corruption in Sri Lanka. If there is such a huge hole in the net for catching anyone engaged in the abuse of funds that should reach the public, it is not possible to catch anyone with such a net. The very enterprise will be one that begins with absurd notions and can have only absurd results. Unfortunately, that is what this report is all about. It tries to address the possible abuse of funds by NGOs while ignoring and allowing the abuse of funds by all state agencies and all public sector institutions. This is like trying to catch a three inch sprat with a shark net thereby leaving all the big fish free; it is like trying to catch an ant in a jungle of corruption. 

Good auditing is essential in preventing abuse of funds. The records of all public institutions in Sri Lanka, particularly in recent years, demonstrate careless and criminal disregard with respect for proper auditing. Let us begin with the Sri Lankan policing system, which after all is the law enforcement agency in the country. 

Corruption revealed by audited accounts in the policing service 

In October of this year the Auditor General’s report revealed widespread corruption in the police department regarding purchases. The buying of items such as spoons made from coconut shell which can be bought for Rs 20/- in the market and which were accounted for at Rs 200/- each; a door mat worth Rs 200/= which was accounted for at Rs 2,600/50 each; a hand towel worth Rs 20/= which was purchased at Rs. 120/= each and an electric coconut shredder worth Rs 5,500/= and which was purchased at Rs 23,500/= are among the many items which have been questioned by the Auditor General’s Department. Since these items are often bought in large quantities to serve various operations where many thousands of officers participate, the alleged fraud involves large amounts of money. For one operation alone the amount comes to Rs 5,247,584/=. When many such transactions are taken together it comes to a staggering amount. 

Corruption revealed by the audits regarding the Inland Revenue Department 

In September 2005 a massive fraud was revealed in the Inland Revenue Department. The alleged fraud was in the amount of Rs 3,570 million (US $ 35.70 million). According to a trade union source from the Inland Revenue Service Union, the report stated that the fraud was alleged to have taken place in the VAT Division of the IRD. The newspaper reported also that the Auditor General, when contacted for his comments admitted, “That there was an audit query on the fraud alleged by the unions and a report has been submitted to Parliament but so far it had not been tabled.”. 

Corruption revealed regarding tsunami funds 

In September 2005 the Auditor General published a report concerning the numerous irregularities in tsunami reconstruction, rehabilitation and fund management. Covering the period from December 2004 to June 2005, the document is an interim report on post-tsunami activities and was presented to the Sri Lankan parliament. 

The media has commented on the tough stance taken by the report, which among other things, highlights the lack of records on the collection of aid money from individuals and institutions, as well as the absence of any government scheme for the utilization of this money. The report further notes the irregular distribution of funds; in one divisional secretariat where 599 families had been recorded as being affected by the tsunami, 15,843 families received assistance. 

Corruption relating to defense expenditure 

A major theme for many years has been corruption relating to military purchases involving enormous sums of money. Numerous reports have been published and many political speeches have been made but no action has been taken to satisfy the public about the massive expenditure in defense. One of the incidents that were discussed widely was the purchase of five MiG 27 aircraft which is said to have had a total purchase cost of Rs. 1,065 Million. That was of course, just one such alleged fraud. Instead of conducting inquiries severe restrictions on the non-government media were imposed and journalists were exposed to severe punishments for talking on these issues. Discussion on corruption relating to defense spending was tabooed as a matter effecting national security. 

Seven thousand queries by auditors from the public sector have been ignored 

Within the last year over 7,000 queries by auditors from government institutions have been ignored. When auditor’s queries are ignored the only assumption that can be made is that they are being ignored because an explanation consistent with innocence cannot be given. 

The former auditor general’s call for an Auditor’s Act 

The former Auditor General, who acquired an almost legendary name for his services, suggested an Auditor’s Act and submitted a draft law to that effect. Nothing has been done to enact that law. With the former Auditor’s General’s knowledge there is no doubt that he would have brought all the necessary experience from developments relating to auditing in the modern world and from this experience of the problems in Sri Lanka he would also have provided legal provisions for overcoming all such problems. If there is any seriousness in ensuring proper maintenance of a system of accountability in terms of the highest auditing standards, the simplest thing to do would be to enact this law. When such an advanced document is available for a group of non-professionals to tamper with the issue is tomfoolery. 

The 17th Amendment to the Constitution 

In a constitutional setup completely dilapidated by the horrible experience of the 1978 Constitution, one ray of hope aimed at the start of work towards accountability was the 17th Amendment to the Constitution. This has been completely and deliberated abandoned. After allowing the catastrophe of non-accountability to flood the country, to be talking about the accountability of some small organisations cannot be taken seriously. This may be perhaps better expressed by the local term, trying to wear underwear to stop diarrhea. 

The lack of effective laws to prevent foreigners bribing Sri Lankans, including top politicians 

For decades now the issue of massive bribes being paid by foreigners and foreign companies to Sri Lankans, including top politicians, for the purpose of gaining advantages in contracts, tenders and other business deals, has been reported. How some politicians have purchased apple yards and built huge houses in foreign lands has been pictorially depicted in the political discourse in Sri Lanka. Everyone knows that foreign companies and corporations have to engage in extensive bribe payments to obtain a foothold in the country. In return they are provided with opportunities to take away monies that should have gone to the local public. No law has been passed and not even the existing laws have been used to stop this massive form of corruption. 

The few items mentioned above are merely a few samples of the mountains of corruption that have risen have permeated every nook and cranny of Sri Lankan life. In fact, from the point of view of corruption, Sri Lanka is a mountainous country and from the point of view of doing nothing to stop this, Sri Lanka’s record is a dismal one. 

The Interim report lacks seriousness 

If the abuse of funds is what the Select Committee was interested in, the Interim Report demonstrates an absence of seriousness. It is perhaps, what in the local Sri Lankan parlance would be called, trying to light a cigar when the moustache is burning. In short, the report borders on being nonsensical. 

How abuse of public funds is eliminated and proper auditing is maintained in other jurisdictions 

It we discuss this with one example from Hong Kong there are no special laws to deal with NGOs. The idea of trying to bring a special law to ensure auditing among NGOs would be regarded as ridiculous because under the law, the Independent Commission against Corruption (ICAC) in Hong Kong has been established and is now acknowledged globally as an effective corruption control agency. Its influence has spread into the policing system, the public service and the private sector which includes also, NGOs. Anyone who violates that law by abuse of funds and trying to cheat auditors is risking time in jail. There is no such fuss and meetings in the Legislative Council on such small players as NGOs. Everyone is under the law and the law is well implemented. 

In the next part of this article we will discuss the Select Committee’s attempt to write history and even science. Charles Darwin wrote the Origin of the Species; the Select Committee is trying to write about the origin of Non-Governmental organisations. Charles Darwin offered his book for the purview of scientists and it was the work of a scientist. Writing about the origins of anything, including various societal matters is a subject that belongs to social sciences. This is not a matter for parliamentary select committees or even parliament itself. There was a time in the middle-ages when the work of a person would be adopted by the monarch as the officially valid version on a particular subject. That kind of thing was also done by regimes such as that of Hitler and Joseph Stalin. These are attempts that the local saying, the donkey trying to do dog’s work, fits. This aspect will be covered in the next part of this article. In subsequent parts of the article we will cover the absurdities involved in the definition of non-governmental organisations given in the Interim Report; the legal absurdities arising from imposing registration of already registered legal bodies under the Voluntary Social Service Organizations (Registration and Monitoring) Act No. 31 of 1980 and Amendment Act No 08 of 1998, Companies Act No. 17 of 1982, Special Acts of Parliament, Societies Act of 1972, Companies Ordinance (Amendment) of 1891, Agrarian Development Act No. 46 of 2000, Rural Development Act, Protection of the Rights of Elders Act No 09 of 2000, Consumer Affairs Authority Act and the Trustee Ordinance. We will also try to demonstrate the origin of non-governmental organisations as far back in history, even before the states came into being. We will also demonstrate what an enormous role Buddhism has played in the areas of social services, particularly in the early part of Buddhist history when it played the role of a social reformer in a caste-ridden Indian society. Further we will also show how in western society the work of early Christianity was very similar to what civil society organisations, including NGOs, do today. We will examine the entire Interim Report from the point of view . 


Imposing strict audit requirements and avoiding abuse of funds meant for the public is absolutely a laudable aim. The NGOs cannot claim exception to this and, in fact, I would not think any sensible NGO would object to this. In public perception it is the politicians who avoid accountability. However, it is not possible to achieve this laudable aim without a holistic approach. Where there are mountains of corruption, trying to remove a piece of stone makes no sense. Therefore, the Select Committee should have critically examined its mandate and reported that the only condition on which proper accountability can be established for any sector or group is through the improvement in law and the implementation of an accountability mechanism in Sri Lanka which means improvements in the law relating to bribery and corruption and the reform of institutions responsible for the implementation of law. 

Document Type : Article
Document ID : AHRC-ART-044-2008
Countries : Sri Lanka,