FOR IMMEDIATE RELEASE
September 15, 2005
AS-95-2005
A Statement by the Asian Human Rights Commission (AHRC)
Scandal at the Inland Revenue Department needs to be investigated and brought under criminal investigation promptly
An alleged fraud involving the Inland Revenue Department (IRD) was revealed in the Island newspaper on 13 September, 2005.
The alleged fraud is 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. Therefore further details of the report could not be released to the media.
An alleged fraud regarding the inland revenue department of any country would be considered a very grave matter. The reason is that such a department is one of the most important national institutions. The integrity of this institution should be above suspicion at all times if national stability is to be maintained. Where the tax payer perceives corruption in an inland revenue department it is inevitable that this will be exploited in many ways and the rational functioning of the institution will become impossible.
An alleged fraud of this magnitude should have been treated as a national crisis of the highest degree and should have been dealt with in the shortest time possible so that all perpetrators could have been criminally charged or, on the other hand, action could have been taken against those who carelessly made such an allegation. The fact that the union started protest action and has threatened to abstain from the collection of taxes, and that the statement of the Auditor General declared that there had been an audit query, suggests that the allegations simply rumour alone.
Fraud by anyone is a matter for criminal investigation. The alleged fraud of this proportion should have become one of the most important criminal investigations in the country and for that purpose the best criminal investigators of the police department should have been deployed. However, up to now there is no news of any criminal investigation taking place.
In countries that looked to the issue of nationalism from the point of view of maintaining the highest standards of the public institutions in order that they may serve the nation in a way that is expected, the prevention of this type of fraud would have been of primary concern. If the political parties and various other forums including religious institutions that claim to be the guardians of the nation were to be true to their claims, there should have by now been a massive remonstration on what is alleged to have taken place at the IRD. However, the so-called nationalists of the country have remained silent, even after a responsible union that is knowledgeable about the workings of the IRD, has blown the whistle and brought the matter to the attention of the public.
National stability depends on the elimination of fraud even more so than the elimination of violence and terrorism. A badly functioning inland revenue department can damage the stability of the country much more effectively than any terrorist group. In fact, where fraud is controlled, the possibility of the spread of terrorism is much reduced. A demoralized nation, frustrated by the unreliability of its own basic public institutions, succumbs more easily to any threat, whether from within or without.
In the past the Asian Human Rights Commission has drawn attention to the issue of the collapse of public institutions in the country and the subsequent exceptional collapse of the rule of law. We had the misfortune of predicting that this collapse, if not arrested would soon manifest itself by way of unimaginable forms of misappropriation, corruption and abuse of resources and people. The alleged scandal at the IRD is a sad confirmation of such a prediction. However, what is more sad is that due to the lack of will to effectively probe and take criminal action on these matters, much worse things may happen and be revealed in the near future.
A question that may arise is as to whether the criminal investigation capacity of the Sri Lankan police will be able to deal with such large scale fraud. This depends very much on the sophistication of the police force and their capacity to use technological resources to look into the whole episode within the shortest time possible. With a union whose members are involved in tax collection on a daily basis, information relating to the matter should be plentiful and readily available. In countries that have shown the capacity of their criminal investigators to deal with corruption within public institutions, this demonstrates that the development of their police to deal with these matters takes pride of place in criminal investigation work. However, if our police continue to conduct their investigations purely by the use of physical force on poor wretches involved in incomparably smaller crimes, then the country may suffer from not having cats that can catch bigger, smarter rats.
We urge all public spirited persons to treat the issue of the alleged fraud at the Inland Revenue Department as a matter concerning national stability and security and take urgent steps to see that it is investigated by competent criminal investigators and that all culprits of whatever positions, be brought before criminal courts as soon as possible.
