Sri Lanka Governance Report 2009

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Text of Sri Lanka Governance Report 2009





  • First Published in Sri Lanka in 2009

    Transparency International Sri Lanka

    28/1, Bullers Lane

    Colombo 07

    Sri Lanka

    Tel: (94) 11 2501474, 2592287

    Fax: (94) 11 2506419



    ISBN: 978-955-1281-28-1

    Cover Photo: Ananda Jayasekara

    Editors: Arjuna Parakrama, Nilhan de Mel, Ramsey Ben-Achour, Bettina Meier

    Coordinator: Aiman Rasheed

    Every effort has been made to verify the accuracy of the information contained in this report,

    including allegations. All information was believed to be correct as of November 2009.

    Nevertheless, Transparency International Sri Lanka cannot guarantee the accuracy and the

    completeness of the contents. Nor can Transparency International Sri Lanka accept responsibility

    for the consequences of its use for other purposes or in other contents. Contributions to the

    Governance Report 2009 by authors external to Transparency International do not necessarily

    reflect the view of Transparency International or Transparency International Sri Lanka.

  • Table of Contents

    Foreword 01

    Introduction 03

    Governance in Times of War and Peace 07

    Suzie Beling

    Transparency and Accuracy of Central Bank and Treasury Data 21

    Transparency International Sri Lanka

    Governance Crisis in the Financial Services Sector 25

    Transparency International Sri Lanka

    Perceptions of Sri Lanka in Governance Indices 35

    Gareesha Wirithamulla

    Interview with the Chairman of the Bribery Commission 45

    Nilhan de Mel

    The Decline of Media Freedom in an Age of Fear 49

    Ananda Dharmapriya Jayasekara

    Failing to COPE: Parliamentary Oversight in 2008/2009 57

    Ramsey Ben-Achour

    The Politicization of Public Administration in Education and Foreign Service 61

    Nilhan de Mel

    Interview with the President of the Clean Hands Alliance 67

    Aiman Rasheed

    Post Conflict Challenges of Governance 71

    Frances Bulathsinghala and Arjuna Parakrama

  • There is a cancer that must be removed in order to facilitate the

    advancement of this nation; it is none other than waste and corruption. You

    and I need to commit ourselves to the eradication of corruption and fraud

    not only in the public sector, but also in the private sector.

    President Mahinda Rajapaksa

    Keynote address at the Institute of

    Chartered Accountants of Sri Lanka


    Power tends to corrupt, and absolute power corrupts absolutely.

    Baron Acton (18341902)

  • Foreword

    Transparency International Sri Lankas (TISL) mission is to enhance integrity and curb corruption

    in all sectors. We do this by engaging all stakeholders in constructive dialogue, with the aim to

    devise joint strategies to overcome institutional, legal, and attitudinal obstacles to good

    governance. We strongly believe that a collective effort is needed to reduce corruption and

    mitigate the negative effects that it has on our society. Policy makers, the business community,

    and civil society must work hand in hand to strengthen Sri Lankas governance framework, and

    create an environment that does not tolerate the abuse of power and corruption. Much work

    needs to be done.

    As in previous years, the Governance Report 2009 aims at stimulating the debate on governance

    in Sri Lanka by providing an overview of key events that occurred between November 2008 and

    October 2009. In addition, it includes detailed analysis on a wide range of selected topics.

    Without a doubt, the end of the armed conflict was the hallmark event in the past year. To bring

    about lasting peace, however, governance issues need to be urgently addressed. Other important

    events in the past year include the crisis in the finance sector and the deterioration of media

    freedom. While this report cannot be exhaustive, it does attempt to cover the most important

    trends and developments and, in so doing, to provide fact-based information that is needed to

    support a constructive debate on governance. Indeed, Sri Lanka needs more space for open

    debatesdebates that are based on accurate and relevant information. We hope that the

    Governance Report 2009 contributes to this goal.

    The chapters of this report have been written by both TISL staff and external subject experts. I

    wish to express my gratitude to the authors of the articles, who delivered excellent texts despite

    working under tight time lines. A great thank you goes to the editorial panelProf Arjuna

    Parakrama, Nilhan de Mel, Ramsey Ben-Achour, and Bettina Meierthat has with great

    dedication and diligence ensured the quality and accuracy of this report. Thanks to Aiman

    Rasheed for competently co-ordinating the process of writing. And finally, a big thank you to the

    external reviewers Nelum Gamage, Chandra Jayaratne, Dr Saravanamuttu, and the many other

    experts who wished to remain anonymous.

    J.C. Weliamuna

    Executive Director


  • -2-

  • Introduction: Post-War Governance Requires Real Changes of

    Attitude and Process

    Definitions of governance are notoriously slippery. It is clear that an all-encompassing mandate

    under the rubric of governance is often counter-productive because it leads to vagueness and

    impracticability. The UN-supported trend to be more inclusive and integrative in describing this

    concept, however, is gaining wide acceptance because it seeks to address the inter-related

    concerns that confront us in the complex societies that we live in today. We no longer have the

    luxury of artificially separating the economic from the social and political. This is especially true in

    terms of governance, as the consequences and ramifications of each impinge so crucially on the


    The UNDPs policy document on good governance and sustainable development provides an

    excellent over-arching framework and lens through which the diverse yet related essays in this

    Report should be viewed.

    Governance can be seen as the exercise of economic, political and administrative authority to

    manage a country's affairs at all levels. It comprises the mechanisms, processes, and institutions

    through which citizens and groups articulate their interests, exercise their legal rights, meet their

    obligations, and mediate their differences.

    Good governance is, among other things, participatory, transparent, and accountable. It is also

    effective, equitable, and promotes the rule of law. Good governance ensures that political, social,

    and economic priorities are based on broad consensus in society and that the voices of the

    poorest and the most vulnerable are heard in the process of decision-making over the allocation

    of development resources.

    Governance has three legs: economic, political, and administrative. Economic governance

    includes decision-making processes that affect a country's economic activities and its

    relationships with other economies. It clearly has major implications for equity, poverty, and

    quality of life. Political governance is the process of decision-making to formulate policy.

    Administrative governance is the system of policy implementation. Encompassing all three, good

    governance defines the processes and structures that guide political and socio-economic


    Governance encompasses the state, but it also transcends the state by including the private

    sector and civil society organisations.

    TISLs 2009 Governance Report seeks to progress beyond minimalist and exclusively statist

    definitions of governance. Indeed, it is important to grasp the multiple, yet inter-connected,

    foundations of good governance which include issues of participation, transparency,

    accountability, gender sensitivity, and anti-corruption to name but a few. The report attempts to

    address these issues in pro-active and people-empowering ways, as opposed to the usual passive

    defaults that are demonstrably inadequate due to hierarchies of power and hegemony in fraught

    contexts such as Sri Lanka.


  • Thus, the chapters in this report describing the years performance of COPE, the Central Bank, and

    the Bribery Commission share a common underlying theme. That is, accountability must not be

    confined to specialists and privileged interlocutors who are able to demand information from

    responsible and crucial state regulatory institutions. Instead, accountability should be pro-

    actively transparent towards all sections of society. The analysis of post-conflict governance in the

    North and East articulates the view that, irrespective of the motives of government, legitimacy

    can only be derived through meaningful participation and ownership of projects, which must

    include serious input into decision-making and periodic review. This also applies to the analysis of

    governance concerns regarding the politicization of the education and foreign affairs ministries.

    The relationship between fundamental rights/freedoms and good governance is less clearly

    defined in the literature, though it is implicit in the chapters discussed above. It needs to be

    stressed that in the Sri Lankan context specifically, but also in general, an enabling environment or

    safe space for dissent, difference, and discussion is a key pre-requisite of good governance. This