charindra chandrasena 00:06 Hi Dana. Hi Dhananath Fernando 00:07 Jani. charindra chandrasena 00:07 Hi Deoni. Speaker 1 00:09 Hi Jaya. charindra chandrasena 00:11 So Deoni is here today because we are going to talk about something something very particular that happened last week. I thought Dhananath Fernando 00:21 it's cricket. That's last night, charindra chandrasena 00:24 and yeah, we are still very happy. We are still sort of celebrating that even while while at work, while recording, while doing anything, we are thinking about last night. But yeah, fantastic performance. Fantastic performance. But you've Dhananath Fernando 00:40 done well on the other front as well, and I think you introduced on the other charindra chandrasena 00:44 front. So the other front that we've done well, and and and which was evidence last week was on the corruption perception index. So Deoni is here because Devon is from the from Transparency International Sri Lanka, Devon, you can you can first of all just give an overall idea to our audience about what you do, what your what your role at TISL is, and then and then maybe we can bring you into the conversation. Speaker 1 01:19 Sure. Firstly, I don't think I'm as elated as Chandra is about the cricket with the CPI score. Let's get that clear. But we'll get that. We'll get into that a bit later. charindra chandrasena 01:32 CPI being Corruption Perception Index score. So we haven't done that. Any challenger Dhananath Fernando 01:40 will come after the Sri Lanka Zimbabwe match to the same. Maybe we'll dial it down. I hope not. charindra chandrasena 01:46 But let's see. I'm ready for anything with Sri Lanka. Speaker 1 01:49 It's the same with in this context as well. Yes, Dhananath Fernando 01:53 exactly. Yeah. Speaker 1 01:54 So my name is Devonidai. I'm the senior advocacy and research officer at TISL. My work mostly entails sort of policy analysis and legislative review of obviously anti-corruption focus legislation, right? So over the last couple of years, with the you know post-crisis context and with the IMF in the country and you know all sorts of changes due to what we went through in 2022, there have been a lot of there's been an influx of laws, policies, mainly a lot to do with the economic front, but also the anti-corruption front. So my work in the last couple of years has entailed looking at those, making sure that they're fit for purpose, you know, that they get passed with as little loopholes as possible, so we advocate for essentially a stronger anti-corruption legal framework, and also try and ensure proper implementation of those those laws and policies as well. Strengthen overall oversight, transparency, accountability within the governance system in Sri Lanka. That's broadly where I work and my area of work currently. Okay, charindra chandrasena 03:09 so I mean, obviously that's why you're here because you would directly have some involvement with with the topics that we are discussing today. So I want to start off with the corruption perception index, but just at a very very granular level of why is it the corruption perception index as opposed to the corruption index? Because a lot of people don't really appreciate the difference between corruption and corruption perception. What's the difference? Speaker 1 03:41 So I can again any with any tool or especially perceptions indices, right? It's it's all based on how you use it, what it is and what it isn't. So I can speak to what the CPI is, and as you rightly said, it's it's a perception of public sector corruption within a country. This is Dhananath Fernando 04:02 purely on public sector corruption. Speaker 1 04:04 Purely on public sector corruption. Okay. Right. So it looks at in it's it's based on surveys. Right. So the surveys look at bribery. It looks at allocation of funds. It looks at public financial management within public institutions. It looks at whether there's nepotism, whether it's a meritocracy, things like that. Those are the questions that are reflected in these surveys, and these surveys are mostly directed to the business community, investors, and there are sections of the tool that also cover the general public, but it's quite limited. This is this is mainly focused on academics, experts, and and the business community. So how the tool itself works? It's so Transparency International has 13 data sources that they use for the CPI. Out of those 13, eight have been used for Sri Lanka this year, and. These scores are then rescaled to fit the zero to 100. charindra chandrasena 05:04 Devon, why, why, why out of 13, eight have been used in Sri Lanka? So why not all 13? Speaker 1 05:10 So there's a criteria that Transparency International has to when selecting out of these 13 data sources, right? So they look at the methodology, they look at year-on-year availability of the sources, they look at how well these sources, how well the the result of these sources can be adjusted to fit the CPI. So those are there's there's certain criteria that they use to select sources essentially, and overall a minimum of three sources required for a country to be included. Right. Okay. So Sri Lanka this year they used eight sources out of those 13 that they have verified. So just just a very brief as in how the CPI works. It's a zero. It's a score from zero to 100. Right. Zero being very corrupt and and 100 being very clean, and how it works is these sources are then standardised to fit that zero to 100 scale, and then it's a simple average of those sources that gives you that CPI score. So Sri Lanka this year was 35, so that's the average of those eight sources that have been restandardized to to fit within that CPI bracket, that's a very right statistic. charindra chandrasena 06:25 So 35 means out of 100 as a percentage, 35, and there are certain countries in the top tier who are around 90, Speaker 1 06:34 around 80, yes, around charindra chandrasena 06:36 yeah. I think there are someone at 87, right? Speaker 1 06:38 Yes. charindra chandrasena 06:38 Yeah, 88. Yeah. So we are not even half that. Speaker 1 06:44 No, we're not. charindra chandrasena 06:44 Okay. Speaker 1 06:46 So the global average is 42. charindra chandrasena 06:47 Global average is 42. So we are we are well below the global average. Speaker 1 06:51 Yes. charindra chandrasena 06:52 So, but yeah, I suppose small mercies, right? In in terms of our history, our our track record, this is something that that we can be happy about, but just one more question on on on the ranking. When you when what does this ranking actually tell? So we have gone up 13 places, right? What does that say about Sri Lanka as a country when you look at the other countries which are above it and below it? Because Sri Lanka climbing 13 spots in absolute terms, what has that meant because Sri Lanka could actually rise 13 places, Dana, if 13 countries above Sri Lanka Speaker 1 07:50 have reduced? Yes, charindra chandrasena 07:51 have have gone down. So is it that is it that Sri Lanka has come up because the bar has been lowered, or has Sri Lanka objectively got better? Speaker 1 08:03 So, in my opinion, there's a in terms of reading the perception, the CPI to the best of you know for it to serve its purpose the best it can. You look at the score as opposed to the rank because it tells you more, right? Because again, like you said, the score can reflect changes that have nothing, absolutely nothing, to do with Sri Lanka. Sometimes, right? And this year is also the first year in over a decade where the global average has reduced. The global CPI scores have reduced as well. So there are so many factors that don't have anything to do with Sri Lanka that can contribute to those those shifts. You also have to remember that within a certain band, within a certain score, even there are so many countries, right? So many countries lie on that same line, on that same sort of interval, right? So then, when there are shifts in the rank, it means less than it seems, essentially, right? So context in viewing the rank matters, right. So when the global sort of global average has declined for the first time in 10 years, that tells you, okay, there have been a significant number of countries that have declined across in that sort of that leadership board that ladder, right. It's also important to a technical sort of technicality within the methodology is also that there's a standard of error, right? There's a standard of error. Sorry, there's what's called confidence interval. Yeah. So it's a 90% confidence interval, right? So it's a range in which ASCO lies, and that again is because there are so many countries within that same band or within that same score, right? And what's interesting is so our confidence, our score this year still lies within the same confidence interval as last year. Our confidence interval, our range in which our score sits, has not really changed much in the past 12 to 15. Right, so those small upticks and downticks, it's still within that same range. So to see real, to see a reflection in the score of any real meaningful institutional change, any institutional progress, is you know essentially seeing that a jump over a certain period of time, as opposed to what we've been doing over a certain period of time, is sort of stagnating within that interval, right? So you want to see progress is seen by sort of breaking that cycle and then moving out of that sort of interval that you've been in for such a large period of time, at which we've seen other countries do, but unfortunately, that is how that's the best way to use the corruption perception perceptions index to sort of give you an idea of actual meaningful structural change within a country, right? Because perceptions can shift. I mean, we all know that, and especially coming post crisis, right? We're coming off of somewhat a period of great instability, right? And and and perceptions shift because of it. And then, Dhananath Fernando 11:10 if I very quick question, what's like the sample size? Because generally, Sri Lankans are also concerned about like you measure the perception. You said it's the business community, and it's also in particular, it's about the public sector corruption, as far as I understood. So, what's like the perception, and what's the ranking that we have done like quite well in the history of the CPI, like where we were like you know ranked topped over the like let's like say 10 years or 15 years, where I have been the best performance of Sri Lanka. Speaker 1 11:41 So, okay. So to answer that, I'll quickly go back to what how the methodology works. Right. So, like I said, it's eight. So their data sources. So some examples of it is the Economist has a survey that they do. The Intelligence Unit, the World Bank has a institutional and policy analysis that they do every year. I believe it's the World Justice Project. There's a survey on on rule of law, etc. So these are the sources that Transparency International uses. So these eight are then combined to give you the CPI. So within these eight are also surveys. They're also perception based, right? So they each have different sample sizes that then feed into our overall CPI score, Dhananath Fernando 12:26 right? Speaker 1 12:27 And this year, particularly, when you sort of look at a couple of them in detail, function of government is somewhere we have scored quite low, right? Which again represents those institutional structures. What do you mean by function of Dhananath Fernando 12:44 government? Speaker 1 12:45 Function of government is essentially perception of service delivery or how certain certain mechanisms within governance need to function, especially oversight mechanisms, accountability mechanisms, transparency within government. All of that contributes to the function functioning of government, right? We've we've scored fairly low in in function of government, which again feeds into the fact that you know it needs to be a structural change as opposed to just a change in sort of culture or attitudes at a at a given point in time, the one of the one of the sources that has been quite consistently used for Sri Lanka is the world is a survey done by the World Economic Forum, so it's a survey that that collects the perception of investors and and business community, that is where Sri Lanka has has sort of fallen this year. Again, coming off of you know a massive economic crisis that's not unheard of, right? And to answer your question on where we've seen sort of historic, historically where we've seen us improve, that also relates to this World Economic Forum survey, which was done in 2012, which we scored quite high in. Right now, again, that can also be attributed to post-war development, right? We saw increased spending in infrastructure. You know, all of these things they shift perception, right? And it's also important to remember that perception usually lags behind behind reality, right? So perception will come first, always. But then you know, reality will always we will always show you what's and also Dhananath Fernando 14:46 perception is also going with the expectations, right? Like the expectation of level of corruption in 2012 versus like the expectation of like 2000. No, I think charindra chandrasena 14:56 that that's that's thing. I think the we are starting from a low. Correct. So the low base effect is going to make 2025 look, you know, fantastic. But Dhananath Fernando 15:07 it's interesting. I didn't know that it's a it's like a composite. Speaker 1 15:11 It's a composite index. Yeah, index because Dhananath Fernando 15:13 you have taken the World Economic Forum, the World Bank, and other sources. So it's not like a sending like a you know questionnaire asked like, where do you rank Sri Lanka in terms of like you know under these indications? charindra chandrasena 15:24 So, so the so the there is nothing done uniquely or particularly for the corruption index. So perceptions index. Speaker 1 15:33 It is it no it is those composite of eight scores and Transparency International also does their own survey within each country. So it's a it's a combination of all of them. charindra chandrasena 15:42 But then what? Transparency International Speaker 1 15:44 does their own survey within each country. Within each of the composite of yeah, exactly charindra chandrasena 15:48 my point. So it is not only no, yeah, because yeah. So there is that that one measures what exactly the the transparency international one. Speaker 1 15:58 So that measures the perception of the the of bribery within the public sector of you know trust within yes charindra chandrasena 16:08 so that is directly connected to the final Speaker 1 16:12 it weighs as much as all the other sources does oh yeah charindra chandrasena 16:16 fine yeah but but I think for a person looking from the outside that would be the most closely aligned with because the general public associates corruption with this under the table bribe giving and all of that. They don't really think about the nuances of corruption. Dhananath Fernando 16:35 Yeah. charindra chandrasena 16:35 So so I think this measures that Dara. Why is firstly why are people celebrating this in terms of the ranking rise, and how is it important for a country's economy? Okay, can you develop Sri Lanka's economy while you know having it riddled with corruption. Dhananath Fernando 17:03 Yeah. So why I think why we are celebrating for the same reason because we have a very poor track record when it comes to corruption. So even like a small Ibrahim Speaker 2 17:14 is Dhananath Fernando 17:15 considered as a you know reason for celebration. Like the same as cricket chari. Sorry. I mean you know after so many losses, even like you know one single win gives us so much of relief. I think that's one reason. But coming more seriously about whether we can move ahead without, I mean why corruption is I mean why it's important. I think there are two sides to this. One is we need to understand this corruption is not the final like the outcome. I mean, it's a in my sense in my view it's a it's a byproduct of a process or a policy issue most of the time because when you have it doesn't mean that people just corrupt because there's a policy issue of course that integrity the personal impact is also there. But when you have a kind of a poor policy framework, that improves corruption at a grand scale. Let's take as an example. I'm sure most of us have tried to build a house or like you know get get the approval from the technical officer at the municipal council, or like you know, every time when there's you call the discretionary power, where someone basically approves or or or gives an endorsement or a stamp on your choice, there's room for corruption. The more that you have that, we are increasing the room for corruption. I think what we need to do in terms of when moving forward with development, we have to limit that space where people giving discretionary power. I think the best example is how this feels uncomfortable is when you go to when you apply for a visa, and when the when you go for the visa interview, regardless of all documentations being done, you always have that kind of a excitement whether actually they will. I don't know. At least it's the case for me because you're not sure whether actually they because they can say no. Your document is you know it's not complete some reason you know. So when every time when you have some, you know, when your choices are dependent on someone else's discretionary power, you. I'm not saying visa process is corrupt or like you know, but you have that unconscious. I mean, uneasy feeling when you have the room, you try to avoid that uneasy feeling by. Yeah, but the difference charindra chandrasena 19:38 between the visa process and and what you're talking about is that in the visa process, it is very interpersonal in terms of the look and feel, the way a person converses. Those are qualitative factors that maybe can't capture, can't be captured in a system. But now, when it comes to some of the permits that are required, that. Shouldn't be qualitative. Absolutely. Dhananath Fernando 20:03 Absolutely. charindra chandrasena 20:03 And and when it is qualitative, when it is based on discretionary power, then that leaves the door open for for if you are the approving party and I'm the recipient or the intended recipient, for me to come and give you something outside the required means. That's Speaker 1 20:24 a huge gap in the system, right? And maybe not even one one gap, many gaps in the system that then contribute to this, right? So if you know if Taranath wants to get a permit, right? Are there criteria, specific criteria, and are those criteria publicly available, right, and then that's your transparency coming into play there. So even if processes aren't perfect and if processes need to be fixed, if there is mechanisms for accountability and transparency, then still certain risks can be mitigated, right? So in in terms of the full system of the the pitch of the the complete system, right? Are there accountability mechanisms? As are there transparency mechanisms? You know, are there proactive disclosure mandates? Right. So if you do go and if if there is you know considered discretion for an individual to to approve or disapprove disprove disapproval a permit, what holds them accountable? What what is there transparency for us for scrutiny essentially, right? So in in one process, one process maybe can't be fixed, but an entire system can hold that process accountable. charindra chandrasena 21:32 Yeah, right. And and what a lot of people don't seem to realise is that this is not about one government. Speaker 1 21:37 Exactly. So charindra chandrasena 21:38 when you have a good government with good governance, who is clean. That doesn't make the urgency of reforms Speaker 1 21:52 and charindra chandrasena 21:53 and accountability any less. In fact, that should be the time that you really try to bring it in because you have a better chance if they are actually clean. So it's it's not it's not you know dependent on on one government or one individual. This president is good, that president is not good, but we have got that president out, and this president is there, and therefore we are out of the woods. No, so Devon, in terms of what what we were just talking about about about the cost of corruption on an economy, and either of you can take this actually, couldn't someone in Sri Lanka point to countries which are developed or developing rapidly, despite having a culture of corruption, despite not really combating corruption, and say, look at them, you know that is a global power now. That country, this country is a rising giant. What are you talking about? Corruption, right? They are doing fine. The world is looking at them. The world wants to deal with them. Why? Why is this such a big deal? Speaker 1 23:06 So I'll just say a couple of things, and I'll let I'll not get into the sort of economic granularity a bit. But I think in in government in in a lot of discourse, right? We like to pick the exception and make it the rule, right? And I think that's the case as well when it comes to case studies where there are. I'm sure there are countries, right, which are thriving on the CPI but show good signs of economic progress and development. But I think again, there there needs to be some discipline, and you need to sort of intellectual discipline, and also just be cautious with making an exception the rule. Because again, context matters. The Sri Lankan context matters. We have seen in our past the detrimental effects of corruption, right? In terms of massive state losses, we've-I mean-we're coming off of a severe economic crisis, and governance failures and corruption risks have played a huge part in it. Right, from weaknesses in public procurement management, and you know, like Danla said earlier, ministerial discretion. All of these things, in terms of public financial management, all of these things have led to one of the worst crises of our time. And you know, we'll be very careful to sort of attribute a sort of a model that has proven to not work in Sri Lanka to Sri Lanka, right? But yeah, like I said, I would let Darna take the the lead on that question. Dhananath Fernando 24:46 Yeah. So again, Chari, when it comes to the granularity of it and on looking at the overall aspect, I would recommend you look at giving more choice. I'll take another example now. I think for common man, the most how shall I say closest example is when they got caught to a traffic violation, right? So the fact that you are trying to give someone a bribe is not merely that you cannot afford it. Sometimes it's the choice of the payment method, because anyway, if you are bribing and getting away with your licence, you have anyway there will be some level of expenditure. It's just the at one point before this gap pay or that was implemented. It's just a matter of like you are getting a ticket and then you have to go to the post office and then you pay that and again you go back to the police. So I think charindra chandrasena 25:41 that's also a good example of how technology and automation and and and the digital economy can can reduce the need for corruption. Dhananath Fernando 25:49 Absolutely. So it is merely the choice. Like okay, you have the choice that you can take the ticket and pay at the post office. I think that wasn't really dismantled. But at the same time, you can pay it online and get it there because it's convenience. So I think again, if you look at on an overall angle of choice, when you have a broad range of choice, then you can minimise the corruption. In my view, but again, there will be corruption anyway. Again, it is not an endorsement that you know people should be corrupted. Human nature. Human nature. There will be some level, but of course, even like in the in the countries who are doing well, they are 80s and 90s, not even 90s, right? So 80s. So that means every the the the top performing country also has corruption. No two words. charindra chandrasena 26:36 I think Norway. No, yeah, Norway is for 88. Dhananath Fernando 26:40 Yeah. Still, so so so you have to look at the overall choice point of view. One second is this is fundamental for any economic growth because perception matters. You know, perception matters because when you feel that it's corrupt, even look at like when you are going to a let's say when you are visiting Kenya or African country, you pretty much how you prepare is completely different from when you are going to let's say Norway or somewhere because your perception matters. It's same with investment and everything. So the perception matters. Not only the perception, the real corruption also has to come down. But this can only be changed in my view through lot of policy. I have seen like transparency has done like a lot of good work on like finding the most the high what you call the the most uncorrupt person or like the integrity of boards and things like that to really identify the people who really driven with integrity, which is definitely important. But when you are looking at mass scale like a massive system, especially a country like Sri Lanka with massive government sector, then it is basically bringing choice and also cutting the size of the government. It doesn't mean the private sector is uncorrupt. Private sector has massive corruption. I mean, I want to be very clear on that because there are two sides now. Because why the government sector gets corrupt? Is not the government government bribing each other, or not the petroleum corporation is bribing each? Exactly. So there is definitely the private sector who is involved. But when you but charindra chandrasena 28:12 just just to pick up on that point, then can the private sector turn around and say we are that that driver who that motorist who got caught by the police, and we prefer to, you know, pay up than go through the inconvenience of you know going to the post office and all that. That that is us. We are only doing it because the system necessitates it. Dhananath Fernando 28:43 Correct. charindra chandrasena 28:43 Okay. So can they say they are just unwilling participants in this system? And if the system is fixed, the private sector will not be that corrupt because they won't need to be. Dhananath Fernando 28:55 No, they they are they can say that. But the truth is, okay, leaving the corruption thing aside, how the private sector also sometimes got prospered was also through unsolicited proposals and pretty much moving away with competition and all that. So that's also part of corruption. charindra chandrasena 29:10 Proximity to the government, absolutely Dhananath Fernando 29:12 proximity to the government. So I think they should not go scot free on that. Of course, there are limitations when it comes to convenience factors like traffic fines and all that, but private sector is also kind of part of it. But it has been influenced in my view because of the poor processors. So that's where we, as Advocata, always say bring the competition in because that's one way to minimise the corruption. You have to look at at an overall system. Unfortunately, lot of Sri Lankans see it as a personal thing. Okay, you as a person has to have its value of integrity, which is 100% true. But we are talking about like 20 million people. You cannot expect like a Speaker 1 29:49 system should be immune to a person's integrity, right? Whether or not that's like what you brought up earlier. A system can't be vulnerable to the political leadership. Has at a given point, right? That's the, that's that's what we're all trying to achieve here. So on charindra chandrasena 30:05 this private sector point, the only like now you mentioned at the outset itself that this corruption perceptions index is about the public sector, Speaker 1 30:13 right? charindra chandrasena 30:14 Have you done any work? Has TISL done any work on the private sector, and and what have you found? Does that match our views of the project? Speaker 1 30:25 So TISL has a report that was launched two years ago called the Corruption Risk Mapping Research. That was a sort of an assessment done on potential corruption risks within the private sector, right? And how this sort of feeds into our overall discussion on systemic change is that a lot of these vulnerabilities exist within these areas of of governance, right? Like you rightly said, they're not public procurement, right? It's one of the biggest areas of government spending, and it's also one of the biggest corruption risks in the country. It's also one of the areas where private sector is a major stakeholder, right? And it's again one of the areas where we have the weakest governance, right? So we're expecting a new public procurement law. We already have new procurement guidelines and a manual, which also unfortunately fall short, which are not fit for purpose. Which, like you, like you just said, they don't regulate unsolicited proposals. They don't even mention unsolicited proposals, right? Which is a huge-it's a huge leakage for the country, and it has been for decades now. We've seen so many white elephant projects come up, and all of this was due to not even poor, just yeah, just poor public procurement management. Yeah, I want charindra chandrasena 31:45 to touch on public procurement as well because, like you said, that's a that's a hotbed of corruption. Yeah. Explain briefly for the audience what unsolicited proposals are versus the the tendering process. Speaker 1 32:00 So essentially, an ancestor proposal is when a third party, right, not the government, the third party identifies a need within the government, the government said essentially public service, and offers a solution to it, right. So there's no assessment done by the government. It's not within a certain procurement plan or a national development projects plan, anything of the sort, or an investment plan of the government, right? It's it's completely a third party's approach to the approach to to solving a solution, a problem or a gap that has also been identified by the third party, Right, and essentially going with charindra chandrasena 32:44 essentially it's a pitch, right? Well, it's a pitch to the government. It's a pitch to the government. It could be some agency, maybe an ad agency or whatever that identifies a big company and says, okay, your your website isn't good, your marketing isn't good. Let us do this. Yes. So here's a proposal. Let us do it. Yeah. Speaker 1 33:03 And then you're bound though by essentially contractual obligations just at that third party. So there's no competitive bidding involved, right? There's no call for proposals. There's no technical evaluation committee to sort of go through what the best you know what the best direction would be in terms of a supplier or a contractor, and there's also no needs assess an assessment of the need for it done by the government, right? Because we have, you know, investment plans, we have procurement plans that the government makes essentially that they're supposed to follow annually, and when you're deviating from this, you're also essentially allocating funds that you hadn't allocated before, and for unsolicited proposal, especially right when you haven't done an assessment of whether this is a need of the government, if you haven't you know call for proposals, if you don't have a technical evaluation committee to evaluate bids because again you don't have bids, I mean that is clearly not responsible management of public funds, right? And when we have procurement laws that allow for this, not only allow for it through the procurement process, but then also you have the ability, you know, to sort of get approval for a project just through cabinet, right? Without any sort of technical evaluation being done, no public consultation, nothing. And it charindra chandrasena 34:24 has happened. And Speaker 1 34:25 it has happened in the past. I mean, most of our infrastructure and development projects. That's how it's been in the past, right? With so much ministerial discretion. Then charindra chandrasena 34:33 you mentioned that the the legislation that is in the works about public procurement isn't really up to the mark, including the manual. Why is it not? What are the major red flags about it? So the Speaker 1 34:50 major one is the is the fact that there's no mention even of unsolicited proposals, right? So there's a major loophole. I mean, are they regulated? Are they banned? They regulated. There's absolutely no. So does it charindra chandrasena 35:03 leave the door open for uncensored? Because for it Speaker 1 35:05 to for it to be business as usual, as it has been for decades now, right? So we also have a public-private partnership law coming in. So whether that will address uncensored proposals, we don't know yet, but again, the fact that it's not in the procurement framework, public procurement. Yeah, why should it be charindra chandrasena 35:26 outside? Speaker 1 35:27 Yeah, and even if it is, it still needs to be charindra chandrasena 35:29 yeah exactly Speaker 1 35:30 addressed within the public procurement legal framework as well. So, and if and the fact that it's not is a major loophole and a huge corruption risk. charindra chandrasena 35:38 Yeah, yeah. So Dhananath Fernando 35:40 I think the the I mean there's Murthusa says it nicely that most of the people who got rich in Sri Lanka they sold something completely unnecessary to government at an exorbitant price or they bought something which is very valuable from the government at the dirty prey right those are the ways that basically lot of. I mean, not saying. charindra chandrasena 36:03 Yeah, we are not saying everybody. Everybody, we are saying Dhananath Fernando 36:05 there are charindra chandrasena 36:06 honest businessmen, but then there are a lot of yeah, not exactly. So that's why Dhananath Fernando 36:11 this unsolicited. When you say unsolicited, that's lot of people unfortunately do not understand when you have a way to compare that it gives a lot of pressure for you to bring the prices down. Like look at like you know even a pair of trousers or anything. Chari, when you have when you compare, okay, that place the price is lower or higher, then it gives you you know a way to measure right. So that actually you keep the other person accountable. That's why in economics says, when you see a price tag, this price is not only about your price; it is actually it reflects someone else's price as well, because you're always before you price you as a businessman or whoever. When the other prices are available on the same category. You think twice before you put your price tag, right? So it's it's not about the price of that good or service. It's all about reflecting your efficiency, your competitors' pricing, your supply chain, everything, your corruption, everything is incorporated in this tag. So when you avail, when when there are many price tags available, actually you're bringing pressure on your own price tag to bring it down. Now the the difference of a private sector corruption versus a public sector corruption ultimately it's like you know passes to the consumer, whether it's private sector or public sector. Only difference is when it's private sector corruption, if there's competition available, that can be the consumer at least has a choice. But in public sector, without the choice, it's being passed to the taxpayer. I'm not sure whether I was clear enough. For an example, let's say both of us-I mean, three of us-are manufacturing shoes. Both of us are importing raw material from, like, let's say, from India. If all of us have to pay a price for corruption, it could be the other way around as well, lah. I pay a price for corruption, and I bring it. I bring the material at a lower rate, including the corruption. So, in a way, the price is included in my pricing, but it is comparatively it is comparatively lower than yours and yours. So actually, I have an undue advantage because I can price it lower. So you will go out of business. At the same time, if I am corrupt, let's say I am getting a business because of corruption, but you are doing the business without corruption, so then your prices has to be lower than my price because I have to cost it for ultimately for the price. So it can go either way. Both ways. Because this is a problem. The classic example is on the Indian Revenue Department because some people are not paying taxes, some are paying taxes. So the guy who pays taxes definitely his pricing has to be higher than the guy who doesn't pay taxes, so you are basically that's a lose-lose situation because when that happens, actually the guy who pays taxes thinking, how can I avoid tax? How can I evade tax? Because if I don't evade taxes, I cannot compete with the other guy. So that can be a completely a vicious cycle on corruption. So that's why we have we always say economics is all about keeping a level playing field because when you only have a level playing field with information available you can bring the corruption down. Otherwise, if you when you have an unlevel playing field, actually the uncorrupt guy can be influenced for corruption or like evading taxes or giving bribery and bring your cost structures down because you cannot no longer be in the business by becoming uncorrupt. So that's something that's very tricky, and that's why it's fundamentally important that we have a kind of low corruption regime if we are really serious about taking the country to the next charindra chandrasena 39:56 stage. Yeah, and and then one thing. That I notice about public sector corruption and private sector corruption is that if, in the case of the public sector, it directly affects the taxpayer because generally, when it comes to the consumer, the consumer makes the choice of whatever amount that he or she is paying, knowing the conditions around it, whereas here, because the consumer doesn't directly make that choice, it is out of the hands of the consumer. And in the example that they only brought in about a public, like an SOE or whichever public institution decided to buy, I mean, decided to go with the unsolicited proposal, the consumer has no choice in that matter whatsoever. Whereas I feel like in the private sector you have a choice, correct? Because the taxpayer doesn't pay their tax thinking, okay, this is going to the electricity board, this is going to Sri Lankan Airlines. They they pay it in bulk. Correct. So they don't have a choice about the decisions that are made, and I think that's that's the that's Speaker 1 41:12 one of charindra chandrasena 41:12 the worst things about public sector corruption. Let's let's talk about solutions Also, and and I can open this up to one of you. What if you had to? So now there's a legislation coming in. She's saying it's incomplete, not her. TISL is saying it's incomplete. That could be one solution, a complete one. But if that is incomplete, then what is the next solution? Can you can you pressure the government to make it complete in the public? That is also Dhananath Fernando 41:50 what is why it is incomplete. Because he's saying charindra chandrasena 41:52 that it has not eliminated the possibility of unsolicited proposals. It wasn't Speaker 1 42:00 addressed it in any shape or form, right? So there's no regulation of it whatsoever. So specifically to, so I'm not going to speak specifically to public procurement, but just in general, right? When when processes fail or legislation fails, usually it's there's a need for accountability, right? And that stems from having the information that you need to hold government accountable, you know, for public information that's needed for public scrutiny, right? So when there are opaque governance structures, when there is no proper implementation of the people's right to information on on the activities of the government, then scrutiny becomes nearly impossible, right? And that's what we've seen in all aspects of governments governance, including public procurement, right? So let's go with the procurement example, right? So there are there are contracts there are that are being awarded. Are they were they being published anywhere? You know, were there were calls for proposals always published for a decent amount of time? Were selected suppliers publicly and proactively disclosed? You know, these are this is information that even if that system and that process has errors and that process has risks, these are systems that could have ensured some level of accountability, right? If there was information that the public could have accessed, that the public could have with civil society or experts, academics that could have held the government accountable, could have asked questions if these things were if this information was published, published, right? And that's on the public procurement front, and it it it sort of it it applies to so many other areas of governance as well. Would you take so take private sector corruption, right? A huge area that we work on is beneficial ownership, information transparency. So beneficial ownership is essentially the true owner of a company, right? So there are so many layers that people can hide behind so many structures of ownership, but a beneficial owner is the true human beneficiary of a company, right? So something that TISL has advocated for for a long time, and the reform now came in with you know the IMF programme and post crisis reform, the post crisis reform agenda was for us to have a beneficial ownership transparent beneficial ownership register, which has now been, you know, enacted into law. So the next step is implementation, right? Ensuring compliance and ensuring that there's proper enforcement. charindra chandrasena 44:36 What is the stage of that? So the law was Speaker 1 44:38 just passed last year, right? And the ROs there. of Companies, is the public institution that's in charge of its implementation. So they essentially they're mandated by law to maintain a digital digital register. So they are supposed to publish information on. The name of a beneficial owner, the any former names, country of residence, business service. Sorry, service address, and the nature and extent. Yeah. All right. charindra chandrasena 45:10 So just just for just for everybody to understand why this is important. Right. The the government in that same example, the government could give a contract Speaker 1 45:21 exactly charindra chandrasena 45:22 to a private company Speaker 1 45:24 that is owned by your own minister's sons. So yeah, yeah, but that's the thing, charindra chandrasena 45:30 right? So the minister's son owning the company is not visible to an outsider. Exactly, unless you have that information. It could be owned by mr. I mean, it could be anybody. Dhananath Fernando 45:43 It could be any kind of relationship that yeah, yeah, it's charindra chandrasena 45:47 John Doe who, and but the ultimate beneficiary of that becomes the. So if the registry is there, Speaker 1 45:56 exactly, then charindra chandrasena 45:57 you can't hide it. You just have to go to the registry and find out. Ah, this is where the money trail ends. Right. Correct. So Speaker 1 46:03 these are the sort of anti-corruption policy and legislation that we advocate for, right? And they always feed into each other. Another aspect of that feeds exactly into the sort of framework that you were describing right now is asset declarations, right? Mandating all government officials of various levels of governance to declare the assets. Right now, when you have asset declarations, you can always you can match illicit wealth, unexplained wealth rather. Right when declare assets are declared by an official, and there is obvious unexplained wealth in the public domain by a certain individual, there's a there's a discrepancy there. Right, there's a mismatch there. That then can you know investigation can be initiated. We have frameworks for initiating such investigations. So these systems all feed into each other, right? So but just charindra chandrasena 46:55 just picking up on that, Devy and and Dana, please come in here as well. The recent asset declarations, the the ones that were made public, were incomplete as well. Speaker 1 47:07 Yes, it was the first. So, is it a trial and error charindra chandrasena 47:10 situation, or you know, just just getting it up and running was a big deal, and we can improve Speaker 1 47:16 it. Yeah. So, implementation is always what comes next, right? That's the next hurdle after sort of the reform agenda is sort of seen through, and these laws are passed. So, the new asset declaration regime was enacted in 23, right, with the anti-corruption law. So, there have been you know loopholes. There has been communication back and forth with civil society, with implementing institutions to try and you know get it fit for purpose. Now, is it currently probably not, but that's again just a part of the reform process, right? Getting it going, looking for loopholes, and addressing them as and when we can. Like an example of that with asset declaration system was initial initial publications had severe redactions, right? Unnecessary redactions, which essentially made them redundant, and this was flagged by civil society. It was brought to the attention of implementing institutions, and in the most recent IMF, sorry, the the penultimate IMF review agreement under under a structural benchmark, that very specific loophole has been addressed. Right, it has mandated that particular public institution that is responsible for implementing asset declarations to fix that loophole of unnecessary and arbitrary redactions. Right, so it's again you go back and forth until you. It's not a linear sort of process, and it's not an Speaker 3 48:43 overnight. Absolutely. Speaker 1 48:44 So, yeah, I mean that's essentially a process. charindra chandrasena 48:50 Dara, going to ask you a straight question. You can give me a straight answer as well. How much of the credit for the improvement in the because it is an improvement whether it's a huge improvement or not. How much of the credit for that improvement in the corruption perceptions index can be taken by the government? Dhananath Fernando 49:14 I would say 50% charindra chandrasena 49:15 50% Dhananath Fernando 49:16 Yeah. charindra chandrasena 49:16 50% only. Dhananath Fernando 49:18 Yeah, because I think there are two sides. How I see it is because as we discuss in the lot of lot of charindra chandrasena 49:24 people are going to say now Daranath is not giving enough credit to the government. So many governments past were corrupt. Daranath didn't say anything. Now Daranath is not giving credit. Earlier, Dhananath Fernando 49:36 when was the data? I mean, I'm sure this the data on the World Economic Forum, the World Bank. It cannot be 2026, right? It must be the previous year. Yeah, right. 2420, charindra chandrasena 49:50 2520. 2420, Dhananath Fernando 49:52 25, right? So it's 2020 24. charindra chandrasena 49:56 September is when correct. So Dhananath Fernando 49:57 the perception I perception came in. No, no, correct. charindra chandrasena 54:53 So much into this because they they actually consider that government. I think it's just a Speaker 1 55:04 there's also a lack. There's been a lack of civil society. There's lack of formalised civil society and public participation. Right. There's no formalised mechanism. So when something has been around a certain way for decades, then obviously changing that is difficult, but I think just identifying how important that is in in in governance and especially anti-corruption, right? And then obviously you have you know the continued use of laws like the PTA and the USA that again shrink civil space, civic space that also feed into indices like the CPI very much, right? So there are, you know, moving forward. I think increased sort of protection of civic space is is a priority absolutely, and ensuring that you know the reform momentum that began in 2022 post crisis, is is kept. You know that laws are passed intentionally, fit for purpose, and through a consultative approach. charindra chandrasena 56:11 Okay, great, Dana. If you have final thoughts, you can. Otherwise, you can we can go to the message. No, no. I Dhananath Fernando 56:17 think no. Important thing is to get this, because understand the evolutionary process of this anti-corruption drive, because even an act like RTI was part of driving to this anti-corruption. Of course, the response rates are quite low, but at least still that's being there is and critical. And it charindra chandrasena 56:37 shows you how long this process takes, because that is 2017. Dhananath Fernando 56:42 Absolutely. Okay, charindra chandrasena 56:43 and that started before 2017. Exactly. So you know, so Speaker 1 56:47 it's a it's essentially it's a cross-cutting area of anti-corruption. Exactly. You need a strong right to information regime for all of these other aspects of governance that we've been talking about to actually be successful as well, right? So oversight mechanisms, oversight bodies, you know, appointment processes-all of that is contingent on also availability of information. Exactly. Dhananath Fernando 57:07 And while while I reiterate the need for policy, it's also important that you have the proper finances and you know budget allocations to and implement the execution because ultimately you otherwise you will have like bunch of all sorts of policies, but what's the point if it if you are not really giving a attempt to execute it and implement it? So that's the other side because even the C O Bob there has I think kind of questions whether the allocation was enough, whether they have enough resources. So oversight Speaker 1 57:36 and enforcement bodies have to be financially independent, right? They need to have the autonomy to to sort of enforce the law and also act as a very very essential oversight body in terms of the government. And you know, allocations are different to actually allowing institutions to spend independently, essentially, right, and also ensuring that you know there's adequate leadership, that appointments are made in line with the law, in in terms of proper timelines, there are no delays. All of these things they contribute backsliding essentially in terms of anti-corruption reform. charindra chandrasena 58:19 Right. Dhananath Fernando 58:19 All right. So we'll quickly give the yeah yeah. So thank you very much for joining our podcast, and you can become an Advocata Insider. This content is purely free of charge, but there's paid content that you can join us through Advocatara Insider. It's a singular platform. We provide futuristic predictions about exchange rate, the vehicle markets, and multiple other markets, but importantly, it's not about supporting, like you know, getting exclusive information. It is about supporting reforms where to minimise anti-corruption, minimise corruption at the same time on bringing more economic freedom. So then, as a country, we can move forward. What we want to do is try to build a community who supports reforms because that's the only way out from this crisis. And if we really want to improve the standard of living, reforms is the only answer, and economic growth is the only answer. So that's why you should become an Advocata insider, so we can continue the good work that we do and also improve the economic literacy of our people. Thank you. charindra chandrasena 59:18 All right. Thank you, Dana. As always, and special thanks to you, Deoni, for for you know enlightening us and giving us an insider's view of some of the the wheels that are turning behind the scenes, and and generally you know making the conversation informative but entertaining as well. Thank you Speaker 1 59:40 so much for having me. charindra chandrasena 59:41 Yeah, so we will meet next week, Dana, for sure. We will meet Deoni as well. You know, in the coming weeks. Dhananath Fernando 59:53 If we can improve the rankings better, probably they are. Yes. Hopefully, hopefully. charindra chandrasena 1:00:02 All right. Thanks, guys, and take care. Transcribed by https://otter.ai