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Corruption threatens to hamstring Sri Lanka reconstruction, says Transparency International

The international community must ensure that the disbursement of donor aid for post-war reconstruction is based on full financial transparency and clear lines of accountability

Financial aid to fund reconstruction in Sri Lanka risks being misallocated or diverted into private hands unless transparency and accountability measures are built into the process, warns Transparency International (TI), the global non-governmental organisation engaged in the fight against corruption.

"The topic of corruption in post-war reconstruction can no longer be ignored by the donor community," said TI Chairman Peter Eigen, speaking today. "The subject will be the focus of a discussion by experts from around the globe at a workshop at the forthcoming 11th International Anti-Corruption Conference in Seoul, Korea, on 25-28 May 2003."

"The manner in which the funds for Sri Lanka's reconstruction are to be managed must conform with best practices in terms of good governance and transparency," said Eigen ahead of a meeting of donor agencies in New York on 14 April. "The international community has a particular obligation to be fully transparent in its aid procedures. The government of Sri Lanka must ensure that funds received go to reducing poverty, especially improving health, education and vital infrastructure projects. Otherwise, the intended effect of this aid will not be met and the Sri Lankan people will be the losers, because they will have to pay back the loans," he said.

"Donor aid is a key incentive to strengthening the ongoing peace talks between the government and the Tamil Tigers," said J.C. Weliamuna, Executive Director of TI Sri Lanka. "Corruption threatens not only to trap vast amounts of the population in poverty, but also to derail the peace talks themselves."

Donor aid has been promised by Japan, the Asian Development Bank, USA, Norway and the EU to rebuild the war-ravaged areas in the north and east of Sri Lanka and to resettle an estimated 1 million people displaced by the war. Some estimates put the sums of grants and loans as high as US$2 billion. The World Bank was chosen in January to administer a fund for reconstruction. Pledges are expected to be made at a donor conference in Tokyo on 16-17 June.

The international community has focused on reconstruction since a ceasefire was signed between the government of Sri Lanka and the Liberation Tigers of Tamil Ealam (LTTE) in February 2002. The 20-year conflict has killed more than 60,000 people. Peace talks between the two sides continue, and donor aid is regarded as a strong incentive to end the war.

TI calls on the government of Sri Lanka to:

  • Establish clear lines of accountability for use of the funds received;
  • Establish a clear and transparent procedure for allocation of funds, and make public this procedure;
  • Make a public commitment that donor aid and loans will be used solely for development purposes and will not be diverted into the private pockets of politicians, regional power-brokers or their associates, nor used for the purchase of weapons and military equipment;
  • Follow proper tender procedures when spending aid monies;
  • Ensure that disbursement of funds is approved by the Parliament and subject to the scrutiny of the Auditor General;
  • Disclose its policy on channelling donor funds to the LTTE who effectively control the northern and eastern areas of the country, especially as some donors have unequivocally stated that they will not direct funds to a non-government entity (LTTE).

TI calls on western governments and the international financial institutions to:

  • Ensure that funding and lending policies are fully transparent and made public;
  • Include a requirement for accountability and transparency in funds or loans and obtain a statement from all parties that corruption will not be tolerated;
  • Make immediate plans to prepare monitoring mechanisms - where possible by citizens' groups in the country such as Transparency International Sri Lanka - to ensure that aid and investment reaches targeted projects, such as schools, hospitals and housing.

Transparency International calls on the international community to remember the lessons of the reconstruction efforts in other conflict zones, including Bosnia-Herzegovina, where corruption is considered to be one of the biggest problems facing the country today.

Note for editors: The 11th International Anti-Corruption Conference in Seoul, Korea (25-28 May 2003), hosted by the Korean Government, will include a workshop stream on the political economy of corruption, featuring a workshop on corruption in post-war reconstruction, and a workshop stream on public sector governance. Transparency International is one of the conference organisers. For further details, please visit http://www.11iacc.org/iacc/index.html.


For any press enquiries please contact

Colombo:
Mr J.C. Weliamuna
Executive Director, TI Sri Lanka
Tel: + 94-1-582520
Email: tisl@sltnet.lk

Berlin:
Jeff Lovitt
Head of Public Relations, TI Secretariat
Tel: +49-30-3438 2045
Fax: +49-30-3470 3912
Email: press@transparency.org