Sri Lanka is introducing tough new laws to hold all ranks of Treasury officials accountable with penalties and possible jail terms if guilty of fraud or misappropriation. This is through the proposed Public Finance Act which will also include new Financial Regulations to be introduced in April, replacing the existing regulations introduced by the British colonial administration.
Finance Ministry sources said a new Audit Act is also to be introduced which would specify the duties, powers and responsibilities of the Auditor General and also provide safeguards for his financial and administrative independence from the Executive - both political and official, these sources said. Treasury Secretary Dr. P.B. Jayasundera referred to the proposed new Public Finance Bill at a recent public meeting but didn't give details. The current regulations provide for the Finance Minister to give directions to the Secretary and other officials. The Financial Regulations were originally made in the context of a colonial administration where all power was effectively exercised by the three Secretaries - the Financial Secretary, the Legal Secretary and the Presidential Secretary,
The Secretary to the Finance Ministry is the Chief Accounting Officer under the current regulations. But the dynamics of public administration have changed over the years since independence and the Secretary is today an appointee of the Minister.
He is obliged to the Minister for his appointment and is bound to follow his oral instructions and guidance. Ministers however are not bound to follow the Financial Regulations and hence this situation no longer provides for financial righteousness in the affairs of government, the Finance Ministry sources said.
The proposed Public Finance Act draws on the practices of other democratic countries, where those who commit financial mis-appropriation, fraud and irregularities will be accountable in law and not merely administratively as under the present Financial Regulations.
The category of officials to be included in the rules include officials, directors and chairpersons of corporation and state agencies. Such an Act would also clarify the accountability relationship of the Secretary and the Minister, the sources said. Government procurement process and documentation will also be changed.
The sources said the proposed regulations will remove bottlenecks and time-consuming procedures and documentation when especially handling development projects. Tender procedure and tender documents will be simplified making it easy for the officials to award tenders for contractors, they said.
The draft Public Finance Act is now before the Legal Draftsman. A special clause on accountability will be included in the bill providing provisions to take legal action and to punish those who engage in financial misappropriations.
Details of the penalties and jail terms were not immediately available.