Sri Lanka’s private sector must align with law enforcement against corruption
Recent changes in Sri Lanka’s anti-corruption laws have significantly expanded the scope and depth of prosecutorial powers, particularly concerning bribery in the private sector. The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) has been granted extensive investigative and prosecutorial powers on par with the Attorney General’s Department, specifically focused on bribery charges. This has raised the stakes for private corporations, as they are now under stronger scrutiny regarding bribery offenses.
Last Monday the Sunday Times Business Club organised an interesting discussion titled ‘Impact of anti-corruption law on the private sector’ at the host Hotel Shangri-La Colombo. The two panellists were from Verite Research, Head of Governance and Anti-Corruption, Sankhitha Gunaratne and Research Analyst Governance and Anti-Corruption, Michelle Handy. Sponsors of the event were Shangri-La and NDB Bank.
STBC members. Pic by M.A. Pushpa Kumara
Ms. Gunaratne highlighting the key changes in anti-corruption laws impacting the private sector, said, “Prior penalties maxed out at seven years of imprisonment and fines of Rs. 5,000. Now, penalties include up to seven years of rigorous imprisonment and fines reaching Rs. 1 million, enhancing the deterrent effect against bribery. The Act primarily addresses bribery within the private sector rather than corruption more broadly. This specifically emphasises individual actions and exchanges of advantages for favours in the private sector. It classifies offences specific to the private sector, providing a structured approach to prosecuting private entities for bribery-related offenses.”
Corporate entities can be held liable for bribery offences, which introduces new risks for directors and senior management who may face prosecution individually. The Act lays out the manner in which private entities can defend themselves in bribery cases, empowering them to navigate legal challenges effectively, she added.
She also mentioned, that historically, the private sector in regions such as Sri Lanka has adapted to a culture where bribery was a standard business practice. This change in law challenges that culture, expecting businesses to alter their operations to comply with the new legal framework. There is a heightened risk now for private sector actors, as failure to adhere to these laws could lead to severe legal repercussions.
Ms. Handy spoke about the new offences in the Act. “Involvement of private sector entities in bribery is now considered an offence under the Act irrespective of public officials being involved. Companies defined as specified business enterprises under the Sri Lanka Accounting and Audit Standards are particularly subject to this. Companies operating overseas must ensure there are no bribery incidents involving foreign public officials. The act has a broad definition of ‘employee’, including directors, interns, and past employees. Companies must justify their wealth; failure to do so leads to legal repercussions under the Act.”
Some of the expanded powers of CIABOC (Bribery Commission) include intercepting communications between private parties, enhancing transparency and scrutiny. It can demand information from banks and non-financial institutions, extending its oversight into private accounts. Individuals summoned must appear in person, disallowing legal representation in these cases, affecting all levels within organisations, she added.
Both the company and its directors, officers, and agents can be held liable for offences. Directors can be fined personally for offenses linked to their company, explained Ms. Michelle.
As defensive measures for the private sector, companies should conduct risk assessments to identify corruption vulnerabilities and implement mitigating strategies. Establishing robust anti-corruption and anti-bribery policies is necessary within operations. Comprehensive training on policies should be provided from the board level down to all employees to ensure compliance and awareness, she noted.
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