Sri Lanka’s proposed Anti-Corruption (Amendment) Bill has faced challenges by certain bodies as the country also pursues governance and anti-corruption reforms under its International Monetary Fund (IMF)-supported programme.
The IMF has noted the strengthening of the asset declaration system, public access to declarations, beneficial ownership information, and the independence and capacity of the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) as part of the reform programme.
According to Deputy Minister of Economic Development U.D. Nishantha Jayaweera, the reduction of corruption and increased taxpayer confidence has contributed to improvements in Government revenue collection.
Speaking to The Sunday Morning, the Deputy Minister noted that the improvement could not be attributed to a single factor, with several governance-related factors contributing to the outcome.
He further noted the Government’s financial statements for the first five months of the year, which had recorded a budget surplus, and said that the positive revenue performance reflected the effect of these factors, including reduced corruption and improved taxpayer confidence.
TISL concerns
The bill proposes changes including raising the State or public corporation shareholding threshold for certain asset declaration requirements from 25% to 50%, changes to the treatment of asset declarations, and provisions relating to prosecutions and bail. Transparency International Sri Lanka (TISL) has raised concerns about how these could impact existing safeguards, access to information, and constitutional concerns.
Speaking to The Sunday Morning, TISL Executive Director Maheshi Herat noted that asset declarations were part of the national safeguards through which a country could identify conflicts of interest, detect sudden unexplained wealth, and protect public resources from abuse.
She noted that the Anti-Corruption Act No.9 of 2023 expressly recognised asset declaration as a mechanism for protecting the integrity of the public resources entrusted to those exercising public authority while improving transparency and accountability in governance to prevent illicit enrichments by public officials.
“The current law requires designated persons to disclose their assets and liabilities, including those of their spouses through a centralised electronic system. The CIABOC is also empowered to verify declarations against information held by other public authorities. The commission has the powers to access records and databases of public authorities relating to assets, liabilities, income, and expenditure.
“This allows the asset declarations to have both a preventive and an investigative function. The economic importance of this system becomes clearer when the discussion moves from individual wealth to public money,” she said.
Addressing the amendments, she said that one of the significant changes proposed by the Anti-Corruption (Amendment) Bill was to amend Section 80(1) of the act by replacing the existing 25% State or public corporation shareholding threshold with 50%. Under the existing provision, chairpersons, directors, and staff officers of the companies registered under the Companies Act with 25% of shares held by the State or a public corporation fall within the asset declaration regime.
Herat explained that the proposed increase in the State shareholding threshold from 25% to 50% therefore deserved examination not only from a legal or administrative perspective, but also from the perspective of public financial management and corruption risk. TISL has raised the concern that the change could remove certain State-linked companies from the asset declaration framework even where they continue to manage substantial public assets and contracts.
“On a surface level, this may appear to be a technical adjustment to an ownership threshold. In practice, however, it raises a larger question about whether shareholding percentage alone is an adequate measure of public accountability.
“This is important because the governance of State-Owned Enterprises (SOEs) has been identified as an area requiring stronger oversight. The IMF has also called for improvements in SOE governance and transparency, including timely publications of audited financial statements to identify governance vulnerabilities associated with State enterprises, and has highlighted the risks arising from extensive Government control and limited accountability in some areas of State activity.
“The concern raised is that not every company with a minority Government ownership should automatically be treated in the same way as a fully owned State enterprise. Nor is the argument that asset declaration alone can prevent all forms of corruption. Rather, the question is whether regulatory thresholds are sufficiently sensitive to actual corruption vulnerabilities,” she said.
Herat added that Sri Lanka had been working to strengthen procurement transparency, including through e-procurement and publication of major procurement contracts. She noted that the IMF’s Extended Fund Facility (EFF) programme continued to identify reducing corruption vulnerabilities in procurement as a governance priority and included commitments relating to beneficial ownership disclosure in procurement and reducing non-competitive procurement.
Thus, according to her, public accountability should be calibrated not only to who owns a company, but also to whose money is being managed, whose interests are being affected, and how much public power is being exercised.
On the consequences of the reforms, Herat noted that Government officials and directors of public and State-linked entities made decisions that could affect significant amounts of public money. These decisions may involve procurement, investments, infrastructure projects, State assets, concessions, contracts, appointments, and other commercial transactions.
Thus, she added that every rupee lost by a State-linked entity through inefficient or corrupt expenditure was a rupee that could not be used elsewhere for health, education, infrastructure, social protection, or other public services.
The IMF has noted that a well-functioning procurement system is important to ensure that this money is spent properly and provides value for money.
Herat explained that in 2017, Government procurement had been estimated to account for 5.3% of Sri Lanka’s Gross Domestic Product (GDP), while reports indicated that corruption in Government tender procurement may cost Sri Lanka around 1% of GDP, or approximately Rs. 300 billion, every year. She added that less than 35% of tenders had been published online, and only 9% of assessed public authorities had met the disclosure standards under the Right to Information Act.
“In the end, it is the public that bears this cost, because money lost through inefficient or corrupt procurement is money that cannot be used for public services and development. This is important when considering the changes affecting SOEs as they manage public resources and are involved in spending, contracting, and other financial decisions.
“If there is less transparency about who owns what, who has financial interest in a company, or whether an official has a personal connection to a business receiving a Government contract, it can become harder to identify possible conflicts of interest. This does not mean that every lack of information will result in corruption. Rather, it can make problems harder to identify before public money is lost.”
According to Herat, this is also where asset declarations have a larger economic function. She explained that an effective asset declaration system could serve as an accountability and deterrent mechanism by enabling relevant authorities to identify unexplained changes in wealth, conflicts of interest, and potential links between an official’s private financial interests and the exercise of public power.
Furthermore, the IMF has identified strengthening Sri Lanka’s asset declaration framework as an important measure for improving transparency and mitigating corruption vulnerabilities.
In this light, she added that the changes introduced by the amendment raised the question of what happens to public accountability when information that may help identify conflicts of interest and potential corruption risks becomes less accessible.
TISL has challenged several amendments of the bill before the Supreme Court, raising concerns regarding their implications for constitutionality. According to Herat, the legal challenge therefore concerns not only the interpretation of the amended legal framework, but also the wider accountability safeguards surrounding the management of public resources.
Economic perspective
Speaking to The Sunday Morning, University of Peradeniya (UOP) Department of Economics and Statistics Professor Ananda Jayawickreme said that Sri Lanka was yet to see serious improvement in the anti-corruption process. He further highlighted that corruption should be prevented and that anti-corruption legislation should be transparent and applied to everyone.
Prof. Jayawickreme raised concerns over any provisions that would restrict the use of information, including information contained in asset declaration reports, as such changes could limit the ability of people to raise issues and concerns based on information that was already available.
From an economic perspective, he noted that the impact of corruption depended on where the money went after it was obtained through corrupt means. He observed that money taken from the Government through corruption had an economic impact that was different from money that was taken out of the country. He further explained that when money remained within the domestic economy and was spent within the country, it could still circulate through the economy, although the Government or another entity may have lost the funds.
However, Prof. Jayawickreme said that the situation was different when funds or foreign currency were taken permanently out of the country, as such situations could result in a loss of resources to the wider economy rather than only to the Government.
“There have many allegations made concerning the smuggling of foreign currencies, and such practices affect both the availability of resources within the economy and the country’s foreign currency position. These issues need more focus, especially in the context of the foreign exchange shortages,” he said.
Prof. Jayawickreme further noted the need for more thorough action by the Government in order to prevent corruption, especially the aforementioned form of corruption where money or resources are flown out of the country. He stated that dealing with forms of corruption alone would not be enough to bring about economic recovery, adding that initiatives to increase investment, create economic activities and buying markets, and increase production also needed more focus.
“The focus should be on preventing corruption before it takes place, while also addressing the wider conditions affecting investment, production, and economic activity. Simply pursuing people after corruption has taken place does not address the larger economic problems. All malpractices should be taken together and prevented. Prevention of corruption is instrumental for economic activity, but it is not the only activity that we should focus on,” he said.
Governance, accountability risks require attention
Commenting on the governance aspect, Verité Research Research Analyst – Governance and Anti Corruption Michelle Handy noted that the proposed amendments weakened accountability in Sri Lanka’s anti-corruption framework by undermining transparency around asset declarations in two ways. One is that it criminalises the use of redacted asset declarations that have been made publicly available, and the other is that it vests the CIABOC with authority to redact any information it deems to violate an individual’s privacy, subject to parliamentary approval.
Handy added that the amendment made it an offence to use redacted declarations obtained through the Central Electronic System (CES) or under the Right to Information Act No.12 of 2016, thereby criminalising the use of lawfully accessed information in a way that the act did not.
Furthermore, she explained that in practice, journalists and civil society groups would be barred from discussing, publishing, or raising discrepancies publicly on asset declarations. Public scrutiny and debate are essential to identifying corruption, unexplained wealth, and conflicts of interest, especially where official verification is limited, where it acts as a deterrent. She added that this approach instead asked the public to trust the CIABOC alone to catch illicit enrichment.
Handy also explained that the CIABOC was also granted sweeping, undefined power to redact “any other information” it decided might violate an individual’s privacy.
“Though subject to parliamentary approval, this risks undermining the usefulness of the information being made public. The IMF has itself called for greater transparency in Sri Lanka’s asset declaration regime, including disclosure of bank account values. What’s needed is a balance where public interest can override privacy where appropriate. The proposed amendment, however, strikes no such balance and leaves it to the discretion of the CIABOC,” she said.
Commenting on governance risks that could arise if the proposed amendments were enacted in their current form, Handy noted a few crucial ones. She added that it would place the right to liberty at risk, that bail would become the exception rather than the rule for bribery and corruption offences above a threshold certified by CIABOC’s Director General, and that jurisdiction over bail would move from the Magistrate’s Court to the High Court. This means individuals could spend prolonged periods in remand before even being heard on bail.
“Moreover, the amendment to the asset declaration system puts Sri Lanka at odds with the IMF programme, which set a structural benchmark requiring reform of redaction rules so that bank account values and other assets are disclosed. Passing the redaction and criminalisation clauses as they stand would visibly reverse a commitment Sri Lanka has already made. Also, the bill excludes co-habitants from asset declarations, reopening the loophole by which officials hold assets through a partner – removing an existing safeguard against it.”