Sri Lankan corruption will scare investors

Rising levels of corruption in Sri Lanka will scare off foreign investors who have poured funds into the country since the end of its three-decade war, the nation’s former chief justice said on Tuesday.

Sarath N. Silva, a well known critic of President Mahinda Rajapaksa, told an opposition forum the country’s anti-graft laws were “ineffective”, and accused government officials of handing out contracts without going to tender.

Sri Lanka’s deputy economic development minister Lakshman Yapa Abeywardena dismissed the accusations on Tuesday and said there was no evidence of corruption in the island country.

“From the top to bottom, corruption has become a systemic issue ... Foreign investors will be discouraged from investing here if this goes on,” Silva said in what, for Sri Lanka, was an unusually blunt discussion of official graft.

“The anti-corruption law is ineffective. The anti-graft commission can investigate only if they receive a compliant and if the complaint is wrong, the complainant will be given an up to 10 year jail term,” he added.

Silva was chief justice for ten years until his retirement in 2009. He did not join an opposition party but backed former army chief Sarath Fonseka in the 2010 presidential election against Mahinda Rajapaksa.

He made a number of high profile rulings, cutting one former president’s tenure by a year and ordering the removal of a treasury secretary over a privatisation deal. The president later re-appointed the official.

Silva also criticised the handling of the government’s $6 billion drive to rebuild the island’s infrastructure with new ports, motorways and power stations after the end of the war with Tamil Tiger rebels in May 2009.

“Most of these projects have been decided without any tender procedure leaving room for corruptions,” Silva told the forum organised by Marxist opposition party Janatha Vimukthi Peramuna (JVP).

“We have built a mega port in Hambantota, but it is not commercially viable yet.”

Sri Lanka flooded a new port, built with Chinese assistance, in the southern city of Hambantota in August last year but it has still not handled any ships.

Foreign investment has picked up since the end of the war, particularly from China and India. The country saw a record quarterly inflow in the first quarter of this year and has secured $3.7 billion investments in ports and tourism.

Silva also accused the government of selling off land at less than market prices to foreign investors.

Minister Lakshman Yapa Abeywardena dismissed the charges.

“We have sold the lands at government-valued prices and not below that. More importantly all the money came in to the Treasury accounts. It is evident that there was no corruption,” he said. (Reuters)