The legal basis of NGO impunity


By C.A.Chandraprema

As we reported last Friday, there has been absolutely no response from the Center for Policy Alternatives to the questions that we raised about the money they received to monitor the presidential and parliamentary elections last year. For the presidential elections, they had received Rs 51 million from the Dutch, German, British and American governments and for the parliamentary elections they had received Rs 18 million from the Dutch and American governments. Since this was money received for the benefit of the Sri Lankan public and not for personal consumption, we wanted to know how that money had been spent - a breakdown of expenditure on those two projects - but the CPA which preaches transparency and accountability to others, has opted to remain completely silent.

The best part of it is that the CPA can if it wants to, remain completely silent. There is no regulatory mechanism that exists in this country which can compel the CPA to submit itself to a mandatory audit of their finances. There is in fact a law for regulating NGOs but it has such large loopholes in it that it is next to useless. The government first introduced legislation to regulate NGOs in 1980, before it became a multi-billion rupee industry where grand larceny is more the norm than the exception. As such the existing legislation is woefully inadequate to combat NGO corruption in the present day.

The Voluntary social Service Organisations (Registration and Supervision) Act No: 31 of 1980 was promulgated - according to its preamble - for the following purposes among others.

* To provide for the inspection, supervision, and coordination of the activities of such organizations,

* To enforce the accountability of such organizations in respect of financial and policy management, to the members of such organizations, the general public and the government.

* To prevent malpractices by persons purporting to be such organizations.

Even though the intention was such,  the biggest loophole in this legislation is that it has not been made mandatory for all NGOs to register under this Act which also not specify any penalty for organizations that carry on the business of an NGO without registering. Indeed in a situation where registration was not mandatory only the very honest or the very stupid would register because once an NGO is registered under this Act, the Registrar of Social Service Organisations will have the power to 

* Enter and inspect the premises of the NGO to ensure that satisfactory standards are maintained.

* Bring to the attention of the Minister any allegation of fraud or misappropriation of funds in an NGO.

* The Registrar of Voluntary Social Organizations also may attend meetings of the executive committee of such organizations if a request is made by the majority of the members of the ex-co or office bearers of such organizations, or the minister in charge of the subject.

* The Registrar also has the power to audit or cause to be audited the accounts of such organizations once a year.

* If there is an allegation of fraud or misappropriation in such organization, the minister may refer such matters to a Board of Inquiry constituted of six persons who are not public officers.

* This board of inquiry will have the power to if necessary, compel the attendance of witnesses and compel the production of documents.

 But all this is useless if it is not mandatory for all NGOs to register under this Act and no organization that is not registered can be subject to inspection and regulation. This law is so faulty that even if a given NGO is registered under it, it may not be possible to enforce supervision. Penalties are recommended if any registered NGO flouts provisions of the Act. The problem however is that the penalties are totally inadequate. If for example, any NGO willfully disobeys summons or refuses to furnish information required by the Registrar or a Board of Inquiry,  the penalty that can be imposed on such NGO after a summary trial by a magistrate, is a fine not exceeding Rs. 250. (Yes, just Rs. two hundred and fifty!) Most registered NGOs which have something to hide will simply pay the Rs. 250, and keep quiet without revealing anything.

Another major fault in this law is the definition of a Voluntary Social Service Organisation. What this Act has is a very primitive definition of an NGO.  According to it, voluntary social service organizations are those that have as their objective the provision of relief and services, to the mentally retarded, the physically disabled, the poor, the sick, orphans and destitutes, and the provision of relief to the needy in times of disaster. In 1980, when this Act was promulgated, there were no peace barons, elections barons, transparency barons or accountability barons. NGO activity was at a much lower level. Organisations like the Center for Policy Alternatives can with every justification claim that they don’t work with the destitute or the mentally or physically disabled or provide humanitarian assistance to disaster victims and therefore they do not fall within the ambit of  Voluntary Social Service Organisations (Registration and Supervision) Act No: 31 of 1980!

These are glaring shortcomings that need to be rectified if this culture of impunity and lack of accountability in the NGO sector is to end.  In 1998, an amendment was introduced to this act in the form of the Voluntary Social Service (Registration and Supervision) (Amendment) Act No: 8 of 1998. This amendment however did not address any of the above mentioned shortcomings in the original Act. All it did was to give teeth to the Board of Inquiry that the minister in charge of the subject was empowered to appoint. The amendment stipulates that if a Board of Inquiry reports to the minister that there is evidence to support allegations of fraud or misappropriation of funds, the minister can appoint an interim board of administration to run the affairs of the said NGO until the financial management system is restored to an acceptable standard.

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