US embassy cable - 05COLOMBO1705

UNCLAS SECTION 01 OF 02 COLOMBO 001705 
 
SIPDIS 
 
SENSITIVE 
 
SA/INS FOR M.GOWER, C.SIM; TREASURY FOR S.CHUN; MCC FOR 
D.NASSIRY 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, PGOV, CE, Tsunami 
SUBJECT: TSUNAMI RELIEF CORRUPTION CHARGES BY AUDITOR 
GENERAL OVERSTATED 
 
1.  (SBU) Summary: On 7 September, Sri Lanka?s Auditor General 
(AG) issued a report to the Parliament based on an audit of 
work done by various Government of Sri Lanka (GSL) agencies, 
as well as district and local government offices in response 
to the December 26 Indian Ocean Tsunami.  The AG?s report has 
been widely reported in the press as concluding that the 
process has been riddled with corruption.  Post has reviewed 
the news articles as well as the AG's report and believes that 
it is largely accurate with regard to failures within the 
system, but that it inappropriately identifies those failures 
as corruption, when they should more accurately be termed 
either inefficiencies or deficiencies.  End Summary 
 
2.  (U) Sri Lanka?s Auditor General issued a report to 
parliament on September 7 that was highly critical of the 
Government?s tsunami relief efforts to date (the period 
covered in the report was from December 26, 2004 to June 30, 
2005).  The scope of the report has several limitations; 
most notably it does not review directly the work of NGOs or 
other private sector organizations, which have been 
considerable.  It outlines weaknesses in the pre-tsunami 
disaster preparedness and mitigation measures and offers 
broad-brush complaints about rescue and immediate relief 
efforts, gives an accounting of death and damages and 
chastises the Government for failing to set up the National 
Disaster Management Council (which the GSL has done in the 
last six months). 
 
3. (U) With regard to its review of the distribution of relief 
efforts, the report finds: 
 
--shortcomings in the clearance of goods from the sea port 
and airport (Note: Post has worked with several 
organizations to expedite clearance of tsunami relief 
items, or to obtain waivers of various charges assessed by 
the port.  There were also clearance delays early in the 
process due to a dispute over clearance procedures between 
the Sri Lankan Navy and Sri Lankan Customs. End Note); 
--weaknesses in the management of the receipt of aid material; 
--poor fund management (while there are some examples of 
monies sent to various districts, but not properly 
accounted for, there are no direct accusations of 
embezzlement or other misdeeds); 
--failure to sign MOUs with NGOs and private sector 
organizations; 
--incorrect provision of relief rations; 
--failure to make progress on home construction; 
--incorrect distribution of relief payments; 
--incorrect deployment of vehicles; and, 
--contradictory/confusing Government decrees regarding 
tsunami relief rules. 
 
SIPDIS 
 
4.  (SBU) Where the report fails repeatedly is to identify the 
source of many of these weaknesses and shortcomings.  For 
example, there are clear reasons why permanent housing has 
not progressed further, most notably: 
--the 100/200 meter coastal setback established by the GSL, 
but only marginally enforced; 
--the failure on the part of the GSL to identify and 
allocate land outside this zone; and, 
--the failure of the Government to provide NGO partners 
with lists of beneficiaries. 
 
None of these is an example of corruption, but rather 
deficiencies in the system. 
 
5.  (U) The AG is appointed by the President from the 
independent Government of Sri Lanka (GSL) Auditor General?s 
service according to seniority.  The AG is a 
constitutionally-established position and reports to the 
Parliament.  Parliament requested the tsunami audit.  A 
group of 42 auditors from the AG department were assigned. 
This is an interim report and when financial statements of 
various GSL departments and ministries are released at the 
end of the year, the AG?s office hopes to do a more 
comprehensive assessment.  The auditors visited 12 of the 
13 tsunami affected districts and reportedly went from 
house to house to inquire about relief distribution.  An AG 
department source said they did this work under severe 
constraints, as the government did not provide funds for 
the audit.  The officers had to travel by bus and were 
given a very small per diem. 
 
6.  (U) Neither did the AG audit the Central Bank account. 
Usually all funds received by the GSL are deposited in the 
?consolidated account? of the Government and are subject to 
AG audits.  In this case, funds were deposited in a special 
account, created specifically for tsunami relief activities, 
in the Central Bank, and not subject to the AG's jurisdiction. 
In the next few weeks a few AG staff members will be helping 
a UN audit team to audit UN tsunami accounts.  On October 4, 
the Public Accounts Committee of the Parliament will call 
various government officials and examine the interim audit 
report. 
 
7.  (SBU) Comment: Post has reviewed the various press 
accounts of the report and finds them largely sensational. 
While the report does articulate problems in the tsunami 
relief and reconstruction process, its allegations of 
corruption are loose and imprecise.  We continue to pursue 
changes to GSL strategy and policy related to the process, 
particularly with regard to clearance of items into the 
country, registration of NGOs and rules governing the 
construction and placement of permanent housing.  Recent 
implementation of the UN-sponsored Donor Assistance Database 
(DAD) through the Task Force for Rebuilding the Nation 
(TAFREN) should have a beneficial affect and assist donors 
and observers in keeping track of pledges, work and progress. 
End Comment 
LUNSTEAD