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Public Hearing on the
Freedom of Information Bill-
An Accountant’s View
A popular government without popular information, or the
means of acquiring it, is but a prologue to a farce or a tragedy or
perhaps both. Knowledge will forever govern ignorance, and a people who
mean to be their own governors must arm themselves with the power
knowledge gives. -James Madison
letter to W. T. Barry, 4 August 1822.
Madison’s
observation is as valid today as it was when he made it almost 200 years
ago. Access to information is still a minefield across the world. As
Madison noted, knowledge is power, and those who possess it have the power
to rule. The concept is problematic enough in many industrialized
countries, but it is particularly challenging where countries have been
under forms of colonial rule – systems marked by a preoccupation with
secrecy, with information of the most menial type being scrupulously
guarded, and with accountability not to their peoples, but to remote
metropolitan capitals. There was no element of trust.
The problem is even more aggravated in the developing
worlds where information is shrewd in secrecy to protect the ruling class
at the expense of the ruled. However, there is a growing agitation across
the globe which has culminated in a paradigm shift from ‘Don’t challenge
me. You can trust me’ mentality of the rulers to ‘Show me. I must see for
myself’ demand from the ruled. Little wonder, then, that in societies
around the world the notion of ‘trust’ has shifted radically – be it in
government, in the private sector, in the professions, in the Media or in
civil society. Transparency has become a substitute for trust.’
Accounting profession has a long and chequered history. A
noticeable feature everywhere has been that accounting has sought to serve
as the major financial information system. Moreover, the evolution of the
discipline is suggestive of the fact that the accounting profession has
been constantly seeking to address the demands placed on it by the
environment. The focus has remained on reporting of performance and its
disclosure.
The level of transparency in financial transactions, the
norms for disclosure, the way accounting is done are central to the issue
of ensuring accountability in corporate governance. The Accounting
Profession all over the world, including that in our country has been
alive to issues of standardisation of principles and procedures and
outlining of norms of disclosure and transparency.
One of the key tools that are commonly prescribed for
ensuring accountability is adequate disclosure and transparency in
periodic financial reporting and review. These ideals should not only be
enforced in the public sector but should evolve as a culture enhanced by
adequate legislation.
An obsession with secrecy persists in leading industrial
countries. Witness the absurd spectacle of Sweden being accused by the
European Commission of breaching Community Law by making Commission
documents available under legislation the Swedes have enjoyed for nearly
250 years. Even modest access proposals provoked a ‘bitterly fought and
still controversial compromise’ in the European Parliament.
Meanwhile, in the United States (whose landmark freedom of
information legislation has long been a world leader) the white House has
sought to block public disclosure of its meetings with Enron and other
energy industry officials – illustrating the fact that the struggle for
information is, first and last, a struggle for accountability. At the
Johannesburg summit on sustainable development, battle raged over whether
communities in the developing world should have rights to information.
That would empower them to hold Multinational Corporation to account if
and when they pollute the environment and damage the health of their
people.
Good governance, transparency, accountability are noble
ideals that are clamoured for in the quest to have an enduring democracy.
Every citizen has a fundamental right to have free access to information
on how he is governed. How much revenue is generated by his government,
how much is spent, and on what.
The citizens on India – the world’s most populous democracy
– are among the most prominent proponents of access to information. In
particular, the civil society group Mazdoor Kisan Shakti Sangathan (MKSS)
– translated as the Association for the Empowerment of Workers and Farmers
– developed a radical interpretation of the notion that citizens have a
right both to know how they are governed and to participate actively in
the process of auditing their representatives.
By encouraging supportive officials to make information
available to them unofficially, MKSS was able to begin documenting the
nexus between local politicians, local officials and local contractors, a
linkage that was well known but flourished under a veil of secrecy. What
this example clearly demonstrates is that the right to information has a
real practical relevance to poor and marginalized people, particularly
where civil society activists can help them to access and use it.
Such was the success of the ‘social audits’ undertaken by
MKSS that the state of Rajasthan passed legislation requiring the holding
of audits right across the state. But because the public officials who
conducted them were not to provide notice as to why or when the meetings
were being held, and made little effort to present information in
comprehensible form. The willful mismanagement of information by
officials protected the corrupt and succeeded in frustrating
well-intentioned reforms.
For information to be useful, it must not be aggregated,
but made available in detail. To be empowered, parents must know more
than the size of a state’s education budget; they must be able to
ascertain readily the budget for their own children’s school. People must
also have access to supporting documentation as to how public fund is
disbursed on behalf of citizens that governments swore to cater for,
protect and be accountable to.
In the developing world the perceived secrecy and lack of
accountability of aid donors and international financial institutions have
fuelled people’s misgiving. The donors have too often appeared to shore up
secretive regimes with loans and assistants, the details of which are kept
from the citizens they are ostensibly intended to help. In some countries,
these citizens are now expected to make good the loans plundered by their
former leaders with the apparent acquiescence of the lenders.
Matters are
further complicated by the crises in the industrialized world over
accounting practices in the private sector. There, the linking of rewards
for senior executives to stock prices- coupled with egregious conflicts of
interest on the part of auditors – has enable scandalous accounting
practices sham insider trading. We have reached the point now where the
public can have confidence that any given corporation’s books present a
true and fair statement of its financial affairs, with untold consequences
for the savings and pension schemes of a whole generation in much of the
developed world and for the sound operation of capital markets
Behind a mask of apparent openness and accountability to
which once-trusted accountancy firms and business analyst were willing
collaborators, a raft of corrupt practices has undermined the live hoods
and expectations of millions. Yet by blowing the whistle audit firm risk
losing fees as well as being questioned about their own role in devising
opaque corporate structures and offshore subsidiaries Auditors were
trusted to provide honest accounts, and this trust was betrayed often,
their activities were supported by legal advisers, who helped to construct
secret corporate partnerships offshore tax evasion schemes.
Indeed, the public
responds with demands to know not only the sources of political party
funding but also the assets, incomes and liabilities of politicians and
senior public servants, in a manner unheard of in the past. Paradoxically,
these demands are often met with claims that disclosure would represent an
unwarranted intrusion into privacy – a defense that further deeds
suspicious that politicians are selling out to the highest bidders and
that officials are siphoning wealth from the public purse.
The claim to privacy is
basically the same cry of Trust me! But the fact remains that a cynical
public does precisely the opposite. In the absence of reliable information
to the contrary, it simply assumes the worst. If our objective is
transparent, accountable and honest governance – government we can trust
and a private sector that is trustworthy – then clearly the less
information that is kept from us, and the greater the confidence we can
have in its accuracy, the more likely we are to achieve our aim. The
easier the work of everybody becomes, the more reduced the expectation gap
between the actors in the polity.
Ordinary citizens need
access to government-held information in order to exercise their rights in
just about every phase of their lives –whether to gain entry to education,
apply for a job, gain access to a poverty alleviation scheme, build or buy
a house, start a business or collect a pension. Without it, they are ready
prey to the corrupt and the abusive. Above all, we need access to publicly
held information if we are to have confidence in our public institutions
and be assured that they are working as they should. Policies and
practices of openness can, of themselves, provide much comfort.
Yet the information we
need can easily be engulfed in an avalanche of irrelevant information.
What do we gain if we suffer from information overload, if the information
we receive is not truly informative, if we are simply confronted by a
flood of unverifiable ‘facts’? In the United States, for example, there is
a plethora of data on who makes contributions to election campaigns, yet
critical information that provides insights into the political influence
gained by major contributors is largely absent.
If we ask for a needle,
we do not want to have to look for it in a haystack. That is where the
mass media can serve as a filter, their role being to sift and sort the
information into manageable forms. Unfortunately, the media’s performance
has often been inadequate. The major reason they claim being inadequate
access to information.
Access
to information campaigns are often led by media interests, whose claims to
access should be beyond argument. Given our uncertain faith in the media,
however, we cannot yield to them exclusive ownership of the struggle for
access, far from it. The claims of the citizen are much more compelling.
If we ask, ‘who owns the information we demand?’ the answer must surely
be, ‘We, the people, not them, the state.
Information is best viewed as being held by the state on
behalf of the people, for use in the best interests of the people.
Indeed, the constitution of Brazil goes so far as to enshrine every
citizen’s right to be provided by public entities with information
concerning a citizen’s personal interest or information of general or
collective interest, the only exception being where the confidentiality of
information is essential to the security of the state and society.
The accountant’s roles of providing financial information,
carrying out stewardship responsibilities, enhancing the budgeting and
planning processes and above all providing professional service that
reduces the possible mistrust between the owners of resources and the
professional managers of those resources are largely information
dependent. This is as valid at the private sector level as it is at the
public. A clamour for openness is a clamour for easier and less costly
acquisition of the information needed for carrying out these sacred
duties. A freedom of information bill is a bill for transparency, a bill
for accountability, a bill for good governance, a bill for democracy and a
bill for freedom, yes genuine freedom.
Akintola Owolabi
Lagos Business School,
Pan-African University,
Lagos.
26/4/05 |
