In a timely analysis published in the Daily FT on December 29, 2025, Prof. Kalinga Indatissa, President’s Counsel and former President of the Bar Association of Sri Lanka, examines the implications of corporate criminal liability under the Anti-Corruption Act No. 9 of 2023 (ACA). The column addresses growing concerns in Colombo’s corporate sector regarding investigations by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) involving private entities.
As Sri Lanka strengthens its governance framework amid economic recovery, this expert insight highlights the expanded scope of anti-corruption measures, particularly how they now encompass private sector bribery and corporate accountability. Businesses operating in the country must understand these provisions to ensure compliance and mitigate risks.
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Background and Evolution of Anti-Corruption Laws
The ACA, certified on August 8, 2023, marks a significant overhaul of Sri Lanka’s anti-corruption regime. It repeals three outdated laws: the Bribery Act, the Commission to Investigate Allegations of Bribery or Corruption Act No. 19 of 1994, and the Declaration of Assets and Liabilities Law No. 1 of 1975.
Rooted in the United Nations Convention Against Corruption (UNCAC), which Sri Lanka ratified in 2004, the Act aligns domestic legislation with international standards. Prof. Indatissa notes that the ACA introduces modern provisions to criminalize a broader range of offenses, including private sector bribery, trading in influence, bribery of foreign officials, and illicit enrichment.
Historically, bribery laws focused primarily on public servants. The old Bribery Act defined offenses mainly in the context of public office or scheduled institutions. The ACA shifts this paradigm by extending liability to private commercial activities, reflecting global recognition that corruption erodes trust across both public and private sectors.
Defining Corruption and Its Forms
Prof. Indatissa defines corruption as the abuse of entrusted power for private gain, manifesting in bribery, embezzlement, nepotism, and extortion. It ranges from “petty corruption” (isolated acts) to “grand corruption” leading to state capture by elites.
In Sri Lanka’s context, where corruption perceptions remain a challenge, the ACA aims to foster transparency and ethical standards. The author emphasizes that the law distinguishes between intentional acts and genuine mistakes, urging CIABOC to exercise caution in prosecutions involving the private sector.
Enhanced Powers of CIABOC
A key change is the empowerment of CIABOC. The Commission can now initiate preliminary inquiries ex mero motu (on its own motion), conduct searches, seize assets, make warrantless arrests, freeze property, and impose travel bans. These tools enable proactive detection and investigation of corruption.
For businesses, this means heightened scrutiny in dealings with government entities or in commercial transactions. Prof. Indatissa advises private sector players to be particularly cautious in government-related interactions.
Private Sector Bribery: A New Frontier
One of the ACA’s groundbreaking features is the criminalization of private sector bribery under Section 106. This section targets acts in economic, financial, or commercial activities where gratification is offered or accepted to breach duties.
Specifically:
- Offering gratification to an employee or director to act or refrain from acting in breach of duties.
- Soliciting or accepting such advantages.
Penalties include fines up to Rs. 1 million, rigorous imprisonment up to seven years, or both.
Other relevant sections include:
- Section 97-100: Offenses related to offering gratification for government contracts, services, or benefits.
- Section 104: Trading in influence.
- Section 105: Bribery of foreign public officials.
- Section 111: Corruption by public officials causing wrongful loss or gain.
These provisions close previous gaps where private sector corruption was not directly addressed.
Corporate Criminal Liability: Sections 116 and 117
The core of Prof. Indatissa’s analysis focuses on corporate liability. Under Section 116, bodies corporate (companies, firms) can be held criminally liable for offenses committed on their behalf.
Directors, officers, agents, or partners are deemed personally liable unless they prove:
- The offense occurred without their knowledge, or
- They exercised all due diligence to prevent it.
This reverses the burden of proof, requiring proactive defense. Prosecutions typically target the entity first, with fines applied accordingly.
Section 117 broadly defines “persons” liable, including former employees, seconded staff, contractors, volunteers, and service providers.
Additionally, asset declaration requirements apply to chairmen, directors, and staff officers in companies where the state holds at least 25% shares (Section 80). This threshold was lowered from 50% in prior laws, expanding coverage.
Implications for Sri Lankan Businesses
The ACA signals a paradigm shift, making companies accountable for corrupt acts by employees or agents. Prof. Indatissa highlights concerns from corporate circles about CIABOC’s investigations into private sector matters.
For businesses:
- Risk Management: Implement robust compliance programs, including anti-bribery policies, training, and internal audits.
- Due Diligence: Directors must demonstrate active oversight to avoid personal liability.
- Government Dealings: Extra caution in tenders, contracts, or interactions involving public officials.
- Private Transactions: Ethical standards in commercial dealings to prevent private sector bribery charges.
Prof. Indatissa views the ACA as “very useful” for combating rampant corruption in Asia but stresses balanced enforcement. He recommends CIABOC distinguish intentional corruption from errors to avoid chilling legitimate business activity.
Broader Economic and Governance Benefits
In Sri Lanka’s post-crisis recovery, stronger anti-corruption measures enhance investor confidence and governance rankings. By addressing private sector vulnerabilities, the ACA promotes a level playing field, encouraging foreign investment and sustainable growth.
Alignment with UNCAC facilitates international cooperation on asset recovery and cross-border cases. For SMEs and conglomerates alike, compliance fosters ethical cultures, reducing reputational risks.
Recommendations and Path Forward
Prof. Indatissa concludes that while the ACA expands CIABOC’s mandate effectively, prosecutions should prioritize transparency over overreach. Businesses are advised to:
- Seek legal counsel for compliance frameworks.
- Promote whistleblower mechanisms with protections.
- Engage in sector-wide dialogues for practical implementation.
As enforcement evolves, ongoing education and stakeholder collaboration will be crucial.
This analysis provides essential guidance for navigating the ACA’s corporate provisions. It underscores the need for proactive ethical governance in Sri Lanka’s evolving business landscape.
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