Trust and Remuneration: Restrictions

Asset disclosure

This category of responsibilities requires officials to declare the financial and other assets they own, are invested in, or control. The disclosures may be fully available to the public or limited based on national legal culture and considerations.¹⁰¹

Elected officials in many countries are subject to some kind of asset disclosure procedures. In Sri Lanka, MPs are expected to report all assets as part of a Register of Members’ Interests after they are elected.¹⁰² Moreover, the Anti-Corruption Act, No. 9 of 2023 (ACA) stipulates the requirements for regular declaration of assets and liabilities of elected officials, among others. Disclosure is required within three months of appointment, annually, and if the value of assets and liabilities increase by Rs. 10 million (USD 33,175.01) or more.¹⁰³ The Regulation of Election Expenditure Act, No. 3 of 2023 requires all candidates, including incumbent MPs, to submit reports on election spending and donations after elections.¹⁰⁴ In New Zealand, MPs provide all information, in the form of an annual return of pecuniary and other specified interests, to the Registrar of Pecuniary and Other Specified Interests of Members of Parliament to be included in a register.¹⁰⁵ Those disclosures typically include assets held prior to being elected and catalog any assets acquired during the term of office. Similar disclosure policies are not currently in place in Nepal or Ecuador, as far as the researchers could confirm.¹⁰⁶

Gift restrictions and reporting requirements

This category of restrictions requires elected officials to report gifts, usually valued over a specific monetary amount, that they receive during their terms. All countries studied have gift restrictions for elected officials, often with stiff penalties for defying those restrictions, which the legal code often classifies as bribes.

The valuation limits differ from country to country. In New Zealand, officials must report all gifts over $500NZ (USD 301.69), including multiple gifts by the same donor that total over that amount, and all debts over $500NZ discharged or paid.¹⁰⁷ Accepting gifts, particularly of higher monetary value, is punished as if the MP had accepted bribes. In Nepal, public servants who accept goods or services at a reduced price without prior governmental approval “shall be liable to a punishment of imprisonment for a term from six months to one year depending on the degree of the offence and a fine equal to the amount involved.” ¹⁰⁸ Gifts must also be previously approved, or else surrendered and registered immediately to avoid a three- to six-month prison sentence.¹⁰⁹ In Ecuador, public officials who receive an “undue economic or other benefit” face one to three years of imprisonment; if the gift or bribe is connected to another crime, such as for a particular vote, the prison term increases to five to seven years.¹¹⁰ In Sri Lanka, a person is disqualified from running for parliamentary office or holding such office if found guilty of accepting a bribe or gratification within the seven years prior to their candidacy.¹¹¹

Sitting on boards of for-profit companies

Elected officials may be prohibited from being part of the governance structure of for-profit corporations while holding elected office. These types of restrictions are common, and violations typically have harsh consequences.

Prohibiting elected officials from participating in the governance of for-profit companies is intended to prevent conflicts of interest and ensure officials’ focus is on serving the public interest. In Ecuador, elected officials may not perform any other public or private function except university teaching while holding office.¹¹² Breaking this rule is punishable with prison time. In Sri Lanka, an MP is disqualified from being elected to or sitting in Parliament “if he has any such interest in any such contract made by or on behalf of the State or a public corporation as Parliament shall by law prescribe.”¹¹³ MPs in Sri Lanka are likewise required to disclose “any private interest or conflict of interests relating to their public duties.”¹¹⁴ In New Zealand, elected officials must provide information about companies in which any member is “a director or holds or controls more than 5 percent of the voting rights … [or] in which the member has a pecuniary interest, other than as an investor in a managed investment scheme.”¹¹⁵ Nepal does not have explicit provisions prohibiting or conditions for sitting on the board of for-profit companies.

Income limitations for outside or other employment

This category of restrictions limits the amount of income elected officials may earn in addition to their positions as representatives.

In Ecuador, elected officials may legally earn income in addition to their salaries as Assembly Members only through university teaching.¹¹⁶ Of course, not all Assembly Members are qualified university teachers, so this option is not feasible for every member. All other methods of earning income are prohibited during a member’s tenure in office. This restriction means that elected officials need the means and ability to take a leave of absence from their permanent careers or jobs in order to serve as elected officials. In Ecuador, at least, this short-term sacrifice is seen as worthwhile given the long-term benefits.

Restrictions on family members’ activities

As some MPs’ benefits are available to their family members, certain restrictions also extend to elected officials’ families. This category of restrictions includes prohibiting representatives’ family members from holding certain occupations, making specific investments, pursuing particular business interests, or receiving discounts or benefits.

Explicit limitations placed on officials’ families range from blanket restrictions to self-reporting requirements. Ecuador’s legal code expressly prohibits nepotism in any form. Thus, family members of elected officials – including distant family members – cannot be employed by the same institution, appointed to a new position within the same authority, or directly supervised by the Assembly Member’s office. If a family member already holds such a position when a relative is elected, “the [family member’s] contract will remain in force until the expiration of its term” but “the appointing authority will be prevented from renewing [it].”¹¹⁷ Where restrictions on family members are not as explicit in the law, many family members of MPs end up employed in Parliament. Sri Lankan MPs are known to hire their wives as personal secretaries and other secretaryships are also often handed to family members.¹¹⁸

Financial disclosures can also be required due to familial ties. In Sri Lanka, the ACA requires cohabiting and close family members and dependents of elected officials to declare their assets and liabilities.¹¹⁹ It is unclear how stringently this requirement is enforced, however. In Nepal, while there are no asset disclosure requirements, if a family member is found to have accepted a bribe, discounted services or goods, or other such favoritism, the MP is subject to the same punishments as if they accepted it.¹²⁰ In contrast, an MP in New Zealand is not required to disclose “any interest involving a family member unless, guided by the registrar’s purpose … they consider the interest should be disclosed.”¹²¹ Uniquely, New Zealand officials specifically do not need to disclose any debt owed, or the names of debtors or creditors, if the debt is between the official and a family member and is purely personal. The de jure or de facto flexibility and favoritism afforded family members can and has invited public criticism.

Of these 16 categories of remuneration, some benefits elected officials receive mirror those of other public employees generally, such as leave time, office supplies, and ICT equipment provisions. Travel and accommodation allowances are standard, as they enable the elected officials to conduct their work. Other practices, such as additional medical provisions, tax-exempt funds, and staff and familial benefits are unique to elected officials. The restrictions placed on elected officials are well-intentioned but less consistently codified – and, reportedly, enforced. These practices can create room for distrust to stir, especially if the processes by which people obtain their offices are not trusted as free and fair. The next section reflects on some general challenges to trust in elected officials as tied to their remuneration.

Leading Challenges to Addressing Distrust Related to Remuneration

Current levels of trust in elected officials vary significantly across the four countries in this study. In New Zealand, this research, particularly the interviews, found that people have confidence in government processes, accept the outcomes of elections, and trust their elected officials to work on behalf of their constituents. In Nepal, people reportedly tend to distrust the government at large, although they do trust their own elected officials to work on behalf of their constituents. In Ecuador, this research indicated that people do not trust institutions and tend to deeply distrust politicians. Similar sentiments persist in Sri Lanka, especially after the 2022 crisis; over 85 percent of respondents in a November 2023 survey conducted by the Center for Policy Alternatives believed corruption had increased since the crisis.¹²² Examining the roots of this distrust through the interviews and the Sri Lanka Survey suggested two simultaneous trends:

• Public misperceptions (overestimation) of how much direct financial compensation MPs receive, and
• MPs leveraging informal benefits outside the law.

Unfortunately, these two trends create a cycle of continued distrust if not interrupted. This section discusses each in turn.

Challenge 1: Citizens’ overestimation of MPs’ compensation

Officials interviewed in all four countries expressed that people often misunderstand exactly how much elected officials make by way of salary and allowances. One former Assembly Member in Ecuador shared that members of the public are often shocked to learn how little Assembly Members receive; notably, members are asked quite openly about their income. Even in New Zealand, where both MPs and non-MPs interviewed generally believe elected officials are compensated adequately and fairly for their service, the public is seemingly unaware of specific legal provisions related to officials’ remuneration and benefits and how they have changed over time. Members of the public in New Zealand reportedly often assume that MPs still receive remuneration based on an outdated superannuation scheme upon retirement, which affords them high annual pensions and international travel perks. That scheme closed to new MPs in 1992.¹²³

Even where the base salary may seem reasonable to the public, additional costs and deductions from an elected official’s formal income are not public knowledge. Sri Lankan MPs interviewed noted that they cover the cost of fuel for trips to meet with constituents out of their own pockets, as the fuel allowance has not been adjusted for inflation since the economic collapse. Others found ways to carpool because of the prohibitive cost of traveling alone. Similarly, Ecuadorian Assembly Members are known to share accommodations in Quito because allowances do not fully cover expenses for those from distant constituencies. Automatic deductions are also reportedly taken for common institutional funds levied against their base salaries.

Such misconceptions about MPs’ incomes can have implications for the demands people place on their elected officials. In Nepal, elected officials are expected to pay some of their staff and contribute to other expenses out of their base salaries, making their net income significantly less than the pay they receive on paper. Culturally, constituents are unlikely to ask their elected officials directly about the benefits they receive. Nevertheless, MPs are often expected to attend and spend a lot on cultural functions, such as wedding rituals, mournings, and local festivals. This is the case in Sri Lanka as well, where people view it as politicians “giving back” money to the community that they are assumed to have “stolen.” This expectation shows that people often wrongly assume MPs have power – in the form of money – to make things happen for their communities as well as at a personal level. It becomes challenging for MPs to counter beliefs about their exaggerated benefits with the reality of more limited resources.

Simultaneously, there tends to be negative media coverage of politicians taking time off – either for vacations or generally doing things other than the people’s work. One interviewee in Ecuador recalled a colleague being accosted in a grocery store at midday for not being at work, when the member had been in the Assembly overnight and was hurrying back for another session. Many MPs in New Zealand reportedly find it disheartening to hear such criticisms, knowing that they may have chosen to forfeit much more lucrative careers (e.g., in high-powered legal firms) to go into public service. While they did not regret these choices, they wished their constituents better understood the MPs’ sacrifices. Sri Lankan interviewees also stressed that they made personal sacrifices, many of them financial, to serve in their elected roles.

Despite this situation – lower salaries and remunerations than constituents understand, coupled with financial demands on MPs – most of MPs interviewed in all four countries did not think they should be entitled to any additional compensation in the form of salary. Instead, they suggested alternative resources such as trainings or library access. As will be discussed next, however, members of the public distrust such non-financial types of benefits for other reasons.

Challenge 2: Informal benefits

The first challenge juxtaposes uncomfortably with the second. While their salaries may be deemed sufficient or even low, this research confirmed that MPs – and their families – often receive benefits beyond what is provided for in the law. These “informal” benefits can erode trust in the integrity of elected officials and, by extension, the democratic system.

Many unofficial perks are tied to travel. In New Zealand, for example, domestic travel for MPs is free, whether it has a “parliamentary purpose” or not.¹²⁴ MPs also receive free membership in airline loyalty programs, along with lounge access and other perks. Nepalese MPs have access to special transportation to airports and are permitted to take their cars directly to a plane to bypass long lines. They can also use a VIP room at the airport, as can Sri Lankan MPs at the Bandaranaike International Airport (BIA).¹²⁵ This practice has stirred controversy, such as when a former Sri Lankan finance minister with no active parliamentary affiliation made use of the VIP facilities, allegedly without payment.¹²⁶ International travel is a unique perk for a subset of Assembly Members in Ecuador, as it is often tied to specific portfolios or coveted committee assignments. Such travel opportunities are not always afforded to citizens, so the option to be involved in politics that involves international travel is a unique benefit. Elected officials in each country typically receive special “official” or “diplomatic” passports that may exempt them from visa fees and intensive visa application procedures.¹²⁷ As mentioned above, passport access is commonly extended to the immediate family members of elected officials.¹²⁸ While travel for official business is naturally part of the job, extra frills around that travel can seem superfluous to citizens.

Some provisions afforded to officials are difficult to separate into either the personal or professional sphere. For example, home internet connections are paid for in New Zealand even if the officials do not use the internet at home solely for work. Security arrangements afforded to officials at or traveling to Parliament also continue while New Zealand MPs are at home. They enjoy other, much less politically relevant, benefits as well, such as access to tickets for major sporting events, tax-free allowances to purchase raffle tickets at constituents’ events, or free entry to speaking events not hosted by an MP.¹²⁹ Such practices are particularly detrimental to trust where citizens already think MPs are motivated to run for office for personal gain – as was the case among 70 percent of Sri Lanka Survey respondents who said they do not believe elected officials are working in the people’s best interest.¹³⁰

The blending of personal and public spheres becomes even murkier when it comes to benefits extended to the family members of MPs. Most countries studied here have some rules against nepotism. However, there are also benefits, notably related to travel and accommodations, extended to the families of elected officials. Despite prohibitions on family members benefiting by virtue of their connections to MPs, Sri Lankan MPs’ family members have been known to make large investments and business decisions that would be difficult without inside information.¹³¹ There are also unwritten benefits; the prestige of having served in the Ecuadorian Assembly is recognized as extending to a member’s entire family. When MPs anywhere act on such instincts, the public often views them as having foregone their promise to serve the people first.

Of course, some officials choose to operate directly outside the rules. For instance, because the base pay for elected officials in Ecuador is so low, some Assembly Members do not completely give up their former employment despite strict income restrictions. In Ecuador’s case, punishment with prison time for this and other infractions is quite common, although it does not fully dissuade the practice. As another example, there is a common belief in Sri Lanka that MPs avail themselves of liquor licenses, sometimes issued outside the law, as concessions for loyalty. While the practice appears to be a feature of Sri Lankan politics, it is connected to non-transparent behavior that people have come to associate with politicians. The traditional media – from which 66 percent of Sri Lanka Survey respondents get their information about corruption in the country – often reveals allegations of this practice, but official investigations and sanctions are uncommon.¹³² Such activities – alleged or confirmed – can quickly instill in the public a perception of ambient corruption, fueling general political distrust.

Where the rules are less explicitly codified, MPs are often perceived as taking advantage of loopholes. Such accusations were levied by non-MP interviewees from Sri Lanka, and they likely influenced Sri Lanka Survey respondents’ perspectives. In fact, 61 percent of survey respondents said they do not think MPs in Sri Lanka should have benefits beyond their salaries, and 75 percent said that the total compensation package – salary and all the other benefits received – are not reasonable. While those opinions may be driven in part by misconceptions about benefits received, corruption – a quarter of survey respondents said all Sri Lankan MPs are naturally corrupt – and use of informal benefits damages trust in officials.

These twin challenges work against each other: while MPs believe their incomes are overstated, the public sees many examples of privileged opportunities for MPs and their families. In one final example of this dissonance, some interviewed MPs were interested in seeing improved libraries and facilities (Nepal), and some wanted training provisions or opportunities for research (Sri Lanka and Nepal). However, non- MPs were suspicious about whether requests for trainings – especially those involving international travel – indicated genuine interest in learning versus a desire for trips. If not addressed, these parallel practices can create a vicious cycle of deepening distrust and mounting corruption.