Excerpts of the judgment
On Ratnayake and JKH
“ All the amendments to the agreement suggested by Ratnayake were incorporated by BOI ensuring the tax relief. This process to say the least makes a mockery of the Rule of Law and the equal protection of the law. If the law can be bent and amended to suit an individual purpose and to confer a benefit to any party that was not due under the existing law, the hallowed principle of equality before the law, will be denuded of its essential and abiding meaning.”
“ JKH knew fully well that this was not a mere sale, but a sale of shares owned by a Public Corporation in an extremely lucrative venture. That, transparency and action being taken according to law should necessarily underpin the validity of the transaction.”
“The allegation that Jayasundera worked in collusion with Ratnayake of John Keells to secure illegal advantages to the latter, adverse to the public interest is established.”
“The application (relating to the land) made by Ratnayake on behalf of JKH is premised on a suppression of the truth in that it is nowhere stated that what was intended is an acquisition of the business of LMSL. It is falsely made out to be a a new investment to qualify for investment relief.”
“... Ratnayake moved quickly to get the former committed to an inclusion of clause 8.2. The obvious purpose of getting clause 8.2 included was to drive away competitors.”
“… I cannot accept the submission of counsel for JKH (18th to 20th respondents) based on bona fides. It is clear that these respondents got an advantage over other competitors through the yielding hand of Jayasundera. The ostensible authority of Jayasundera cannot be a shield for these respondents to safeguard what they secured as an illegal, arbitrary and biased exercise of executive power.”
“From the perspectives of JKH I hold that the company had secured advantages and benefits through the illegal process and in specific instances by misrepresentations that have been made.”
On PB Jayasundera:
“Having successfully stalled the process, he selected a private bank on his own and paid the full fee that was sought. This is completely contrary to the basic tenets of public sector procurement. The business valuation was conceived by him alone.”
“.. Jayasundera’s action was adverse to the interests of the state in securing a better price.”
“..Jayasundera had no mandate whatsoever from the cabinet or anyone else to make an astounding respresentation that title to 8 acres of state land would be transferred with any payment, in such a casual manner, on a sheet of paper that does not bear even a signature.”
“He not only acted contrary to the law but purported to arrogate to himself the authority of the Executive Government. His action is not only illegal and in excess of lawful authority but also biased in favour of JKH.”
With the scathing attack on John Keells and its directors, Sri Lanka’s biggest listed group, by the Supreme Court over the now-deemed fraudulent privatisation of Lanka Marine Services, the question arises as to what action will follow or whether there will ever be any action.
Both Dr P.B. Jayasundera, Treasury Secretary and Chairman of the Public Enterprise Reforms Commission (PERC) at the time, have been virtually hauled up by the court for lying in the whole transaction process. The court comment that “The allegation that Jayasundera worked in collusion with Ratnayake of John Keells to secure illegal advantages to the latter, adverse to the public interest is established,” clearly implies that cheating and fraudulent means were used to win this deal.
Knowing Sri Lanka and the period we live in, it won’t be surprising that PBJ and Ratnayake escape the net of good governance, ethical practices and social responsibility, despite (JKH) professing to practise it through the various parts of the 130 year-old company and its community service arm, the John Keells Foundation.
Having said that the issue also focuses on the role of independent directors who are expected to ensure good business practices and good governance. In fact it was only last week that we raised this issue. We said: “If they are independent, do they ‘truly’exercise their independence? While this is not an indictment on the many respected individuals who have been called to serve on the boards of companies under the SEC requirement of independent directors, have they exercised their independence in decision-making? In the first place, are they aware of their roles and responsibilities or is it laid out by the company that invites them on board and often pays them a fee for attending meetings?”
The independent directors at JKH are Franklyn Amerasinghe, Tarun Das, Mohamed Muhsin, Deva Rodrigo and Sithie Tiruchelvam. We are told Ratnayake has called a board meeting to discuss all issues. We hope the truth will prevail and good governance will be the winner!
The criticism against PBJ would result in any other public official hiding his head in shame. Not Dr Jayasundera who has the full backing of the cabinet! Will he or won’t he resign … has been echoing in the corridors of power in the public and private sectors this whole week. Time will tell.
While there are no clear rules in Sri Lanka about action against the chief executive/chief accounting of a ministry who is also the chief disciplinary officer in a situation of this nature, the convention overseas is quite clear in both public and private sectors: quit. This should be the eventual outcome given the serious comments on the role of two officials by the Supreme Court.
The court judgment is a clear indictment of two high officials – one from the government and the other from the private sector. The perseverance and courage of petitioner-politician Vasudeva Nanayakkara and respondent Nihal Sri Amarasekera, who are both also battling against the SLIC privatisation, in seeing that truth must prevail and the state not defrauded must be fully commended.
The due judgments of the SLIC case and Waters Edge land transaction are also being looked at with equal interest.This is what JKH says on the corporate governance framework on its website: “JKH is committed to the highest standards of business integrity, ethical values and professionalism in all its activities towards rewarding our stakeholders with greater creation of value, year-on-year.”
What more can we say than practice what you preach at the highest levels of good governance, ethics and decent business practices.