Waters Edge transaction Chandrika’s presidential robbery

Supreme Court rules that former president abused her executive powers to facilitate a corrupt deal

The Supreme Court on Wednesday, upholding a fundamental rights petition filed by two retired public servants, Suganapala Medis and Raja Senanayake, said former President Chandrika Bandaranaike Kumaratunga, was instrumental in illegally transferring state lands meant for a 'public purpose' to a private golf course -- now known as Waters Edge.

In a landmark judgment, Justice Shiranee Tilakawardane said Kumaratunga had failed to function in a manner consistent with the expectations of a public officer, much less an Executive President, and in doing so, had completely betrayed the position of trust bestowed upon her by the Constitution and by the people of Sri Lanka.

Kumaratunga was fined Rs. 3 million while the fifth respondent and Kumaratunga family friend Ronnie Peiris, who is said to have made a Rs. 57 million profit in the corrupt deal, was ordered to pay Rs. 2 million rupees. The court also ordered that the flood retention area at the controversial site be restored and recommended that the Water's Edge complex be utilized to house government offices.

Excerpts from the judgment which also had the consent of Chief Justice Sarath N. Silva and Justice P. A. Ratnayake.

In considering the part played by the 1st Respondent [former President Chandrika Bandaranaike Kumaratunga}, it is important to specifically understand that no single position or office created by the Constitution has unlimited power and the Constitution itself circumscribes the scope and ambit of even the power vested with any President who sits as the head of this country. In exchange for a conferment of extensive executive powers, the Constitution requires of the President, among other things, affirmation by oath that s/he, once elected, will "faithfully perform the duties and discharge the functions of the office of the President in accordance with the Constitution of the Democratic Socialist Republic of Sri Lanka and the law", and that s/he, will be faithful to the Republic of Sri Lanka and that s/he will to the best of her/his ability uphold and defend the Constitution of the Democratic Socialist Republic of Sri Lanka. (vide Chapter VII, §33, 4th Schedule). Similarly, a Minister is required to give affirmation by oath of the same attestations, and in the same manner.

Common to both roles is the expectation and understanding that any person who is elected to the Presidency or appointed to Ministerial service - and as in the case of the 1st Respondent, serves in both capacities due to self-appointment as Minister of Finance using the power of the presidency are so chosen because they are deemed able to embrace, uphold, and set example as a follower of the Rule of Law created pursuant to the Constitution and they hold in trust the executive power of the People acquired through the Sovereignty of the People.

The first respondent
Chandrika Bandaranaike Kumaratunga

While the exercise of Presidential power is a duty that must accord with the Rule of Law, such compliance should also come from one's own conscience and sense of integrity as owed to its People. This means that whilst they can use their private power and their private property in an unfettered manner when granting any privileges or favours and, even in an overwhelming act of great generosity, give all their private property away, their public power must only be used strictly for the larger benefit of the People, the long term sustainable development of the country and in accordance with the Rule of Law.

Consequent to this framework, it is to be noted for our purposes that all facets of the country - its land, economic opportunities or other assets - are to be handled and administered under the stringent limitations of the trusteeship posed by the Public Trust Doctrine and must be used in a manner for economic growth and always for the benefit of the entirety of the citizenry of the country and, we repeat, not for the benefit of granting gracious favours to a privileged few, their family and/or friends.

Furthermore, being a creature of the Constitution, the President's powers in effecting action of the Government or of state officers is also necessarily limited to effecting action by them that accords with the Constitution. In other words, the President does not have the power to shield, protect or coerce the action of state officials or agencies, when such action is against the tenets of the Constitution or the Public Trust, and any attempts on the part of the President to do so should not be followed by the officials for doing so will (i) result in their own accountability under the Public Trust Doctrine, betraying the trust of good governance reposed in them under the Constitution by the People of this nation, in whom sovereignty reposes and (ii) render them sycophants unfit to uphold the dignity of public office.

At the base of her defence, the 1st Respondent principally alleges that her involvement in the instant transaction was minimal, and limited to only the action she was expected to take in her capacity as Minister of Finance and as head of the Cabinet of Ministers. Moreover, she argues that when she saw the project undergoing "substantial change", she immediately sought to cancel the transaction. Such statements, however, fail to explain the submitted evidence, resulting in a series of contradictions and inconsistencies that lead us to no other conclusion than a determination that the 1st Respondent has failed to function in a manner consistent with the expectations of a Public Officer, much less an Executive President, and in doing so, has completely betrayed the position of trust bestowed upon her by the Constitution and by the People of Sri Lanka. The 1st Respondent has grossly abused her power.
The first action of the 1st Respondent significant to the present case involved the issue of the Special Projects Memorandum. Only 4 months after the initiation of the Asia Pacific project, the 1st Respondent issued the Special Projects Memorandum that, quite conveniently, aimed to facilitate and "streamline" the alienation of land in situations precisely like the kind at issue. In contemplation of the Special Projects Memorandum, was the later issuance of the Cabinet Memorandum P3 which, as set out in the facts above, sought to facilitate the approval of Asia Pacific's Golf Project and sought, among other things, significant economic concessions for the project. Though the 1st Respondent argues that the issuance of this Memorandum was both customary and in response to a recommendation of the project by the BOI, the BOI has expressly stated (vide para. 3, Document EF of the BOI's Affidavit) that at no time was a recommendation ever made to the 1st Respondent to issue the special concessions she advanced. The BOI's assertion is substantiated by the fact that letters dated 25th August 1997 (Document JJ(1) of the BOIs Affidavit) and 3rd September 1997 (Document JJ(2) of the BOI's Affidavit) reveal that the Digana golf course was still under construction and encountering financial difficulty which would result in a 2-year delay to complete the project. Such a blatant misrepresentation by the 1st Respondent only strengthens the allegations of the Petitioners that such behaviour had ulterior motives unrelated to furthering the Public Trust. Regardless of the 1st Respondent's argument that her behaviour was 'customary', the fact remains that the promoters themselves received payment for transfer of the shares of Asia Pacific, whose sole significant asset at the time of sale was the leasehold of the land with the UDA and the approval agreement with the BOI, both containing provisions exceptionally and unusually favourable to Asia Pacific - such provisions she had successfully lobbied for approval.

The fifth respondent
Ronnie Peiris

Given such a result, it was the duty of the 1st Respondent to, at the very least, inform the Cabinet through a subsequent memorandum - it must be remembered that the 1st Respondent was the Minister of Finance during the year of the sale (2002) - of the material change to the project resulting from the sale of Asia Pacific to Access Holdings. Whilst the 1st Respondent argues as evidence for the normality of this transaction that "it is an everyday commercial reality that the very basis of commercial transactions is to make a profit", the sale of a development company after obtaining state-subsidized assets and inordinately favourable tax incentives, before significant investment into the company or the commencement of development is anything but an "everyday commercial reality".

Given the fact that the 1st Respondent actively and successfully lobbied the Cabinet for concessions for Asia Pacific beyond and in excess of the guidelines she herself had promulgated in her capacity as President, it is patently disingenuous for the 1st Respondent to now abdicate responsibility and claim ignorance of the nefariousness of the transaction. Quite simply, it is unacceptable and reprehensible for the 1st Respondent to have made use of the power conferred upon her by the People to advance this Project, and now distance herself from the responsibilities inherent to such power.

Notably, this is not the only instance in which she has interceded in land alienation procedures for the purpose of "actively facilitating," if not seeking to bypass the appropriate approval process. According to a Report of Committee of Inquiry delivered on 6th November 2002 regarding, in part, the propriety of alienation of land in Narahenpita to Lifestyle Health Services (Private) Limited, the 1st Respondent issued several pieces of correspondence through which she, inter alia, expressed repeated concern over procedural delays and instructed the BOI to expedite the process of' vesting of the land by "eliminating some of the steps outlined or by accelerating the same." (Document EE of the BOI Affidavit page 9 paragraph ix). From the documentation presented to this court it appears this transaction too was another 'favour' granted - and as submitted by the petitioner, according to some in the media, a favour to her masseur. This court directs the BOI and the SLLR & DC to immediately investigate this dubious alienation and to act forthwith to restore the public purpose for which the said land was acquired especially as the affidavit of the SLLR & DC reveals that several instalments amounting to approximately Rs. 25 Million have not yet been paid. This is of particular importance given the pressing problem of the lack of housing for middle class government officials who reside in Colombo, since no development whatsoever has taken place on this land....

Interestingly, as part of a plea of propriety, the 1st Respondent blames the issuance of the Cabinet Memorandum approving the construction of villas and apartments as an action taken while she was out of the country and a result of the shift of government control to the UNF in 2001, and further submits that she moved to terminate the transaction "no sooner" than when "it took a different turn during the period of the UNF Government." Several peculiarities arise, however, when viewing this abdication of responsibility in light of the submitted evidence. Apart from the fact that such an assertion implies that the position of Executive President was essentially powerless during the latter part of her Presidency - an assertion belied by the inordinate constitutional power held by the President as Head of the Cabinet that remained unchanged from prior to that period and, frankly, a statement unbecoming of a former holder of such post - the assertion ignores the fact that the Memorandum she issued to seek cancellation of the transaction (Document U46 of the UDA's written submission), by her own words, states that the "substantial changes" at the basis of her objection, had infact, been approved prior to this alleged shift in power, a time in which she, by her own logic, was in control. Furthermore, the need to issue such a cancellation appears to have been obviated by the fact that the CEA had already issued an order one year earlier to cease activity pending CEA approval of the environmental impact of the proposed villas and the SLLR & DC had subsequently given its approval to the revised master plan (Document U45 of the UDA's written submission) - apparently, a resolution for which the 1st Respondent felt unnecessary when declaring without substantiation that the villas posed a flooding hazard.

Even assuming the legitimacy of the above suggestions, a question remains as to why the 1st Respondent waited till the end of 2004 to act upon the results of an investigation she reinstated and which were delivered in late 2002 (Documents EE and FF of the BOI's Affidavit) revealing, inter alia, the inconsistency in the use of the CV's Valuation with respect to the freehold sale of the luxury villas and associated land. Given, then, her presumed awareness in 2002 of the "substantial change" to the plan to include villa construction, such a delay to cancel the transaction belies the 1st Respondent's assertion that she took action "no sooner" than she found out about such change, and gives rise to the idea that the cancellation sought was for reasons other than a newly-found appreciation of environmental protection.

Justice Shiranee Tilakawardane

The irregularities of the above actions cannot be dismissed. Such actions can be seen to be, at best, revealing an incompetence and an unacceptable abdication of responsibility of the most powerful state official of Sri Lanka, and at worst, a pattern of behaviour evidencing an agenda at odds with ensuring optimal use of public lands (the Court at this stage will not deal with the submission of Counsel for the Petitioner that her "lapses" were deliberate, merely to secure a favour to her friend, the 5th Respondent (Mr. Ronnie Peiris). His Lordship, Sarath N. Silva in Senerath v. Kumaratunga [2007] SCFR 503/2005 SCM, espoused in the context of inappropriate action by the 1st Respondent, that:

The case of the Petitioners is that the 1st Respondent and the Cabinet of Ministers of which she was the head, being the custodian of executive power should exercise that power in trust for the People and where in the purported exercise of such power a benefit or advantage is wrongfully secured there is an entitlement in the public interest to seek a declaration from this Court as to the infringement of the fundamental right to equality before the law.

I am in full agreement with the spirit of his Lordship's characterisation of the 1st Respondent's responsibility. The expectation of the 1st Respondent as a custodian of executive power places upon the 1st Respondent a burden of the highest level to act in a way that evinces propriety of all her actions. Furthermore, although no attempt was made by the 1st Respondent to argue such point, we take opportunity to emphatically note that the constitutional immunity preventing actions being instituted against an incumbent President cannot indefinitely shield those who serve as President from punishment for violations made while in office, and as such, should not be a motivating factor for Presidents — present and future — to engage in corrupt practices or in abuse of their legitimate powers.....

In light of the foregoing, which has given much credibility to the emphatic allegations of Counsel for the Petitioners, I can say without reservation that the 1st Respondent has failed to act with the requisite level of responsibility warranted by her position, abused her power and has acted in a manner that reveals a desire to accommodate an interest or interests other than that of the People of Sri Lanka.

Accordingly, the Court finds that the 1st Respondent has failed to further the Public Trust, has betrayed such trust and stands in infringement of Article 12(1) of the Constitution.


Suganapala Medis
Raja Senanayake


Sarath N. Silva. CJ
Shiranee Tilakawardane. J
P. A. Ratnayake. J


J. C. Weliamuna with Maduranga Ratnayake instructed by Samararatne Associates appeared for the petitioners.
Faiz Musthapha, P.C. with Faisza Markar appeared for the intervening petitioners.
K. Kanag-Isvaran with N. Bartholomuesz instructed by Paul Ratnayake Associates appeared for Chandrika Bandaranaike Kumaratunga, first respondent
Fifth respondent Ronnie Peiris retained no lawyer.
Nihal Jayawardane with Chathura Writhamulla appeared for the UDA.
D. S. Wijesinghe. P.C. with Harsha Amarasekera and Dr. Shivaji Felix instructed by Amaratunga & Dissanayke Associates for Asia Pacific Golf Course Ltd.
Romesh de Silva, P.C. with Harsha Amarasekera for Sumal Perera, sixth respondent.
Mohan Peiris, P.C. with Hiran de Alwis for the Board of Investment.

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