Financial Times

2003 Govt. should have annulled SLIC privatization

By Natasha Gunaratne

The petitioner in the successful Sri Lanka Insurance Corporation (SLIC) fundamental rights petition said Ranil Wickremesinghe, was the Prime Minister in 2003 when the privatization took place, should have annulled it.

At a press conference this week, petitioner Vasudeva Nanayakkara and respondent and former PERC Chairman Nihal Sri Ameresekere said the Prime Minister had gone ahead with the privatization despite objections from President Chandrika Bandaranaike Kumaratunga who even submitted a Cabinet paper voicing her concerns against the deal.

Mr. Nanayakkara said he was planning on asking President Mahinda Rajapaksa to set up a powerful committee to probe into other controversial or questionable privatizations. At the press briefing, he stated that a commission of inquiry should be set up to reveal to the public information on deals pertaining to plantation companies. Based on the findings, he recommended plantations companies be given a basis of repayment instead of jail sentences. He added that the government needs that money today and can use it to help the internally displaced persons.

Mr. Nanayakkara said he is keen to file more fundamental rights petitions over other privatizations but that it is a strenuous task. “Why should we always to go Court?” he questioned, adding he is going to push for a powerful commission of inquiry. Mr. Nanayakkara further stated that Cabinet must be asked to explain why they approved the SLIC deal to go through which was subsequently revealed to be a huge fraud.

Mr. Ameresekere, who supported the petition and gave extensive oral and written submissions, said the petitioner will ask the Supreme Court on June 18th 2009 when the case is again mentioned, that several government institutions such as the Securities and Exchange Commission (SEC), the Insurance Board of Sri Lanka (IBSL), the Commission to Investigate Allegations of Bribery or Corruption, the Criminal Investigation Department (CID) and others to investigate.

At the press conference, Mr. Ameresekere also said that according to the applicable law, the government can get the value of Rs.6.050 billion, the amount paid by businessman Harry Jayawardene’s consortium of companies for the 90% SLIC stake, back threefold if the government or the CID has the courage. Mr. Ameresekere said his valuation of SLIC showed that the company was worth around Rs.25 billion.

Mr. Ameresekere added that if not for the fundamental rights petition, nothing would have happened in the case. He said the SEC, Bribery Commission and other institutions should have assisted the Court by conducting their own investigations the moment it was brought to their notice. If more action is taken, he said it will lead to good governance.

Last week, the Supreme Court annulled the April 2003 privatization of SLIC and ordered that the government repay the purchaser, Milford Holdings, the Rs.6.050 billion paid for the 90% stake. The Supreme Court bench headed by former Chief Justice Sarath N. Silva, K. Sripavan and G. Amaratunga, directed the government to issue treasury bonds in the amount of Rs.6.050 billion with a maturity period of five years. Furthermore, the judgment stated that in lieu of interest, Milford Holdings will be allowed to keep any profits made by SLIC from the date of purchase to when it was reverted to the government.

Mr. Ameresekere said the he first started looking into the SLIC privatization during his tenure as PERC Chairman after the consortium of companies demanded payment of Rs.2 billion for overpayment for the 90% stake in SLIC, stated in writing to PERC. Mr. Ameresekere said that under the Public Properties Act, anyone can be prosecuted for attempting to defraud the government. In this instance, he said the attempt to get back Rs.2 billion from the government is illegal in addition to the consortium’s backdoor entry as purchasers of SLIC as established in the Supreme Court judgment. “The judgment found this action to be unlawful and illegal and criminal action should be taken by the CID,” he said.

He said that in terms of Article 28 of the Constitution, it is a fundamental duty of every person to preserve and protect public property and the combat the misuse and waste of public property. The Offences Against Public Property Act No. 12 of 1982, amended by Act No. 28 of 1999, stipulates that any person, whether public servant or otherwise, is liable for the following offences -- Mischief to public property; Theft of public property; Robbery of public property; Misappropriation or criminal breach of trust of public property; Cheating, forgery or falsification in relation to public property; and Attempting to commit any one of the above offences.

Punishment for any one of the above offences is a fine of 3 times (300%) the value of the public property in respect of which such offence was committed and imprisonment not exceeding 20 years. Public property as defined in the Act means the property of the government, any department, statutory board, public corporation, bank, co-operative society or co-operate union.

Challenging privatisation needs money

Public interests activists say they want to challenge the privatisation of plantation companies but lack the resources."We need resources such as money for the lawyers. We can challenge the 12 plantation company privatizations, but only if these resources are forthcoming we can go ahead," Vasudeva Nanayakkara, a left-leaning politician who was successful in challenging the Sri Lanka Insurance Corporation (SLIC) privatisation, told The Sunday Times FT.

Mr. Nanayakkara together with accountant and public interest activist Nihal Sri Amaresekere successfully returned SLIC to the state through their FR petition challenging its privatization. Mr. Nanayakkara noted that they had examined the possibility of challenging the Shell Gas and Distilleries Co. privatizations but since its way back in time, there is a difficulty in going ahead with those.

He said it was a difficult choice to file this petition against some (corrupt) government officials as on the one hand he is an adviser to the President and the petition was effectively targeting the President's staff such as Dr. P.B. Jayasundera, the then Treasury Secretary.

He said the Commercial Bank (CB) staff had also wanted him to lead them in fighting business tycoon Harry Jayawardena as he had been trying to take central of CB. “But I did not want to take this up as then I would have been on my way to become a professional petitioner," he added.

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