The Political Column

17th August 1997

Political stunts amidst Susanthika show

By Our Political Correspondent

Yesterday the PA government completed three years in office, having won the Par liamentary General Elections in 1994 with a slim majority.

After three years, the PA has as yet little to talk about other than the devolution package, which is yet to be introduced.

Thus political uncertainty hangs over Sri Lanka with most people wondering whether the country would be able to find an acceptable solution to the ethnic crisis.

That same political uncertainty had definitely put the country into economic turmoil over the past years, aggravating the day to day problems of the people.

Though there is a significant improvement in the country’s human rights record, people are facing severe difficulties in other areas mainly due to inaction or indifference of government bodies.

For the past three years no major development project has got off the ground to create substantial job opportunities for the youth.

In short, the past three years of the Chandrika Kumaratunga government has largely ambled along.

The opposition was also in deep slumber over the past few years allowing the government to get away with inefficiency and broken promises. But with the dawn of the fourth year the main opposition UNP has planned a protest campaign countrywide over the sky-rocketing cost of living.

While the people are burdened with the rising cost of living, unemployment and other problems, the government is trying to bridge the budget deficit through its privatisation programme.

The latest is the Sri Lanka Telecom privatisation where Nippon Telegraph and Telephone Corporation has taken a 35 percent stake to form a strategic partnership.

But there are many questions raised about the agreement and the monopoly enjoyed by the Sri Lanka Telecom (SLT) after forming this strategic partnership.

Though Sri Lanka has fetched a colossal sum through this partnership, some economic analysts do not see it in quite the same light.

In addition, it is felt that certain conditions in the deal are not favourable to other companies which have invested in Telecom projects here.

The monopoly enjoyed by the SLT with its strategic partner (NTT) for five years on international services and the clause which says that after five years the government of Sri Lanka may sell its shares without restrictions, had raised many questions among trade union and political circles.

The deal signed by the Secretary to the Treasury, the NTT and SLT is as follows:

Shareholders Agreement

Business of SLT

I. The Investor and GOSL to procure that the business is conducted in the best interest of SLT.

2. Subject to market and regulatory conditions, shares to be listed on the Colombo Stock Exchange and if appropriate on one or more international stock exchanges, by no later than 3Ist December 2000.

Shareholders Meetings

1. Quorum: two holders of shares including GOSL and Investor.

2. All Reserved Matters given in Schedule I (attached) will require the approval of each of the Shareholders (i.e., GOSL and Investor).

Board of Directors

I. Upto 10 Directors, in the ratio of 6 GOSL Directors and 4 Investors Directors, or 5 GOSL Directors to 3 Investor Directors.

2. The ratio will change from time to time to reflect the relative shareholding of the Shareholders.

3. The 6 Directors currently on the Board of SLT shall be the GOSL Directors.

4. All GOSL Directors shall be non-executive.

5. GOSL shall appoint the Chairman of the Board.

Board Meetings

1. Quorum: 4 Directors, at least 2 GOSL Directors and at least I Investor Director.

2. Board meetings shall be held at least once every two months and at least six times during a calendar year.

3. Decision by simple majority except in the case of Restricted Matters given in Schedule 2 (attached) will require a majority vote with at least one GOSL Director and at least one Investor Director voting in favour.

4. The Board may delegate its powers to the CEO.

Powers of Directors

1. Senior management will report to the CEO who shall be accountable to the Board.

2. The powers listed in Schedule 3 (attached) are expressly delegated to the CEO.

Articles of Association

In the event of any conflict between the provisions of this Agreement and the Articles, this Agreement shall prevail.

GOSL Transfer of shares

1. Within 5 years, GOSL may sell its shares subject to

o Retaining 51% of the shares.

o No transfer or sale to Telecommunications Operator.

o The transferee shall be bound by the terms of this Agreement.

2. After 5 years, GOSL may sell its shares without restriction unless the Management Agreement is in effect in which case, the Investor shall have first option on the shares.

3. GOSL may transfer upto 63,170,000 shares (3.5% of the shares) to the employees of SLT.

Investor Transfer

1. The Investor may transfer its shares to a Group Company at any time, subject to a Parent Guarantee and Deed of Adherence.

2. All transfer of Investor shares outside of the Group Company shall be subject to first option to GOSL.

3. Within 5 years, the Investor shall retain not less than 75% of the original shares transferred (i.e., 26.25% of the shares).

4. In the event of an IPO (Initial Primary Offer) within the 5 years, the Investor shall retain not less than 20% of the shares after such IPO.

5. After 5 years, the Investor may transfer or sell its shares without restriction unless the Management Agreement is in force, in which event the GOSL shall have first option on the shares.

Compulsory Transfer

In the event of dissolution of the Investor or of serious and persistent default by the Investor, the Investor is required to sell its shares to GOSL at the price determined by an independent expert.

Employee Shares

1. The Investor shall purchase any shares of the employees at the price per share paid by it to acquire the 35%, provided that the employees notify SLT anytime between 1st February 1998 and 31st July 1998.

2. Payment for shares for which notification was delivered between 1st February and 30th April, shall be made no later than 31st May 1998.

3. Payment for shares for which notification was delivered between 1st May and 31st July, shall be made no later than 31st August 1998.

Monopoly and Tariff Rebalancing

1. SLT shall have a monopoly on international services for 5 years.

2. Thereafter no issue of international licence which results in unfair discrimination to SLT.

3. The GOSL guarantees that the minimum annual tariff increases on a basket of domestic services including connection charges, shall be 25%, 25%, 20%, 15% and 15% respectively, including inflation.

4. There shall be no unreasonable increase in any one item in the basket or their components.

5. In 1998 and 1999, the increase in domestic call charges will be effected by a reduction in the number of seconds per unit.

6. There shall be a reduction in international call charges over 5 years with a view to rebalancing international and domestic charges to cost basis.


SLT shall continue to employ all those currently in employment on terms no less favourable, subject to the right of SLT to terminate employment for breach of terms of employment or as permitted by law for misconduct.

Indebtedness and Equity Contribution

1. The GOSL confirms that the sale of 35% shares shall not result in a breach of the existing Government Loans to SLT or Government Guarantees.

2. The proposed Government Loans will be made available to SLT on the terms given disclosed to the Investor.

3. Future indebtedness of SLT approved by the Board of Directors shall be guaranteed by GOSL and the Investor at the ratio of 65% to 35%.

Universal Service Obligation (“USO”)

No USO for the duration of this agreement.

Government Levy and Investment Protection

1. No government levy for the duration of this agreement.

2. The Investor is a Company to which The Agreement for Promotion and Protection of Investment signed between Sri Lanka and Japan, applies.

Amounts due from Government entities

The amount due from Government entities shall be settled by 31st October 1997.

Pension Liability

Pension Liability and other benefit payments to former employees of the Dept. of Telecommunications shall be paid by GOSL.


The Investor nor any of it Group Companies shall not compete with the Protected Business of SLT such as basic fixed wire line telephony, basic WLL telephony, public telegraph, telex, data transmission, maritime mobile, facsimile, international television, IDS, INMARSAT etc.

Dispute Resolution and Arbitration

1. Disputes to be referred to a Dispute Committee, comprising of 4 persons, 2 appointed by GOSL and 2 appointed by the Investor and resolution of a dispute shall require the unanimous approval of the Committee.

2. Any dispute which has not been resolved within 60 days of forming the Dispute Committee shall be settled by arbitration in Singapore under UNCITRAL rules.

Remedies for Force Majeure

In the event of Force Majeure which delays the performance of either party by 180 days, either party may terminate this Agreement by giving to the other party 30 days notice. GOSL and SLT cannot terminate the agreement in the event of Government Force Majeure.

Waiver of Sovereign Immunity

GOSL agrees that should the Investor institute proceedings against it, GOSL shall not claim immunity by or on behalf of itself or any of its assets.

Management Agreement

Provision of Services

NTT shall provide certain key personnel including but not limited to:

o Chief Executive Officer who shall direct the day to day management of SLT.

o Director of Corporate Strategy

o Director of Technology and Operations

o Director of Marketing

o Chief Financial Officer

Annual Business Plan (“ABP”)

NTT shall procure that the personnel shall prepare and submit to the Board

a) an Interim abridged business plan for 1997, as soon as practicable

b) annual business plan for each financial year thereafter three months prior to the first day of such financial year.

The ABP shall include projected network expansion, income statement, balance sheet, statement on expected expenditure and the projected staff and related expenses.

Fees and Expenses

I. SLT shall pay in Sri Lankan Rupees to NTT a fee equal to aggregate of 0.5% of EBITDA and 1.2% of Revenue for each period for which audited accounts of SLT are prepared, less penalties given below.

2. The fee shall accrue on a daily basis.

3. The salaries, fees and expenses of the Personnel shall be refunded by SLT in US$, provided they are reasonably incurred with reference to prevailing international standards.

4. SLT must approve such salaries in writing.

Penalties on the Management fee will be calculated on the following basis:

The fee for 1997, 1998, 1999 and 2000 shall be based on achieving the following roll out on the number of lines as at 31/12/96:

1. Urban 21% 42% 73% 104%

The targets are cumulative and will result in the fee being reduced by 5 percentage points for each whole percentage point by which the actual increase is below the target.

2. Rural 14% 18% 25% 24%

The targets are not cumulatIve and will result in the fee being reduced by 2.5 percentage points for each whole percentage point by which the actual increase is below the target.

The fee for 2001 and 2002 shall be based on achieving qualitative targets such as

o clearing of waiting lists

o increase in Call Completion Rate (CCR)

o decrease in Fault Rate (FR)

o increase in Fault Clearance Rate (FCR)

Besides the phone side of the Telecom deal, sprint queen Susanthika Jayasinghe’s spectacular achievement at the World Games in Athens is being marred by an apparent political row among VIPs. The first sign of the back-stage row appeared when a full page advertisement was carried in the Daily News of Tuesday praising the feats of the poor village girl who emulated the feats of the legendary Duncan White.

The ad was signed by the Amateur Athletics Association of Sri Lanka which is headed by Mahinda Rajapakse.

The next day, the Daily News carried a supplement congratulating Sri Lankan cricketers indicating the supplement was sponsored by the newspaper itself. But there was speculation that the supplement was more of a balancing act in a backstage battle between Ministers S.B. Dissanayake and Mangala Samaraweera.

The red-carpet welcome and other receptions for Susanthika on her arrival last Tuesday were organised under the direction of Sports Ministry Press Officer Mangala Janaka.

The superstar was welcomed at Katunayake, brought in a motorcade to the Sports Ministry and then to Temple Trees for a meeting with President Kumaratunga.

But as arrangements were being made Mr. Janaka received a call on his cellular phone from Presidential Press Consultant Sanath Gunatilleke, telling him that media coverage of the ceremonies at Temple Trees would be arranged by the President’s Media Staff.

A baffled Mr. Janaka told his Minister S.B. Dissanayake about this. And this reportedly led to a verbal clash between Mr. Dissanayake and the Presidential Press Office. But the battle ended when Ms. Kumaratunga said she could not meet Susanthika on Tuesday due to ill health.

The President had however indicated that she could make herself available for a private meeting with Susanthika sans others on the same day.

Since there was an apparent cancellation due to President’s ill health which bothered her since last Friday and which compelled her to seek immediate medical attention, Susanthika Jayasinghe and her party decided to see the President the following day.

But on Wednesday again the President indicated her inability to see Susanthika through her Secretary K. Balapatabendi. This compelled Minister Dissanayake to make an unscheduled visit to Prime Minister Sirima Bandaranaike along with Susanthika and others.

There they chatted for some time and Mr. Dissanayake told Ms. Bandaranaike that Susanthika wished to have a double cab with large wheels.

“What is the difference between large and small wheels” the Premier queried.

But after a frendly chat with the Premier, Minister Dissanayake accompanied Susanthika to Indra Traders to look for a pick-up double cab to her liking.

But the events had taken a dangerous turn on Tuesday night. At the Bullers Road junction (Thunmulla), a high security area, Mr. Janaka was on his way home after making arrangements for the Susanthika reception. Mr. Janaka saw some Pajeros following him and then obstructing his way. In a few seconds, the Pajeros compelled Mr. Janaka to stop. Some thugs who got off the Pajeros had allegedly dragged him out and assaulted him mercilessly, injuring him. The Pajeros sped away leaving behind the injured man who later lodged a complaint with the Cinnamon Gardens Police.

Susanthika did have an audience with the President on Friday and the first issue of the New look Daily News, has a page one picture of Sports Minister Dissanayake presenting Susanthika to a resplendant President.

The week however was eventful with Susanthika Jayasinghe, Sanath Jayasuriya and Aravinda de Silva making more historic contributions to sports.

Politically the UNP moved with determination in a bid to dissolve the earlier ruling given by Speaker K. B. Ratnayake on the regulations made under the Rehabilitation of Public Enterprises Act.

The UNP gave written submissions on Friday setting out reasons as to why the Speaker should review his earlier ruling.

The UNP delegation headed by Ranil Wickremesinghe made the following submissions:

Section 6 (3) of the Interpretation Ordinance provides that:

Whenever any written law repeals either in whole or in part a former written law, such repeal shall not, in the absence of any express provision to that effect, affect or be deemed to have affected.

c) any action, proceeding or thing pending or incompleted when the repealing written law comes into operation, but every such action, proceeding or thing may be carried on or completed as if there had been no such repeal.

Section 15 provides that:

When any rules made under any enactment which has been repealed are kept in force by the

repealing enactment, whether passed before or after the commencement of this ordinance, such rules shall be deemed for all purposes to have been, and to be, made under the corresponding provision of such repealing enactment, and shall be enforceable as if they had been so made.

Consequently, Regulations made under an Act that has ceased to be in force are of no force or avail and cannot be tabled in Parliament for approval.

1. The reference to action, proceeding or thing in Section 6 is a reference to a matter in court of law. The ejusdom generis rule of interpretation requires that general words have to be interpreted in the context of the specific word that appear along with it. The word ‘thing’ has therefore to be interpreted in the same sense of action and proceeding in a court of law and not in Parliament.

2. Even if it is conceded for the purpose of argument only that a matter pending in Parliament is caught up within the ambit of the section, the Regulations were not pending before Parliament when the Act lapsed on the 11th of May 1997. A matter can be said to be pending in parliament only when it is placed on the Order Book. In this instance the Regulations were placed on the Order Book only on the 11th of July, well after the Act had ceased to be in force.

3. In any event section 6 applies only to Principal Enactment and not to Subsidiary Legislation since subsidiary legislation is dealt with specifically in Section 15. The rule of interpretation that is applicable in this case is Specialia gereralibus derogant.

4. Section 15 refers to the repealing enactment keeping in force, rules made under the repealed enactment. Section 9 of the Act (Which is the repealing enactment in this case) does not keep any rules made under Act in force.

5. Maxwell on interpretation of Statutes (p 18) citing Watson v Winch (1916) KB 688 observes “When an Act is repealed, all delegated legislation made under the Act falls to the ground with the statute, unless it is expressly preserved.”

6. If rules already made fall to the ground, it naturally follows that no new rules can be made.

At the meeting with the Speaker, the Leader of the Opposition protested over the manner the Speaker had given his ruling.

He said at a time when the Opposition had agreed with the Deputy Speaker on the course of action to be taken the Speaker had given a ruling countrary to this.

The Speaker at this point agreed to discuss this matter fully at the Party Leaders’ meeting next week and work out the procedure to be adopted in such cases.

Later the Opposition Leader along with the Chief Opposition Whip decided to issue a press statement protesting over the Speaker’s ruling.

After the meeting with the Speaker they came straight to the UNP leader’s office at Cambridge Place and drafted the press statement with the help of Mahinda Samarasinghe, who raised the matter in Parliament.

It was indeed ironic that the government had to increase the price of bread almost as if to coincide with the PA’s third anniversary. It also gave yet another issue for the Opposition UNP to make a noise about on their planned 150 simultaneous protest rallies for later in the week.

But all this did not deter Deputy Minister G.L. Peiris having a birthday bash on Thursday night at his official residence of Auckland House.

Among those present were a galaxy of cabinet ministers headed by prime minister Sirimavo Bandaranaike, Richard Pathirana, Anuruddha Ratwatte, Mangala Samaraweera, Dharmasiri Senanayake, Jeyaraj Fernandopulle and Nandimitra Ekanayake.

Speaker K.B.Ratnayake was also there while opposition Leader Ranil Wickremasinghe breezed in and breezed out wishing the Professor good luck.

World Bank representative Roberto was there too, savouring the moments and no doubt content after the government had agreed to jack up the price of bread to Rs. 8.50 a loaf.

Others included the Amerasuriyas, well they are part of family, the Thittwellas, the Wijemannes and the Nareshwar Dayals. It was quite a full house. But the question was whether the other ministers cut the birthday dinner, or otherwise, or not invited in the first place.

Dr. Peiris made it a point to invite both President Kumartunga and Mr. Wickremsinghe thinking that they could meet each other informally to disucss outstanding issues.

But the President did not turn up for dinner until the UNP leader left.

It was a long time since they met last when President Kumaratunga made a remark that “Sin” meaning that he was not responsive enough.

Thereafter various efforts had been made for the two leaders to meet but both apparently felt that they were too far apart though they were physically only a short distance apart.

Mr. Wickremesinghe had an occasion to exchange a few words with the Indian High Commissioner after his remark at the Friends of the Media Forum where he told an Indian diplomat Jayoti Sinha that the Indians were too interested in pushing the package and thereby they are supporting the government’s idea of setting up a Constituent Assembly for the purpose.

This had caused a certain amount of uneasiness in the Indian High Commission and diplomatic circles as to whether the Indians were interfering in Sri Lankan affairs. Secondly many thought about the UNP’s anti-Indian sentiments but Mr. Wickremesinghe apparently telephoned Mr. Sinha to douse those flames and equally he had this opportunity when he met High Commissioner Nareshwar Dayal.

Amidst all these developments the common man had another shock when the government increased the price of flour.

The brunt of the criticism was taken by Minister Kingsley Wickremaratne when several Ministers including Richard Pathirana fired salvos at him over the decision.

One Minister said that, once it was increased on a Bandaranaike day and this time they have chosen the third anniversary of the government to make the increase.

Minister Wickremaratne defended his position and said it would not make any difference whether it was done now or later.

He said it was inevitable in the present circumstances.

What is most important at this juncture is to realise that the cost of living, could throw governments out of office if they don’t take meaningful steps to arrest it forthwith.

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