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L E G A L W A T C H By Nayana The Public Enterprises Reform Commission or PERC was created by Act of Parliament in January 1996 as the statutory successor to an ad hoc Special Task Force set up by the present Government to oversee its privatization programme. The legal status of the Task Force had been challenged in court during the sale of the Steel Corporation, and hence the Act became necessary. The word "privatization" does not occur anywhere in the Act of Parliament. The functions of PERC, enumerated in Section 4 of the Act, consist of fostering and accelerating economic development of the country; improving the efficiency and competitiveness of the economy; upgrading production and services by the acquisition of new technology and expertise; developing and broadbasing the capital market and mobilizing long term private savings; motivating the private sector; and augmenting the revenues of the Government so as to enable it to better address the social agenda. While each and every activity of PERC cannot simultaneously achieve all these objectives, any activity should, under the general rules of statutory interpretation, be clearly referable to at least one of them. For the purpose of discharging its functions, PERC is empowered under Section 5 of the Act to do the following: To carry out studies to determine the public enterprises which require to be reformed; to formulate a framework for sustainable and stable public enterprise reform strategy; to make recommendations to the Government on the continuation and efficiency of public enterprises which are profit-making and of national importance; to make recommendations on the selection of public enterprises for conversion into public companies; to make recommendations on the sale or disposal to the public of shares in, or assets of, State-owned companies; to manage State-owned companies on behalf of the Government; to regulate and monitor the performance of State-owned companies and make recommendations for the correction of weakenesses in their performance; and to promote worker participation in the implementation of its policies and programmes and in the equity of State-owned companies whose shares are divested to the public. Readers will no doubt notice the contrast between the low profile, methodical approach envisaged for PERC in the statute - basically the role of an advisory and regulatory body - and the high profile activities of its present Board. Nowhere in the Act is there any reference to the Board members of PERC being empowered to directly negotiate the sale of any public enterprise to a private party, local or foreign, and this is likely to be one of the points raised in any challenge to the legality of the Airlanka deal. In addition, the powers of PERC as set out in the Act appear to envisage the sale of any part of a public enterprise only by sale of its shares or disposal of its assets to the public. It may or may not be unlawful for the Government to sell by private treaty, but that certainly does not seem to be a task for PERC. A public official, as any student of administrative law knows, must act strictly within the four corners of the statute that empowers him. If one relates the powers of PERC as set out in Section 5 of the Act to its functions as set out in Section 4, it could also be argued that any sale of a public enterprise should be geared towards "augmenting the revenues of the Government so as to enable it to better address the social agenda". Therefore a sale negotiated by PERC under the terms of which a significant part of the revenue generated has to be spent by the Government on the purchase of plant and equipment for the privatized enterprise, or surrendered to the buyer by way of commissions, or paid to cover insurance premiums for the benefit of the buyer would also be questionable. The Board of Investment or BOI has a somewhat longer history than PERC. It is the legal successor to the Greater Colombo Economic Commission (GCEC) established by the Jayewardene government in 1978, and was vested "with the powers necessary for the development and resurgence of the economy of the Republic". Its objects as specified in Section 3 of the GCEC Law No.4 of 1978 were to foster and generate economic development; widen and strengthen the base of the economy; encourage and promote foreign investment within the Republic; diversify the sources of foreign exchange earnings and increase export earnings; and encourage and foster the development of industrial and commercial enterprises within the Republic. Although initially limited in its operation to the Greater Colombo area as designated in the statute, the GCEC superseded the local authorities within its area and had power to acquire, sell or lease lands for industrial sites, lay out industrial estates and enter into agreements with enterprises both within its area of jurisdiction ("area entreprises") and outside it ("licensed enterprises"). It was empowered to vary the application of, or grant exemptions under, a number of laws including the Inland Revenue Act, the Customs Ordinance and the Exchange Control Act in relation to such enterprises. In 1992 it was decided to rename the GCEC as the Board of Investment (BOI) and give it Island-wide jurisdiction. With a view to streamlining the administrative procedures faced by investors, the BOI would, in relation to a licensed enterprise, "exercise all powers, duties and functions conferred or imposed on or assigned to any persons, body or authority by any written law relating to the approval of plans for buildings required for the business of such licensed enterprise or the issue of any licence, permit or authority required for the setting up, commencement or carrying on of the business of such licensed enterprise". (Subject to the concurrence of the Central Environmental Authority in respect of matters coming under the National Environmental Act) It is probably this clause more than any other that gave rise to the popular perception that the BOI is above the law. However, when the Bill to amend the GCEC Law in this fashion was challenged in the Supreme Court, that Court, while allowing the Bill with some minor variations, was emphatic that it did not confer arbitrary or unfettered discretion on the BOI to approve plans or grant licences in disregard of existing laws. The Court held that the Bill must be considered in the light of the mischief that it was intended to remedy, namely the elimination of unreasonable delays and difficulties encountered by enterprises in having to seek approvals from various authorities. However, "all statutory conditions and provisions will have to be observed by the Board and the enterprise, and the Board will have no power to disregard or to authorise the disregard of the law". The factories of the Katunayake and Biyagama industrial zones bear testimony to the performance of the GCEC in attracting investment with benefits easily understood by the people - jobs and industrial production. The problem with the BOI from the point of view of popular perception in recent years is that irrespective of the stated cash value of the transactions it has been involved in, there has not been the same visible signs of development. From the legal point of view the question is whether the BOI has acted ultra vires its powers in terms of the types of agreements it has entered into. On the one hand we hear of BOI status (i.e. substantial tax and duty concessions) being given for such small time import-intensive ventures as foreign food restaurants in the metropolis. The objects of the BOI remain those set out in the 1978 GCEC Law, and thus their actions must be geared to economic development of the Republic, the widening and strengthening of the country’s economic base, increasing foreign exchange earnings etc. While another of its objects is to encourage and foster the establishment of industrial and commercial enterprises, it is arguable that such enterprises must bear some relation to the other wider economic objects as set out above, and should not be merely small ventures for the profit of their owners. The other controversy, of course, is over the big deals of recent times most of which involve the selling to foreign "investors" of significant portions of this country’s public enterprises. Recently reported utterances of members of the BOI and PERC Boards seem to indicate that any foreigner prepared to buy into this country’s industrial or commercial sector is an "investor" and the challenge facing those who seek to question some of those deals is to establish whether and on what criteria the agreements entered into by such bodies must be in the national or public interest. Others may argue that the law courts should not be an arena for determining economic policy. However, it is significant to note that other bodies which have a more direct concern with the realm of policy such as Parliament and its relevant committees (not to mention the tax-paying public) have been treated with scant respect during the most recent controversy, with Parliament and the public still waiting for the full details of the Airlanka deal. The apparent lack of public accountability of the PERC and BOI go hand in hand with the best of the privileges accorded to both the private and public sectors. Personnel are appointed on an ad hoc basis, their salaries fixed at figures far in excess of public sector levels, yet they are also considered as public servants, pay no income tax and enjoy the status of senior government officials both at home and abroad. They determine the terms on which many of this country’s most valuable economic assets will be disposed of, but they are not, it seems, threatened with the sword of "performance evaluation" which now hangs over the heads of the more mundane type of public servant. As previously stated in this column, the first problem confronting the Sri Lankan people as they embark on their next fifty years as a nation is not how power is to be devolved but how those who wield power are to be made accountable for their actions. A unique
solution to the ethnic problem
Q: It is an indisputable fact that the Mahavamsa is the great epic that depicting the continuous history of Sri Lanka. Professor Wimala Wijayasuriya has defined your book "Mahavamsaya and Sinhala Jana Jeevithaya" as the first attempt to subject this chronicle into a impartial analysis and evaluation. Now, how is the life of an ancient Sinhala people explained in the Mahavamsaya? A: Mahavamsaya deals with the life story of great beings such as Lord Buddha and King Mahasammala, reveals the dedication of the Sinhala people for the upliftment of Buddhism and the state and the continuous struggle they waged to preserve the integrity of the nation. Q: Today people state that the Mahavamsa is an obstacle and hindrance to economic development and national integrity. But, you say that there is no real life for Sri Lankans alienated from the Mahavamsa. What do you say to that? A: No nation can face the crises of modern society without a thorough grasp of its historical background and this is provided only by the Mahavamsa which effectively portrays how Sinhala culture developed and the Sinhala nation faced various catastrophes and ultimately emerged victorious. However, as we look at the Mahavamsa from a western point of view, we couldn't benefit much from Mahavamsa. All the university professors who so far talked about Mahavamsa either dwelt upon the discrepancy in chronology in the European system and the Buddhist era or the style of writing of Ven. Mahanama or the views of Geiger on Mahavamsa. Nobody so far had made a genuine attempt to lay bare the lessons it avails to posterity. A deep study of its contents will reveal that it is part and parcel of the life style of the ancient people of Sri Lanka. Q: The view of some that the Mahavamsa contains conflicting concepts is described by you as malicious. Would you please quote some examples from Mahavamsa, in which solution to problems of modern Sri Lanka could be found. A: Today many people talk emotionally about the setting fire to the Jaffna public library, It was the terrorists who set fire to the Jaffna library. There is an account in Mahavamsa of how a South Indian invader, Kalinga Magha set fire to Dhammasangani, a very great library in Polonnaruwa built and developed by King Mahindu IV. Moreover it is also stated that the Tamil invaders completely destroyed 128 libraries set up in Polonnaruwa by Parakramabahu the Great. Talking about the Jaffna public library fire isolated from its historical background is a great insult to the integrity of the Sinhala nation. Sri Maha Boddhi on several occasions was besmeared with blood by the Tamil militant groups according to the Mahavamsa. Q: Modern intellectuals say the Mahavamsa which favours war cannot be used for abolishing war. So how concepts from Mahavamsa help the people here today? A: Once Nehru said that history of man is nothing but war. When we survey history world, we realise that wherever man has lived there has been a war there. Whatever those so called humanitarians and NGOs say, even Lord Buddha could not top war. Moreover Lord Buddha had realised that neither he nor his disciples should involve themselves in wars between kings. When an enemy attacks us, we have two alternatives. Either we must fight back or run away from the scene. The Mahavamsa states that Sinhala people always fought back. Until 1815 sinhala people always fought the enemy. Q: Mahavamsa portrays King Kavantissa as a hero and as the first king to maintain a permanent army for whom the salaries were paid. What do you say about that? A: King Kavantissa maintained an army to defend the country against the frequent foreign invasions. It's a fact Sri Lanka never initiated war. Q: A common point of those who criticise Mahavamsa is that it is wrong for Buddhist monks to foster war. What can you say about that in relation to Mahavamsa, as far as the social life of Sri Lanka is concerned. A: In campaigns against Elara, the Buddhist clergy were in the warfront, to expiate a fault they had done. Those who criticise the Buddhist clergy twist this to favour the Tamil terrorists. Mahavamsa records the role the Buddhist clergy played in averting Tamil attacks. Priests even disrobed and joined the army to avert terrorist threats. Q: Does Mahavamsa favour racism? A: No, Mahavamsa has never encouraged attacking Tamils or others, it favoured those who safeguarded the integrity of the Sinhala Buddhists and has even praised Tamils who supported that. The two generals Potthakutthi and Mahakanda were Tamils who served king Agbo iv when the Tamils accepted Buddhist cultural tradition, there was peace and harmony in the country and Mahavamsa has praised that the so called humanitarians, who undervalue Mahavamsa want to weaken national unity of the Sinhala people and make them succumb to the chauvinistic attacks of the Tamils. Q: Politically and economically the country is adversely affected. What solutions does Mahavamsa propose to the country in such a situation? A: Self sufficient village based on Buddhist ideals as in the past from ages ensures economic independence. Restraint is the hall mark of a good society. The West running after manifold luxuries suffers stress and straits. The social unit eulogised in the Mahavamsa doesn't suffer all that and the Western oriented societies today are looking up to this ideal. But we in Sri Lanka are looking down upon this ideal profounded whereas westerners are ready for receive it with open arms. Q: Modern economists say those age old economic systems won't suit modern conditions. What do you say to that? A: This is an irresponsible utterance made by people who blindly ape the west. All the latest concepts in mathematics, the technology of skyscrapers, electricity and latest techniques of irrigation were known to the ancient Sinhala people. It is obvious that they knew well about electricity. Otherwise how could they have installed a lightning dispeller on the pinnacle of a chetiya. When you read the accounts in the Mahavamsa about the Ruvanveli chetiya, skyscrapers would not be a wonder to people in the good old days. Comparative studies reveal that nowhere in the world was irrigation so well developed as in this country in ancient times. Politically, economically and socially there is no salvation for our people apart from the ideals in the Mahavamsa. You cannot turn your back to the reality. National Peace Council - Not a Front, A War Council Special Correspondent Assuming that the National Peace Council are no body’s front, as they claim, specially that of IA — internationally accused coup plotters and diamond smugglers, let us present the NPC’s true thoughts and actions. The National Peace Council’s key members have stood for some very interesting stands on "peace" and war. It is instructive to recall these "peace" positions of their key personnel. A so called "Friends for Peace in Sri Lanka." meeting in Hong Kong 11-14th April, 1995 accepted the traditional homelands of Tamils hoax as valid and stated explicitly (as published in Tamil Voice the US Tiger organ): "Freeze state aided colonization .... In spite of several protest for a long time the present Government also has taken no steps to stop colonizing the Tamil areas with Sinhalese settlements and surround them with army posts to protect them. The demography of the Eastern province is sought to be altered and also the plan is to break the contiguity between the north and the eastern province to avert the demand of the Tamil people for a contiguous homeland... Sinhalese innocents The recognition of the so called traditonal homelands as valid is a charter for ethnic cleansing. The so called "Consultation of Eminent Persons" of 1995 endorsed a false map, and indirectly gave a reason for Tiger ethnic cleansing of non-Tamils from these areas. These members of the National Peace Council, — they were the largest number of singatories in Hong Kong — who approved the annexation of these lands is in the same category as Hitler’s propaganda chief who justified Lebensraum, "living space for Germans" — before the Nazis conqureed others’ lands. The North East is the Lebansraum for or current fascist butchers, the LTTE. The national organizer of the National Peace Council the brother of Kumar Rupasinghe, Ajith Rupasinghe has stated, incidentally in the Sri Lankan government organ the Sunday Observer that "The aspiration for a separate state has arisen as a result of the pitiful inability of the Sri Lankan State to address the issue of national self-determination of the Tamil people in the North-East" (Sunday Observer Aug 25, 1996). In the UN, the word self determination has been applied only to countries freeing themselves from European colonial rule. It is not extended to other entities. Otherwise, the world would break up into thousands of little pieces. India would break up into nearly five hundred pieces. Boutros Boutros Ghali the then UN Secretary General put it well: "sub-national, ethnic or tribal factions cannot expect to undermine the political unit in which they exist while claiming the privileges of a sovereign nation-state .... The quest to establish one ethnicity on one territory is being revelaed for what it is, a generator of "ethnic cleansing," racism and crimes against humanity." (Boutros Boutros-Ghali, "Don’t Make the U.N’s Hard Job Harder" New York Times). He could well have been describing the activities of Tamil separatists and the mischievous support of the NPC for the traditional homelands. Tiger march Not only is the National Peace Council organizer speaking at Tiger rallies, but rallies to their cause in international meetings. We are also informed by Hot Spring that Ajith Rupasinghe spoke at an "NGOs briefing session organized by the International Educational Development, the North-South XXI and the International League for the Rights and Liberation of People was held in Geneva on 18th August." The other members of the panel who spoke "consisted of Rev. Daniel Thiyagarajah ‘from the Vanni’, James Karan, U.K., Ms. Deirdre McConnell, U.K. and Francis Xavier, human rights lawyer, Canada". The meeting was presided over by Ms. Karen Parker, the international Tiger apologist. Hot Spring reproduced a "picture taken at a Press Conference elsewhere, (which) shows Ajith Rupasinghe, Ms. Karen Parker, James Karan, Sivaji of the Swiss Federation of Tamil Associations, and Rev. Daniel Thiyagarajah". The NPC national organizer Ajith Rupasinghe is now hardly a peace keeper as he marches and signs in chorus with the Tiger barbarians. The Media Director (read propaganda chief) of the National Peace Council, Jehan Perera, has also taken very "peaceful" positions. At the time of the Indian incursion he threatened Sri Lanka with dire consequences saying that it was time "to tell Sri Lankans some hard truths about their island, its geography, its multi ethnic population and its limitations.....". He said that any government will now have "to confront the reality of the Indo-Lanka Accord and the presence of the Indian army in the north and east...(They) are unlikely to leave should the Accord be dishonoured by Sri Lanka... (our) governments have been presented with a fait accompli...(they have no) choice but to honour the Accord . Given the Indian presence in Sri Lanka it would be reckless not to do so." (Daily News August 26, 1987). Jehan Perera, the Media Director of the NPC, also went to the defense of Kenneth Fernando when the latter was being attacked in the press for his statement that Prabhakaran was a humanist (Island 7/12/93). He is also a member of the "Sasakawa Peace Foundation," as the latter's letter head informs us. This is a contradiction in terms as Sasakawa was a Japanese war criminal. Having done some of the most atrocious war crimes, Sasakawa built his financial empire on casino money. Sovereignty In the US, the Logan Act prohibits US citizens from interfering with foreign policy, which is the prerogative of the government. After the Indian proxy invasion of Sri Lanka culminating in the Accord, the American Ambassador to Sri Lanka, James Spain told a reporter on the issue of the IPKF "We (meaning Americans) still blame the Japanese, but ironically in Sri Lanka, the people do not blame India" (Rohan Gunaratne 1993: 210). We do not have to go far to seek for an answer. The Sri Lankan public is being continuously brain washed to accept a loss of sovereignty. The NPC is fully involved in this exercise. The report into the International Alert chicanery in Sierra Leone by the Christian Michelson Institute (December 1997) has something very interesting to say. It says that International Alert type exercises in so called conflict resolution are "by definition"...interference in the internal affairs of sovereign nations (p. 5). By this means diplomacy and conflict resolution "has now been privatized" (p81). This interference erodes "national independence and autonomy" (p. 82) and that "there is a growing number of critics of conflict resolution... (who consider this) as a new form of imperialism." (p6.) The National Peace Council is in the forefront of these new imperialists. Let us recapitulate. The National Peace Council members have justified a fictitious traditional homelands of Tamils as Lebensraum for Prabhakaran. The direct parallel is to Hitler's declaration of the Sudetenland as part of his natural Reich. The NPC propaganda chief (Media Director) in the manner of Goebbels threatened Sri Lanka in 1987 and later calls for shared sovereignty. The National Peace Council's chief organizer, Ajit Rupasinghe, marches with the butchers' band singing their war cry, directly reminiscent of the march of Hitler's out in Nuremberg. The National Peace Council is very plainly a War Council aimed at Sri Lanka's sovereignty. It speaks of Peace in the South but psychologically prepares the enemy for war. It is this type of double speak where peace means war and war means peace, that Orwell caricatured in his frightful novel "1984". In any other sovereign country this Council would be investigated for aiding the enemy. The law for espousing and helping separatism as well as the LTTE is very severe. The Peace Council should be immediately investigated. As a beginning the trips that their members have made, and by whom paid, should be investigated. Jehan Perera has also ask who this "Special Correspondent" is. Well the short answer is the writer (s) of this column are actually Jehan Perera himself as well as all others of the Peace Council members who have been quoted here. Special Correspondent has only done some editorial work making plain the import of these worthies' words and actions on behalf of separatism. My credibility is simply the credibility of their words. There is also a more important personal reason for my anonymity. With the close Tiger company that the National Peace Council keeps, I am simply afraid to reveal my name. It is natural prudence. A Reply to Mr. H. L. de Silva on constitutional proposals By A. J. Wilson Paragraph (1) of Article 76 states: Parliament shall not abdicate or in any manner alienate its legislative power and shall not set up any authority with any legislative power Whereas Paragraph (3) clarifies the issue for us in that It shall not be a contravention of the provisions of paragraph (1) of this Article for Parliament to make any law containing any provision empowering any person or body to make subordinate legislation for prescribed purposes etc. etc. Precisely it is because the G. L. Peiris-Chandrika Kumaratunga proposals come within the ambit of Paragraph (3) that I contended that the proposed investiture of devolved powers to Regional Councils was by no means a violation of Paragraph (1) of Article 76 of the existing Constitution. For although the proposals contain two exhaustive lists of powers, they leave the Sri Lanka Parliament in the enjoyment of the plenitude and majesty of its power. The litmus test is can a Regional Council legislate in excess of its powers? The answer is decisively in the negative. For should this happen, Parliament can bring the offending Council to book in two steps, firstly by enacting a law to withdraw the power ceded and secondly by introducing the necessary corrective legislation. The confusion that has arisen is that observers allege that there is proposed a rigid demarcation of powers which neither Parliament nor Regional Council can transgress. It is because of this misunderstanding that the critics assert that the proposals convert Sri Lanka to a federal state. Nothing of the sort is envisaged. Mr. de Silva does not take up cudgels against my interpretation of Article 76 (1) and (3) but instead wanders into Article 82 (2) on which I do not have any disagreement. It might be recalled that in all the past debates about devolution of powers to Scotland and Wales, British prime ministers asserted that Westminster continued to be the supreme legislature and that home rule meant nothing ore than it meant. Notwithstanding therefore the creation of local parliaments in Scotland and Wales, the British Parliament has the ultimate overriding power in the same way that the Sri Lanka Parliament will enjoy overall sovereignty. I am somewhat hesitant to enter into a debate or discourse with Mr. H. L. de Silva for two reasons. He states: if the legality of the change in the new basic norm is challenged, then it is the court and the judges who preside over it, not learned academics (emphasis added) who must determine whether there was reason for the change and whether it has acquired the requisite degree of efficacy before it is given the stamp of legality and validity. And in his concluding section, he is dismissive when he uses the word blithely, viz., finally it must be said that it is a matter for surprise when those who blithely (emphasis added) suggest an extraconstitutional procedure as a way out of a difficult....etc., etc. Surely a Daniel come to judgment? there was absolutely no intention on my part of proposing a circumvention, but putting Kelsen's pure theory aside, I was merely raising the question, not positing a sine qua non. For here we enter the realm of constitutional morality. On the one hand we have an Opposition (the UNP) which tailored a Constitution to suit the whim of one person. It is a garment which simply will not fit another President. This garment leaves little room for alteration. Not only does amendment of it require a two-thirds majority but it must be ratified by the people at a referendum. The latter device is merely a transfer of power from knowledge to ignorance. The requirement of a two-thirds majority is rendered almost impossible by the introduction of proportional representation thereby making it certain that a Constitution hereinafter can never be amended without the cooperation of the United National Party. The latter therefore enjoys a permanent veto in office or out of office. Is this at all democratic? What is being debated today is the very future of our island polity. If we do not wake up to this stark fact, we might as well throw in the towel and lament that all is lost. Though Herman Finer (a noted political scientist) observed in his The Theory and Practice of Modern Government (London, Macmillan, 1962, p. 137) "it is a fundamental convention that no Parliament can bind its successors" the point is well taken about Jennings and future parliaments. Our intention was to indicate that a Constitution if it must survive must be capable of being bent without being broken. This is precisely what will happen to the 1978 Constitution. If on this occasion, change cannot be made because it is impossible, there will come a time when a political party will seek a mandate to declare Parliament a constituent assembly which will then whether or not in possession of a two-thirds majority proceed to enact a new constitution. And this is why the cases of Pakistan, Cyprus and Uganda were cited in support of our contention. As Jennings himself once stated, in the end all that is needed is for a majority of judges to uphold the new constitution which will then become holy writ. It is precisely for this reason, presumably, that the 1972 Supreme Court was dissolved and the new judges (most of them the same) were made to swear their oaths of allegiance to the new Constitution of 1978. Judges are just as mortal as other humans are and can be assumed to move with the political tide. As Rhadika Coomaraswamy observed in her excellent and insightful Ideology and the Constitution (Colombo, ICES, 1996, p. 28) "with a 2/3rd majority and a crippled judiciary, the cabinet executive under the 1972 and 1978 constitutions emerged as the unbridled wielder power." Pace H. L. de Silva and so much for his rude warning that judges not academics should pronounce on the Constitution. Judges have erred in the past as they did in the Dred Scott decision which sparked the American civil war. And what about our Justice Wanasunderas? Is the sacrosanctity of judges so inviolable that academics are asked to keep off the turf? Jennings himself in his The Constitutions of Ceylon (London, Oxford University Press, 1953, 3rd edition pp. 78-9) argued that the Soulbury Constitution placed limitations on the power of the Ceylon Parliament and these limitations showed that "it is not a sovereign legislature in the sense in which it is commonly used; that is, it has not complete and unlimited legislative power." It is this Constitution which the 1972 UF dominated Parliament overthrew with impunity, caring not one whit for the safeguards assured to the minorities. All that was required was for judges to uphold the new Constitution which they did when C. Suntheralingam challenged its validity. Samuel de Smith in his classic The New Commonwealth and its Constitution (London, Stevens and Sons, 1964, p. 285) in his observations on Cyprus which is not dissimilar to our situation stated: ....the Constitution of Cyprus is perhaps the most rigid in the world, it is certainly the most detailed and (with the possible exception of Kenya's new Constitution) the most complicated. It is weighed down by checks and balances, procedural and substantive safeguards, guarantees and prohibitions. Constitutionalism has run riot in harness with communalism... Sri Lanka can end with its own Cyprusisation if the communities remain as obdurate as they are. And on the much touted Indian constitution, de Smith remarked (p. 269) unitary features stand out clearly on the face of the Indian Constitution. So why model Sri Lanka's constitution on the highly centralized Indian model? We might take a cue from Sir Kenneth Wheare. In his famous Federal Government (London, Oxford University Press, 1947) Wheare wrote (p. 260): One of the most urgent problems in the world today is to preserve diversities either where they are worth preserving for themselves, or where they cannot be eradicated even if they are not desirable, and at the same time to introduce such a measure of unity as will prevent clashes and facilitate cooperation, Federalism is one way of reconciling these ends... Lastly Mr. H. L. de Silva raises a pertinent note on the need for adhering to constitutional morality. Constitutions should therefore not be treated as mere scraps of paper. As Dr. Neelan Tiruchelvam indicated, constitutions should preferably be "consensual" in that they will command as wide a support as possible and not "instrumental" when designed to serve the narrow partisan purposes of political parties ("The Making and Unmaking of Constitutions - Some Reflections on the Process," The Ceylon Journal of Historical Studies, Vol. 8, No. 2, Colombo 1977), It is the latter objective which makes a constitution not endure. Both the 1972 and 1978 constitutions were in this respect "instrumental" resulting in both not lasting more than a few years. Perhaps we may leave the last word to Dr. Rhadika Coomaraswamy (ibid p. 3) it has been a characteristic of liberal scholarship in these societies to take the constitution as granted and then to spell out the enormous evidence of situations and contexts which violate the basic tenets of any liberal constitution. If one adopts this line of reasoning, the picture is very clear. Constitutions in South Asia emerge as formal pieces of paper where fundamental provisions such as fundamental rights are observed more in the breach. However what is also interesting but rarely analysed are the ways and means in which liberal democratic values are transformed by the contexts of cultural nationalism and economic and social underdevelopment. This process has created morbid symptoms where liberal values are openly perverted... Thisis exactly what has overtaken the amateurish attempts at constitutional structuring in 1972 and 1978 - formal pieces of paper, morbid symptoms, liberal values being openly perverted. How long can constitutions be the playthings of politicians? Can we stand such a diet of constitutions? On the other hand when irremovable obstacies are placed in the path of constitutions so as to make them almost unchangeable, we are only inviting revolution or a constitutional coup d'etat as in 1972 which superseded its immediate predecessor. This seems to be the problem with Mr. H. L. de Silva. His exhortations to "learned academics" to keep off the judicial turf seems as if the inflexibility of the Jayewardene Constitution of 1978 suits the worldview of people of his school of thinking who have set to halt the juggernaut of constitutional reform which now threatens to tear asunder the fabric of the 1978 Constitution. Should the liberal school stand aside and let events overtake to destroy the territorial integrity of a once happy island? Alas, repentance might come too late. Scotch proposed sales deal -- Mahinda UNP MP Mahinda Samarasinghe made this speech last week over the difficulty that has arisen on the sale of the state-owned Plantation Investment and Management Company (PIMC), owning the controlling shares of Hapugastenna and Uda Pusselawa Plantations, being sold to James Finlay of Colombo.
Hon. Deputy Chairman, I wish to move the following motion. "PIMC holds a 51 per cent stake in the Hapugastenne Plantations Limited and Udapussellawa Plantations Limited both of which are public listed plantation companies. James Finlay & Co. (Colombo) Ltd., was one of the two pre-qualified bidders by the Public Enterprise Reform Commission of Sri Lanka for the sale of 100 per cent shares of PIMC. Since the other pre-qualified bidder did not participate at the time of bidding, 100 per cent shares of PIMC were sold to James Finlay & Co. Ltd., at the minimum price of Rs. 15/= per share. As per the last published accounts of James Finlay & Co. (Colombo) Ltd., which is a public listed company, James Finlay plc of the UK owns 75.92 per cent of this company making the Sri Lankan entity a subsidiary of the holding company of the UK. In my view, this sale if confirmed, would clearly violate the restriction placed on the permitted limit of 49 per cent in respect of foreign share holdings directly or indirectly in companies participating in the bidding for the shares on offer. In the above context I call upon the government and its relevant agencies not to proceed with the sale of PIMC to James Finlay & Co. Ltd., and to explain to this House why James Finlay & Co. (Colombo) Ltd., was pre-qualified by PERC to bid for 100 per cent PIMC when a restriction is placed on beneficial foreign shares holding either directly or indirectly that it should not to exceed 49 per cent of the issued capital of the company." Sir, this motion concerns issues of transparency, accountability and, in my opinion, even national sovereignty. It is indeed a very important motion and I express the hope that the government will consider this motion in an objective manner and treat our contributions as constructive criticism in the best interests of the country and the people. Now, Sir, the plantation sector in this country is the life blood of the economy. It is the backbone of the economy. We had a history of plantations being managed and even owned by foreign Sterling Companies. But then in the 1970s, estates were nationalized and two giant corporations were setup, namely the Sri Lanka State Plantations Corporation and the Janatha Estate Development Board and these state corporations continued to manage our plantation sector until a decision was taken during the previous UNP Government that the plantation sector would be privatized. Sir, looking at the situation today, I am happy to say, and I am proud to note that the plantation sector is indeed doing extremely well. Doing well When we took the decision to privatize the plantations, we categorized the plantations into two sectors or two levels. One was the profit making level and under the profit making level approximately 10 companies were categorized. The other 13 companies were considered to be non profit making companies and they were put in the second category. When this government came into power, with the establishment of the Public Enterprises Reform Commission or the PERC, you appointed a Sub-Committee and you told the Sub Committee to devise a method of privatization of these 23 Regional Plantation Companies. The Sub-committee which was headed by very eminent people looked at this mandate, the terms of reference, and they submitted two systems of privatization of these 23 regional plantation companies. According to the Cabinet decision which was finally taken on the recommendation of this committee, 51 per cent of the shares of the 10 profit making plantations were not going to be sold through the Colombo Stock Exchange, contrary to the general belief that that was going to be the system which was going to govern the privatization of profit making plantations. I think the committee got the whole thing mixed up because what they decided was, and what the Cabinet finally adopted was, that the non-profit making companies were going to be privatized on the basis of 51 per cent being offered through the Colombo Stock Exchange and the profit making companies were going to be privatized on the basis of only 20 per cent to be offered on the Colombo Stock Exchange. That 20 per cent was going to determine the floor price, the minimum price or the "strike price" as they called it. The jargon used is the "strike price". Sir, I think everyone in this House
knows You do not have to be an economist to know, when
you offer 51 per cent of the shares to someone, which is
a controlling interest, the enthusiasm and the interest
generated is far greater than when you offer 20 per cent
of shares. So what happened was when the profitmaking companies which should have fetched very much more than the non-profit-making companies were privatized by your government, you followed that principle of offering 20 per cent on the Colombo Stock Exchange and there was very little enthusiasm, if at all, and as a result the strike price arrived at per share was the minimum price, which was Rs. 10. It did not go beyond the Rs. 10 strike price. So, the majority of the shares of profitmaking companies were sold for a paltry sum of Rs. 10 because of the flaw in that particular system. All these eminent people did not see through that. They did not have the wisdom to know, or may be they had the wisdom and they were on to something else, or they wanted to achieve something else, and therefore, deliberately misled the Cabinet of Ministers. Flawed system In some instances they even got Rs. 65 and recently I think shares of Maturata Plantations, if I am not mistaken fetched Rs. 70 or Rs. 72 or something like that. So when shares of profit-making companies are sold at Rs. 10 per share and the non-profit-making companies are sold at a price five or six times more, I ask you, Sir, who is to take the responsibility for the loss of a significant amount of revenue for this country which is facing a war, which has major economic problems and which needs every bit of money they can muster to run the economy? I just gave you a little bit of history leading to my motion. Now Sir, one good thing which was done was that there were certain regulations and guidelines which governed the privatization of these regional plantation companies. This was made known to all the people who wanted to bid for these plantation companies. It was advertised widely and everyone knew about it. When the tender procedure took place, everyone was made aware of it, given the fact that the plantation sector of this country, as I mentioned earlier, is the life blood of the economy and it concerns issues of sovereignty and independence. There was a rule which was embodied and everyone had to abide by it, and was subject to it. The rule was that no foreigner could own more than 49 per cent of our plantation sector. No foreigner, either directly or indirectly could own more than 49 per cent of a regional plantation company. Sir, I have that particular paragraph which is 2.1 (b) under foreign Shareholdings. I quote this for the Hansard. Foreign Shareholding: In terms of government restrictions place on foreign shareholdings in a Company engaged in the business of Plantation Management, a foreign entity or foreign entities may collectively on, either directly or indirectly up to 49 per cent of the total issued share capital of the company. For this purpose, the term foreign entity will apply to approved country funds, approved regional funds, corporate bodies incorporated outside Sri Lanka and individuals resident outside Sri Lanka. Then it goes on to say: In light of the above, foreign persons and entities are ineligible to participate directly in the bidding for the shares on offer. However, foreign entities may be shareholders of a company which complies with the above conditions [(2.1 (a)] and as long as the legal and beneficial "foreign" shareholding, either directly or indirectly, does not exceed 49 percent of the issued capital of the company at any time. The operative part is "as long as the legal and beneficial "foreign" shareholding, either directly or indirectly, does not exceed 49 per cent of the issued capital of the company at any time." This was not put in their just for the sake of putting it. There is a lot of debate on the privatization of plantations. We all agreed that this was something which should remain within the control of Sri Lankans - Sri Lankan companies, not Sri Lankan companies which are subsidiaries of foreign companies, which brings the indirect control into the whole picture. Justifiable In fact, when the Kotagala fiasco, happened, the government also went back on that particular decision and the result has been that Mary Ong and Aiyadurai, those two Malaysians who came in here and bought Kotagala have not been able to take their money back. The Rs. 400 million had been put in a non interest bearing fixed deposit and in addition they had been fined by the Exchange Control Department of the Central Bank. Several other people to have been fined. Of course, Kotagala is now owned by a Sri Lankan company which is a good thing and they are doing well. But then, there were a lot of people who were fined as a result of violating this principle. Of course, there is a slight difference between the Kotagala transaction and this transaction but still, the indirect control of a foreign beneficial shareholding is there. Now, Sir, I come to that. Once again in the wisdom of the government they created the Plantation Investment Management Company. I understand it was the Merchant Bank, the Insurance Corporation and the ETF which put the initial money into the Plantation Investment Management Company. When this company was created we made the point in this very House as to why a fully owned government institution was being set up to participate in the bidding process of the privatization of regional plantations, which was going to be divested from State control to the private sector. We said this was not privatization. In fact, the Chambers of Commerce objected to it. The Ceylon Chambers of Commerce objected to it. I have tabled letters which they have sent to Her Excellency the President on this issue. One and a half years later you decide to sell the PIMC once again to the private sector. I think, the PIMC invested nearly Rs. 1 billion or a little bit more in buying Hapugastenne and Udapussellawa including the money which they had to spend for the debentures, Rs. 150 million each on the debentures and approximately Rs. 600 million for the two transactions. You did not stop at that. In addition you gave permission for ETF funds, the Employee's Trust Fund to be used to buy another regional plantation, which was Maturata. When this was bought, we once again brought to the attention of this House and the Government that this was not privatization, that this was running contrary to privatization. A huge amount of resources at the disposal of the ETF was used to out-bid others. In fact, you out-bid the management agents of these plantations. And to add insult to injury, after you out-bid the management agents, the two institutions which took these plantations, used those very management agents which they out-bid, to manage the estates. And you paid a massive sum as a management fee. It was ridiculous. It was an absolutely ridiculous decision. I do not know who took this decision, but I am glad that you have gone back on that decision. You have sold Maturata now, which was owned by ETF. You may have made a profit on this, which is very good. But it is back again in the private sector hands, which is what should have been done in the first place. With this kind of policy you were sending out ambiguous signals, wrong signals to the private sector. So, naturally they were not interested in participating with full enthusiasm. That is why there was the shortcoming as far as the prices were concerned. The PIMC, which is the subject of consideration today in this motion, which I have presented, bought 51 per cent of Hapugastenne and Udapussellawa. I will, for the benefit of Hansard, tell you exactly how much they paid. On the 27th of August, 1996 they bought 51 percent of Hapugastenne Plantations at Rs. 23.75 per share, which amounted to Rs. 243.3 million. On the 7th of October, 1996, 51 per cent of Udapussellawa Plantations was bought at Rs. 55.25 per share, which amounted to Rs. 316.1 million. When the PIMC was set up we said that this is not privatization and asked, What is the expertise the PIMC has in managing estates? I think, I was answered by someone on that side who said, "Oh! We will hire people. We will bring in expertise." That is not what you did. You paid a massive management fee to James Finlay & Company and Somerville to manage these two plantation. Not disclosed Now, Sir because of various pressures coming from various quarters especially the private sector, the chambers and from us on this side. You finally saw what we were saying as correct. So you took a decision to sell 100 per cent of the Plantation Investment Management Company. You called for bidders. There were two bidders who were pre-qualified. One was James Finlay & Company, Colombo, and the other was Forbes and Walker. Now when the bid enhancement took place, for some reason which is still unexplained, Forbes and Walker opted out. So you had only one person and naturally that person was given 100 per cent. PIMC was sold to that particular bidder, who was the only bidder. (Interruption) No. I do not think that it was pre-arranged. It was just that another private sector company opting out. But anyway they paid approximately Rs. 1.59 billion. If I am not correct the Hon. Minister may rectify that figure. The sale, although it went through on the 7th of April, has not been approved as yet, and I am glad about that. There was lot of talk in the last two weeks that lot of pressure was being used from various quarters to get this whole thing through. But from what I understand PERC is reconsidering the whole thing. The owners of the PIMC are considering the whole thing and the Government too are going through it again. (Interruption). Alhaj A. H. M. Azwer —Cabinet instructs the PERC. Mr. Mahinda Samarasinghe — It is quite possible. Now I come to PERC. Really I do not blame James Finlay & Company for this transaction. Really James Finlay & Company is a very well run company, there is no two words about it. They are not to be blamed for this transaction. I put the entire blame on the people who pre-qualified James Finlay & Company to bid for this company. And that was PERC. PERC should have been aware of this very clear legally binding instruction which governs the privatisation of plantation that foreign beneficial share holding both directly or indirectly cannot exceed 49 per cent. PERC should have known this. They should never have pre-qualified James Finlay because James Finlay (Colombo) although a local company is owned from the latest figures I have, I can table that for the benefit of the House to the extend of 75.9 per cent by James Finlay (PLC) UK which is a company in the UK which has been there for over a hundred years. So, you cannot call James Finlay & Co. (Colombo) Ltd., a local company. It is a company which is owned to the extent of 75.9 per cent by a foreign company and therefore, James Finlay & Co. (Colombo) Ltd., is a subsidiary of James Finlay (PLC) - UK. Why did PERC not look at this? PERC should have looked at this. In fact PERC has been bungling their job for the last three and a half years, since it was set up. They have been messing up privatisation, they have been going against the terms of references as far as these privatization are concerned, they have altered the terms of references in very many instances without giving that benefit to the bidders who were there when the initial tender was announced. When they go into negotiations secretly, they chop and change at the last moment and they put the country into a mess. I do not want to tell you about Air Lanka deal. Everyone knows about the Air Lanka deal. Finally, we ended up paying 700 million US dollars for six air buses - A330200. This was not in the original terms of reference. There were other concessions which were given in that deal which were not in the original terms of reference. Take for example the Shell deal. There was a significant deviation from the original terms of reference. The Colombo Steel Corporation deal there was a deviation from the original terms of reference. And many other privatisation including Lanka Orient, there was a deviation from the original terms of reference. So, someone has to be held accountable and responsible for putting the country into this kind of a mess, and getting the Government of Sri Lanka to loose valuable resources. I mean, if PERC wanted to violate these rules and regulations, why didn't they do that initially, before the privatization took place? Then there would have been so many other foreigners who would have come into the market, and you would have made the bidding process very much more active, very much more lively, and you would have got very much more money as a result. This rule was there, this regulation was put in place, for a certain reason, I mean, for a valid reason, for a justifiable reason. In certain sectors in any country for that matter in vital sectors, in the national interest and for the long term future of that country foreigners are not allowed more than 49 per cent, so this is a blatant violation of a rule which was very clearly stipulated. I heard the other day, that Mary Ong and Aiyadurai are planning in taking the Government of Sri Lanka to Court, because they say what is the difference as far as our deal is concerned. We also could have come in and set up a company here and brought it through that company. I spoke to Mr. Vasudeva Nanayakkara a little while ago. He apologized for not being able to speak on this motion, but he wanted me to bring to the attention of this House that he is even prepared to take those who are responsible to courts privately, individually. He wanted me to mention this to the House. Do not have these rules and regulations if you are going to violate them. I am putting the blame really and squarely on PERC. PERC should have seen this. James Finlay is not responsible for this. They were pre-qualified. From what I understand, they have given a deposit and I understand that deposit has been banked. They also have a good reason to take PERC or whoever is responsible for giving the go ahead to buy this PIMC. The whole thing is a mess. Watawala
Plantations The reason that this clause was put because we did not want to give our competitors a foothold in a vital sector of our economy the plantations of this country, which is vital for the long term interest of this country for the future generation of this country. Someone should be held responsible for this. This whole deal is a shoddy deal. It is not a deal in the interest of the country. It has violated the laws of this country and this deal should not be allowed to go ahead. You must put a stop to this. Mr. Deputy Chairman of Committees Order, please! There is too much noise from the Officers Box. Somebody is on the phone. Mr. Mahinda Samarasinghe — May be they want to answer me. I think we should even consider appointing a Select Committee of Parliament to probe this whole thing. I do not know what kind of advice the Attorney-General of Sri Lanka has given. I do not know what kind of approval has been forthcoming from the Exchange Control and from the Central Bank. From what I understand, they are also considering this whole thing. From what I understand, the shareholders of PIMC are also considering this whole thing. Do not make a mistake again. We have lost enough on the plantations. As I said earlier Rs. two billion. Sir, in conclusion, my motion calls for this whole thing to be gone into. We must find out as to why PERC pre-qualified these bidders. I think we should hold those people responsible for pre-qualifying these bidders and an explanation is needed from those people as to why they did it. If they had done something wrong they should come out clean and say that they have done something wrong. I am also calling upon the Government, through this motion, not to go ahead with this sale because it violates an important principle embodied in the privatization of plantations. Finally, Sir, I would also like the Government to consider looking at another aspect which I have heard, which PERC is looking at or had looked at. That is that they were apparently considering taking the premium on this sale, which is the Rs. 5 premium on the Rs. 10 minimum price, and using that for some other purpose without giving it to the shareholders. Now, even to consider something like that is a violation of all norms of good governance and responsibility and accountability. ETF is one of the major share holders of this company. This is employees' monies, workers, monies. If you get a premium on an investment which the workers have put in, you must give that premium to the workers. You cannot take the premium and put it somewhere else. You cannot give them only Rs. 10. You must giver them the full Rs. 15. The last time I spoke to the Director-General who has been very helpful, I must say, with information. He said, "No, although it had been considered, they are not going ahead with it." But please do not even consider these kinds of things. Always have the interests of the country at heart because what is important is the interests of the country. Do not try to compromise the interests of the country for anything because the interests of the country is also the interests of the general public. It's the Sinhalese who need a ‘package’ says Ven. Sobitha in Canada By Kirthie Abeyesekera
In an interview, he said he was deeply disturbed at the attitude of political leaders — a situation akin to "Nero fiddling while Rome is burning." (my analogy) Ven Sobitha gave to public sermons in Toronto and one in Ottawa. It was my first meeting with the monk, much in the news at home, and active in the Devolution debate. Rational, yet emotional, at times he was of firm composure serene, yet firm. "Package?" he scoffs. It is the Sinhala people, he says, who need a package. He cited some of the social injustices and economic inequalities the Sinhalese have been subjected to since colonial times. In the pre-1983 era, he observed, there were 23,000 Sinhalese in the north. Today, there are none. Yet, Tamils inhabit all other parts of the country, living side by side with the Sinhalese. Buddhist religious shrines have been destroyed, bo-trees burned and ancient ‘Chaityas’ replaced by lavatories. How can a division of the country bring about unity? He asked. It is a myth, he said, that Sinhala is the official language of the country. Neither Sinhala or Tamil are. English still dominates. There is mass unemployment among Sinhala youth, he said. Commenting on the armed conflict, he said in other countries army generals fight battles. In Sri Lanka, every politician is a military strategist. That's why the war has dragged on so long. He expressed grave concern for the heavy loss of human life. "Servicemen are dying by the hundreds," he said. Desertions from the army are increasing, enlistment rates are falling. Morale is at its lowest. Today, as evidenced by regular bomb explosions, Colombo is in greater danger than Jaffna. He deplored the fact that the ‘Dalada Maligawa’ explosion and other civilian bombings have not been condemned by Tamil political leaders. Ven. Sobitha is also perturbed that the Sinhala people are asked to eschew communalism, while no such restraints are required from Tamils and Muslims. The son of a peasant farmer, Ven. Sobitha was born in Maduluwawe in the Padukka district. Ordained at 12, and now 55, the venerable monk who is Viharadhipathi of Naga Vihare, Kotte, says he devotes his time to the economic and social amelioration of the people. As president of the National Heroes’ Foundation, he says, his rehabilitation work goes beyond communal boundaries. Sinhalese, Tamils and Muslims are beneficiaries of his village upliftment schemes, such as housing and looking after the needs of poor children. The work of the Foundation is non-sectarian, he says. Ven. Sobitha is also active in the National Sangha Sabhava which, he claims, is non-political, and the United National Committee — an umbrella organization for some 40,000 affiliated societies working towards national unity and the preservation of the country's sovereignty. Ven. Sobitha looks to a time when the temple will be the focal point of the village, as in days of yore. He prays for a return to peace where all communities could live in harmony. He appealed to the Sri Lankan expatriate community to assist in national reconstruction at home. He made a specific plea for help in restoring the ‘Dalada Maligawa.’ |
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