Sajith slams Expropriation Bill

United National Party Co-Deputy Leader Sajith Premadasa vows to give leadership to a public agitation campaign to prevent the Government going ahead with the controversial asset takeover act. Premadasa, who emphasises the importance of making a strenuous effort to defeat the act, warns that every institution and every person is under the threat of expropriation as far as the properties are concerned. He also points out that having this type of a State-centric economic approach will crowd out foreign investments. Following are excerpts from the interview:

Q: It was obvious the Government would somehow pass the Expropriation Bill. Do you agree that the Opposition did nothing to stop this bill?

A: We should have taken a three-pronged approach as far as embarking on a process of agitation and showing opposition to this draconian bill. Firstly through the Parliamentary procedures, where I think we did great and almost all of the Members of Parliament were thoroughly engaged. With the small numbers we put up a good fight against the Government in terms of facts and figures and arguments.

With the Parliamentary procedure I would have coupled this with judicial proceedings; challenging the authenticity and the legal, moral, political and Constitutional justification for this particular piece of legislation. That also took place with various stakeholders coming into the process and challenging it in the various judicial institutions.

Thirdly, we should have also had a street agitation, which I think we didn’t perform adequately. We could have taken a greater interest in the people’s agitation programme that would have also had some bearing on the Government whether to bring this bill or not.

Q: Are you saying the Opposition put its best effort into the agitation campaign?

A: Well... we have put our best effort but there are deficiencies and shortcomings and we have to correct those shortcomings. This is not an ending itself. This is a whole process; we can initiate street agitation programmes and I am hoping to give leadership to that.

If we could have mustered the public opinion as far as the private pensions bill; why not for this? Are we going to have a society where free enterprise reigns or are we going to have a society where free enterprise is severely curtailed and very heavy Government intervention takes place?

Q: Do you think the Opposition had enough representation at the Supreme Court when the bill was at the judicial level?

A: I think we would have done better. As far as the three approaches are concerned I must once again reiterate we did fairly well at judicial and legislative level. I believe I am quite satisfied with those two aspects. What I am not satisfied about is the public agitation programme, which we should have initiated.

Q: The bill is now part of the law. What will be your next step?

A: It is law alright. But it is important that we initiate a public education programme as far as this particular bill concerned. If we just stand by and watch while the political leadership of this country just acts according to their whims and fancies to curtail free enterprise, it would be a doomsday scenario for Sri Lanka.

The famous philosopher Dante stated that the hottest place in hell is reserved for those who in times of moral crisis preserve their neutrality. So I think it’s better that we take Dante’s statement and really put our energies to garner, mobilise and strengthen the moral force in order to eradicate this act. There is no provision to say that we cannot bring in another legislative provision which negates this act. It is important that the public is educated.

In my view this bill is totally and absolutely unconstitutional. I have three aspects of arguments that I have formulated against this bill. This is called the Revival of Underperforming and Underutilised Assets Act.

If you go by economic theory; the basic objective behind this act is correct – I have absolutely no problem with the objective. Where I defer vehemently is the methodology adopted to achieve the objective.

In economic theory, there is something called the production possibility curve’s theory. What the theory says is that we have to ensure that we are on that curve. As economists we have learnt that we have to always try to maximise maximum utilisation of scarce resources. This is why I say the objective of the act is correct; if something is underutilised, underperforming, if an attempt is made to make sure there are better performance, better efficiency and better allocation of resources, that is perfectly alright.

We are given the responsibility as parliamentarians to scrutinise and examine legislation. When we are examining legislation we must not be partisan; we have to be non prejudicial, we have to think about the whole process with an open mind with the sole objective of attaining national interest and public welfare. This is why I say the objective of enacting a process geared towards achieving proper performance is a good thing and it is proven by the accepted economic theory; the production possibility curve.

When we examine the method adopted by the present administration, there are glaring deficiencies and drawbacks. I have looked at my objectives in terms of three basic objections; the legal Constitution objection, the political economic context and issues of morality and ethics.

If we take the legal objective; the rules of natural justice have been absolutely totally violated and abrogated. When we look at the rules of natural justice every affected person has to be given full and adequate opportunity to raise issues and objections as far as the particular bill is concerned.

There was lack of consultation, lack of discussion, stakeholders were ignored; there was no opportunity for them to present their side of the case. If you pass this bill since it was brought through a particular procedure, you cannot challenge it in the Supreme Court. Our country does not have this system of judicial review; the Supreme Court does not have the power of judicial review which the US Supreme Court has.

This bill was brought in as a very surreptitious and a clandestine manner because they prepared it in a secretive manner. They have brought it in through Article 122 of the Constitution, which is the fast-track procedure, in the guise of being urgent and it being in the national interest. If the normal procedures had been followed the citizens would have been able to challenge to protest their violation of Constitutional and fundamental rights.

When this 122 procedure is taken, the Supreme Court does not get an opportunity to have access to all facts because the representations are only made by the Attorney General. The Attorney General normally makes submissions to represent one part of the story. With the repeal of the 17th Amendment and with the enactment of the 18th Amendment, the independence of Attorney General is legally removed. Therefore only one side of the story is related; basically other stakeholders are totally and absolutely marginalised.

If this bill was very much in national interest, why worry so much about the transparency? This was brought in one day and within 36 hours approval given and brought to Parliament.

The word ‘underutilised’ and ‘underperforming’ are all subjective and relative terms. And certainly when making these evaluations and assessments all dies must be given a hearing. This 122 procedure absolutely contravenes and violates the Constitution, fundamental rights and human rights that are given to the citizens of our country. If you are to uphold rule of law and when there is a deprivation of persons’ or institutions’ assets, surely they must be given a hearing.

They have been wrong in two ways. One is that the stakeholders were deprived the opportunity to state their objections before the preparation of the bill. Second, since the Article 121 procedure was not followed but the fast-track 122 procedure was followed, the stakeholders could not place the material facts. Depravation of assets is a punishment. When a punishment is made without giving those parties an opportunity to be heard, it completely undermines the fundamental rights of the citizens.

Standing Orders are the set of rules that govern Parliamentary practice. Standing Order 1 says: Official oath or affirmation by speaker and then by all members present. Standing Order 5 emphasises the importance of the affirmation. What is the oath or affirmation by all parliamentarians? That is we affirm to protect the Constitution. We have to protect all Articles of the Constitution.

Article 3 of the Constitution says sovereignty is in the people and is inalienable. It cannot be violated. If there is a change that impacts on Article 3, you have to have two thirds in Parliament and a referendum.

Sovereignty includes the powers of government, fundamental rights and franchise. The judicial power can only be exercised by Parliament only if it is with regard to privileges and immunities and powers of Parliament and of its members. But this particular act is an exercise of judicial power. So the separation of powers emphasis by the Constitution has been totally and absolutely violated.

My argument was affirmed by a decision that was given in 1962; Liyanage vs. the Queen; Privy Council appeal. Here the Privy Council affirmed and confirmed that the Parliament has no right to exercise judicial power. The Parliament can establish general law but it cannot impose punishment. The punishment ought to be administered or not is a judicial act.

Standing Order 84 (6) states that ‘no member shall refer to any matter which is under adjudication by a court of law or to any matter on which judicial decision is pending’. On the day the case came up three honourable judges heard the case. But after the lawyers on behalf of the petitioners brought up issues of rule of law, separation of powers, fundamental rights and public interest, the judges thought that it was vital that they should consult the Chief Justice of the Supreme Court to see whether there should be a fuller bench. And it is going to be taken on Tuesday, 15 November.

So with an issue that is going to be taken up on Tuesday and with the Standing Order stating that ‘no member shall refer to any matter which is under adjudication by court of law or any matter on judicial decision is pending,’ it is clear that Parliamentary procedures and practices have been totally and absolutely violated.

There are businesses in the first and second schedule which involve foreign investment. Article 157 of the Constitution says that ‘you cannot pass any laws in your Parliament otherwise than in the interests of national security in contravention of the provisions of treaties and agreements with foreign investments’.

This is an investment protection agreement and we have such agreements with Japan and Singapore. There are parties that are involved with both those parties in those schedules. This is a violation of Article 157 of the Constitution.

Chapter 3 of the Constitution deals with fundamental rights. Under that, 14 G says: The freedom to engage by himself or in association with others in any lawful occupation, profession, trade, business or enterprise. This clearly proves that the act has clearly violated the fundamental rights of the people. The people have given this Government immense amount of power, immeasurable amount of power and it has become an elective dictatorship.In addition, we are also party to the Universal Declaration of Human Rights, which is part and parcel of Sri Lankan law and practice. Article 17 of the Universal Declaration of Human Rights states one has the right to property. Here the Government is usurping the right to property.

What I mentioned so far is the legal and Constitutional argument against this bill. There is a political and economic aspect as well. The act is about underperforming and underutilised assets. But this particular piece of legislation has not given a methodology for quantification of that. There is no proper definition to describe what is underperforming or underutilised. If one was to do this properly, there are certain ratios to be followed such as the gross profit ratio and the net profit ratio, but none of these have been specified in this act.

In India there is a similar act called ‘The Sick Industrial Companies Special Provisions Act 1985’. They have defined what a company is, what a board is, what a chairman is, schedule bank, sick industry, etc. – every little detail is specified, whereas here there is absolutely no definition. The so-called formulators or drafters did not go through some comparative studies and see how it is done. I feel that the drafting process in itself is very substandard exercise. Incompetence is shown throughout the preparation of the bill.

They say there is a process of valuation. Who does the valuation? It’s not properly stated who does the valuation. Are the current market prices the process? How is depreciation going to be classified? What is the methodology used for depreciation? Nothing is stated in the act. They say they are going to appoint a Competent Authority. The Competent Authority is a stooge of the Government. One has to think 100 times whether the Competent Authority appointed is competent enough to carry out the tasks.

COPE Chairman D.E.W. Goonasekera came out in the media and stated that when COPE examined 249 Government-owned institutions in the period 2007 to 2009, losses incurred came to 19 billion. How can the Government take a ‘holier than thou approach’ as far as converting these so-called underperforming and underutilised institutions into efficient institutions?

In 2010 the Ports Authority has recorded a loss of Rs. 4,409 million, Railways Rs. 3,173 million, Mihin Lanka Rs. 728 million, SriLankan Airlines Rs. 2,674 million, CTB Rs. 830 million and the loss of Petroleum Corporation for the same year was Rs. 12,343 million. These are important institutions of the Government. The loss-making has taken place mainly due to inefficiency. The Government does not have a good record of managing institutions.

Why did the Government bring this act in such a rush? Why not go through the normal procedure? It basically shows that Government has no confidence in the Constitutional structures that are there. They do not have confidence in their arguments. The Government has no urge for discussion. The Government is not the sole decision maker.

What is the situation as far as the political economic context is concerned? The Government proclaims that it wants to maintain an eight to nine per cent or higher growth rate. If we are to do that, we have to have an investment rate of 35%.

The savings rate in our country is 23%. There is a deficit and it has to be bridged. It has to be done by greater private and foreign investments. If we take foreign investments; in 2008 foreign investment to Sri Lanka was US$ 889 million, in 2009 it was US$ 601 million, in 2010 the figure was US$ 516 million and in 2011 is yet to be calculated but according to all sources available it is below than 2010.

There is a decline in foreign investments. Seeing this, the Government is still bringing in draconian legislations that are going to enhance not free enterprise but they are going to reintroduce a command economic system. Having such a State-centric economic approach will only crowd out foreign investments. If the international perception is that the Government is going to enact draconian nationalisation programmes, that is going to have a detrimental impact on the country.

The Government has assured the chambers that this will be a one-off act and it will not be repeated. There was no written assurance given. There is a famous Latin phrase that says ‘spoken words fly away – written words stay’. The Government only has to amend the bill and include a set of institutions. From enact of this particular bill, every institution and every person is under the threat of expropriation as far as the properties are concerned. We should never forget that the Government has a huge majority; 160 out of 225.

Why do we need this bill? We already we have a set of legislative enactments that can deal with this bill. This bill has created a legal labyrinth; the act would conflict with the Companies Act and Rehabilitation of Public Enterprise Act, etc.

All modern economic gurus have emphasised it is not the changing of ownership that matters, but the changing of management practices. It is only through strategic conduct that one has to win over the market.

Usurping property rights is an inhumane, immoral and undignified act. This particular piece of legislation epitomises that. An eminent international jurist called Grotius came up with this international legal principal ‘Pacta Sunt Servanda,’ meaning ‘Thou shall abide by your agreements’ – all legal practices throughout the world are based on this. This basic agreement has been totally violated by our Government in bringing this bill.

Let me be clear before I prove my point with examples; I am not making these arguments in favour of any one single company or institution. I don’t want to boost individual companies; I oppose this bill because of the wrong principals.

Lanka Tractors Limited was an institution that was privatised. But the Government failed to adhere to certain clauses of the agreement. The company had to go to courts and the Supreme Court decided in March 2010 to award monetary damages to this company since some lands were not vested. Up to this date that money has not been given by the Government.

The court case was based on the fact that the lands were not given – the funniest part is the Government has put in their schedule lands that were not given as lands that have to be taken over. This Government is trying to expropriate lands that are not even owned by them. The losses were incurred because those lands were not given. This is how bad this piece of legislation is.

Let me give another example; the Exhibition and Convention Centre (SLECC) is an investment by Pico Holdings in Singapore. A 25-year BOT agreement. Only 17 years have passed and eight years are remaining. They have included SLECC as one of the companies to be expropriated. There is an investment protection agreement with Singapore. This is not rule of law; it is jungle law.

If we take Daya Gamage’s matter, it was only in August 2011 that the land lease agreement was given to Gamage, whereas privatisation took place in 2003. Normally within three years these matters need to be sorted, but it has taken eight years. The agreement that was signed specifically states that it shall not be liable to acquisition, expropriation or nationalisation.

This act is a despicable and a despotic act which must not be condoned. We have to make a strenuous effort to defeat this piece of draconian, unnecessary, unwanted, dictatorial legislation, which I think is inimical and detrimental to the nation’s national interest.

Irrespective of the obduracy and the obstinate character of this present Government, I think if sufficient people’s mobilisations are garnered, we would be able to prevail upon the Government to make amendments that would make this legislation more justifiable.

This is a brutal piece of legislation. In order to fight this legislation, we have to make a strenuous effort in terms of organising the democratic forces and civil society against this enactment of elective dictatorship. We should not lose hope just because the bill is now passed. We can educate always educate and generate adequate people power. It’s not an easy task at all but it’s achievable.

Q: Is the UNP trying to gain political mileage from this issue, by showing the world that you are against the act but genuinely not doing anything against it?

A: When you are opposing a piece of legislation that goes against the national interest, you automatically gain political mileage. Gaining political mileage happens whether you like it or not. I am brave enough to admit there were shortcomings. If we had a much stronger people mobilisation campaign at least we could have been satisfied that we used all instruments available prior to the event taking place. I admit that didn’t happen, but that is not to say that we cannot have agitation processes that may influence change of heart.

Q: What actions will you be taking other than mobilising people?

A: Certainly all legislative, political and judicial instruments that are available to us should and ought to be utilised and we aim to that. It could be domestic courts or international courts. If the Government is not respecting the Sri Lankan judiciary, one wonders whether the international judicial decisions will be carried out by this Government. But what is important is that we have to take up this issue and we have to defend private enterprises.

We have to defend the system of capitalism with a human face. We have to protect free enterprise because free enterprise is the engine of economic growth for this country. That’s the sole and most indispensable mechanism of wealth creation for a country. We have to take up this issue in a very strong manner and I am willing to give the leadership for the public agitation programme which we have to initiate.