Review bond scam reports and be your own judge of prosecution options

Since 2015, beginning with analyst amber signals, media exposés and debates, parliamentary debates, followed up by public interest litigation, Central Bank investigations, Auditor General’s Reports, CoPE committee reviews, the Presidential Commission Report and most recently the Forensic Audit reports, have made sufficient material on the purported bond scam available to the public, and even the details of similar scams

One media station tagged the bond scam as the greatest financial loss inflicted on the nation since its independence. The million dollar question yet remaining unanswered however is, “will the truth, the extent of the scams, the long-term impact on the nation and its citizens, the real culprits and recovery of proceeds of the crime, be ever be transparently visible for society expectations of Justice to be delivered?” 

Since 2015, beginning with analyst amber signals, media exposés and debates, parliamentary debates, followed up by public interest litigation, Central Bank investigations, Auditor General’s Reports, CoPE committee reviews, the Presidential Commission Report and most recently the Forensic Audit reports, have made sufficient material on the purported bond scam available to the public, and even the details of similar scams.

The Forensic Audit Reports cover the years prior to 2015, where irregularities are seen even under other accountability regimes. Regrettably, these forensic reviews have left out of its scope, the essential detailed examination of the biggest scam of all purportedly carried out in March 2016 (which in any event is unpardonable to have been allowed to take place despite the public fury and remedial action demands following February 2015 scam). It is also likely that these forensic reviews have failed to “follow the money tracking of placements, layering and integration-led money laundering tracings” essential to institute court action.

In the backdrop of the purported primary dealer mainly connected to the 2015 and 2016 scams failing to be liable for tax on its publicly declared profits from these wrongful trades, and also not being subjected to Financial VAT and Deemed Dividend Taxes despite activist demands – can citizens expect any action to recover the proceeds of these crimes? 

The only silver lining is that the material now publicly available could provide interested citizens and even law enforcement officers sufficient information to make their own judgments and opinions; and even to advocate the best option for strategic next step action. In this context, should public interest-oriented activists set up a mechanism to establish a People’s Court?

Leaving aside the accountability of the executive, legislature and the judiciary for the present, business persons, professionals, academics, intellectuals, civil society activists, media expose journalists and even common citizens should now begin to engage in a review process in order to make up their mind on the reality or myth of the purported ‘bond scams’ and their impact on society and citizens. They can now also determine, or at least get a ballpark estimate, of the likely extent of losses suffered by the State, the EPF/ETF/privately managed funds, individual investors and, last but not least, society as a whole (i.e. all present and future taxpayers, the citizens of today and tomorrow). They should collectively or individually, even publicly, critique and debate and try to reach a decision on the reality or the myth of what has been done by the present and previous governments, politicians, officials, governors, Central Bankers, primary dealers, public/private funds, State institutions, law enforcement officials, media and even potential parties with direct or indirect connections to the scam, and identify the third parties that either engaged in and/or aided and abated in any irregular, illegal, unethical or nationally detrimental actions leading to the purported losses.

Post the aforesaid review, the suggested stakeholders should also attempt to draw up a list of potential suspects, who may have engaged in such conspiracies, encouraged or led such conspiracies from the background, those who directly or indirectly engaged in their execution and also identify those who aided and abated in any such irregular, illegal, unethical transactions, including those persons in supervisory or control positions with accountability to prevent such incidents who wilfully and knowingly failed to take such preventive actions. 

The next step for these stakeholders is to identify where possible the potential charges that can be framed against these errant persons and possibly even prepare an ‘Evidence Matrix’ identifying the  critical relevant dates, the irregular/illegal/unethical transactions/events, available evidence, persons responsible, purported violation or offense and potential charges. 

The final step in this process is to recommend action that should be taken to recover the proceeds of crime.

Towards the initiative suggested above, the relevant statutory provisions and jurisprudence that can be considered by the public stakeholders in determining the potential charges against the errant persons are those arising mainly from the Penal Code, Bribery Act, Declaration of Assets and Liabilities Law, Securities and Exchange Commission Act, and Registered Sock and Securities Ordinance, EPF Act and Monetary Law Act.

Looking forward to civil society collective activism in setting up an independent and competent People’s Court supported by citizens in advocacy, exerting pressure on the Government and law enforcement and guiding independent citizens’ voting decisions of the future, set out hereinafter are the relevant statutory provisions and jurisprudence for consideration and benchmarking by the collective stakeholders and People’s Court.

Penal Code Chapter V A – Of Conspiracy – Definition of “Conspiracy”     

Sections 113 A (1) and (2) and B    

If two or more persons agree to commit or abet or act together with a common purpose for or in committing or abetting an offence, whether with or without any previous concert or deliberation, each of them is guilty of the offence of conspiracy to commit or abet that offence, as the case may be.

A person within Sri Lanka can be guilty of conspiracy by agreeing with another person who is beyond Sri Lanka for the commission or abetment of any offence to be committed by them or either of them, or by any other person, either within or beyond Sri Lanka; and, for the purposes of this Subsection as to an offence to be committed beyond Sri Lanka offence means any act which if done within Sri Lanka would be an offence under this Code or under any other law.

Penal Code Chapter XVII – of Criminal Breach of Trust

Criminal breach of trust (Section 388)

Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.

Criminal breach of trust by a clerk or servant

Section 391               

Whoever, being a clerk or servant or employed as a clerk or servant, and being trust in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine.

Criminal breach of trust by public servant, or by banker, merchant, or agent  

Section 392       

Whoever, being in any manner entrusted with property, or with any dominion over property, in his capacity of a public servant or in the way of his business, as a banker, merchant, factor, broker, attorney, or agent, commits criminal breach of trust in respect of that property, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine

Penal Code Chapter IX – of Offences by or Relating to Public Servants

Public servant taking a gratification other than legal remuneration in respect of an official act (Section 158)

Whoever, being or expecting to be a public servant, accepts or obtains or agrees to accept or attempts to obtain from any person, for himself or for any other person, any gratification whatever (‘gratification’ is not restricted to pecuniary gratifications or gratifications estimable in money), other than legal remuneration, as a motive or reward for doing or forbearing to do any official act, or for showing or forbearing to show, in the exercise of his official functions, favour or disfavour to any person, or for rendering or attempting to render any service or dis-service to any person the Government of Ceylon, or with any public servant as such shall be punished imprisonment of either description for a term which may extend to three years, or with fine or both. 

 In the backdrop of the purported primary dealer mainly connected to the 2015 and 2016 scams failing to be liable for tax on its publicly declared profits from these wrongful trades, and also not being subjected to Financial VAT and Deemed Dividend Taxes despite activist demands – can citizens expect any action to recover the proceeds of these crimes?

The only silver lining is that the material now publicly available could provide interested citizens and even law enforcement officers sufficient information to make their own judgments and opinions; and even to advocate the best option for strategic next step action. In this context, should public interest-oriented activists set up a mechanism to establish a People’s Court?

Taking a gratification in order by corrupt or illegal means, to influence a public servant, taking a gratification for the exercise of personal influence with a public servant, and punishment for abetment by public servant of the offences above defined (Sections 159, 160 and 161)

Public servant disobeying a direction of the law with intent to cause injury to any person or the Government (Section 162)

Whoever, being a public servant, knowingly disobeys any direction of the law as to the way in which he is to conduct himself as such public servant, intending to cause or knowing it to be likely that he will, by such disobedience, cause injury to any person or to the Government, shall be punished with simple imprisonment for a term which may extend to one year, or with fine, or with both.

Public servant framing an incorrect document with intent to cause injury (Section 163)

Whoever, being a public servant, and being, as such public servant, charged with the preparation or translation of any document, frames or translates that document in a manner which he knows or believes to be incorrect, intending thereby to cause, or knowing it to be likely that he may thereby cause, injury to any person, shall be punished with imprisonment of either description for a term which may extend to three years, or with fine, or with both.

Penal Code Chapter XI– of False Evidence and Offence Against Public Justice

Causing disappearance of evidence of an offence committed, or giving false information touching it, to screen the offender (Section 198)

Whoever, knowing or having reason to believe that an offence has been committed, causes any evidence of the commission of that offence to disappear with the intention of screening the offender from legal punishment, or with that intention gives any information respecting the offence which he knows or believes to be false

Intentional omission to give information of an offence by a person bound to inform (Section 199)

Whoever, knowing or having reason to believe that an offence has been committed, intentionally omits to give any information respecting that offence which he is legally bound to give, shall be punished with imprisonment of either description for a term which may extend to six months, or with fine or with both.

Giving false information respecting an offence committed (Section 200)

Whoever, knowing or having reason to believe that an offence has been committed, gives any information respecting that offence which he knows or believes to be false, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Destruction of document to prevent its production as evidence (Section 201)

Whoever secrets or destroys any document which he may be lawfully compelled to produce as evidence in a Court of Justice, or in any proceeding lawfully held before a public servant as such, or obliterates or renders illegible the whole or any part of such document with the intention of preventing the same from being produced or used as evidence before such court or public servant as aforesaid, or after he shall have been lawfully summoned or required to produce the same for that purpose shall be punished with imprisonment of either description for a term which may extend to two years, or with fine , or with both.

Fraudulent removal or concealment of property to prevent its seizure as a forfeiture or execution of a decree (Section 203)

Whoever fraudulently removes, conceals, transfers, or delivers to any person any property or any interest therein intending thereby to prevent that property or interest therein from being taken as a forfeiture, or in satisfaction of a fine under a sentence which has been pronounced, or which he knows to be likely to be pronounced, or which he knows to be likely to be pronounced, by a Court of Justice or other competent authority, or from being taken in execution of a decree or order which has been made or which he knows to be likely to be made by a Court of Justice in a civil suit, shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both.

Penal Code Chapter XXII – of Attempts to Commit Offences

Punishment for attempting to commit offences punishable with imprisonment (Section 490)

Whoever attempts to commit an offence punishable by this Code with imprisonment, or to cause such an offence offences to be committed, and in such attempt does any act towards the commission of the offence, shall, where no express provision is made by this Code for the punishment of such attempt, be punished with imprisonment of either description provided for the offence, for a term which may extend to one-half of the longest term provided for that offence, or with such fine as is provided for the offence, or with both

All of above

Read with Penal C ode Chapter V Abetment Sections 100, 101 and 101A, 105, 109, 112, and 113

Read together with Penal Code Sections 10 – Person, 19 – Public Servant, 20 – Moveable Property, 21 – Wrongful Gain and Loss, 22 – Dishonesty, 23 – Fraudulently, 24 – Reason to Believe, 27 – Document, 31 – Omission, 32 – Act Done by Several Persons in the Furtherance of Common Intention, 34 – Effect Caused Partly by Act and Partly by Omission, 35 – Co-operation, 36 – Several Persons Engaging in Criminal Act, 41 – Illegal, 42 – Legally Bound, 51 – Good Faith – Without Due Care and Attention

Bribery Act (No. 2 of 1965) 

Bribery in respect of Government business

19. A person – 

who offers any gratification to a public servant as an inducement or a reward for that public servant's performing or abstaining from performing any official act, or expediting, hindering or preventing the performance of any official act whether by that public servant or by any other public servant, or assisting, favouring, hindering or delaying any person in the transaction of any business with the Government, or

who, being a public servant, solicits or accepts any gratification as an inducement or reward for his performing or abstaining from performing any official act or for such expediting, delaying, hindering, preventing, assisting or favouring as is referred to in Paragraph (a) of this Section, or

who, being a public servant, solicits or accepts any gratification which he is not authorised by law or the terms of his employment to receive, shall be guilty of an offence punishable with rigorous imprisonment for a term of not more than seven years and a fine not exceeding Rs. 5000.

Bribery of public servants by persons having dealings with the Government

21. A person –

who, while having dealings of any kind with the Government through any department, office or establishment of the Government, offers any gratification to any public servant employed in that department, office or establishment, or

who, within one year before or after his having dealings of any kind with the Government through any department, office or establishment of the Government, offers any gratification to any public servant employed in that department, office or establishment, or

who, being a public servant, solicits or accepts any gratification the offer of which is an offence under this Section,

shall be guilty of an offence punishable with rigorous imprisonment for a term of not more than seven years and a fine not exceeding Rs. 5000: Provided, however, that such offer of a gratification to a public servant as is referred to in Paragraph (b) of this Section shall not be an offence under this Section if the offerer proves that the gratification was bona fide offered for a purpose not connected with and not relating to such dealings as are referred to in that Paragraph and that when he offered the gratification he had no hope or expectation of having any such dealings or he did not intend that the gratification should be an inducement or a reward for that public servant's doing or forbearing to do any act connected with or relating to any such dealings.

To be Continued tomorrow