Nihal’s FR Application on the Expropriation Law

Part 4 – ‘Entertainment of a doubt’ deemed the Bill to be inconsistent with the Constitution – Petitioner’s stake in HDL greater than the Government’s

 

In the public interest to create awareness of the issues involved, the FT will continue to publish extracts adapted from the Petition filed by public interest activist Nihal Sri Ameresekere on the Expropriation Law. The Supreme Court has directed that Notices be issued on the Respondents and Notices have been issued and the Case listed for January 26.

Notices have been issued on Minister of Finance, Mahinda Rajapaksa, Minister of Economic Development, Basil Rajapaksa, Secretary, Ministry of Finance, P.B. Jayasundera, Minister of External Affairs G.L. Peiris, former Attorney General C.R. de Silva, former Attorney General Mohan Peiris, Advisor to the Cabinet, Minister of Justice Rauf Hakeem, Secretary Ministry of Justice, Suhadha Gamalath, Speaker of Parliament, Chamal Rajapaksa and Attorney General.

Part 1, comprising paragraphs 14 to 18 of the Petition, was published in the Daily FT of 17 January 2012. Part 2 comprising paragraphs 4 to 9 of the Petition was published in the Daily FT of 18 January 2012. Part 3 comprising adapted extracts from paragraphs 10, 11, 12, 13 and 22 was published in the Daily FT of 19 January 2012. Given below are adapted extracts from paragraphs 19, 24, 25, 27, 43, 44, 45, 46 and 47 of the Petition

19. a) The statements made that in view of ‘national interest’ of protecting public property, that the Bill was secretively and expeditiously enacted into Law, even denying the right of the people and/or affected parties to have been heard thereon, is a puerile hollow argument, in that, the Law as in the instance of a winding-up of a company, could have provided, that any alienation of property, within a certain past period of time would be null, void and fraudulent, even providing penal provisions, if such alienation had taken place.

b)The Fundamental Duties stipulated in Article 28(d) of the Constitution to preserve and protect public property and to combat misuse and waste of public property had been articulated, but this could not be mere pontification or a selective process; all being equal before the law.

c)Whereas, there are several instances Your Ladyship’s Court had annulled and reversed major transactions of the pillage and plunder of public property, such as in the cases of SLIC SC (FR) Application No. Case 158/2007, LMSL SC (FR) Application No. 209/2007 and Water’s Edge SC (FR) Application No. 352/2007, after inter-partes inquiries in conformity with norms of natural justice.

24. a)    Article 80(3) of the Constitution stipulates thus:

 “80(3) Where a Bill becomes law upon the certificate of the President or the Speaker, as the case may be, being endorsed thereon, no court or tribunal shall inquire into, pronounce upon or in any manner calling question, the validity of such Act on any ground whatsoever”

b)The Petitioner very respectfully submits that the foregoing Article 80(3) of the Constitution does not preclude or ousts the jurisdiction for Your Ladyships’ Court to correct a per-incuriam Determination of Your Ladyships’ Court, should it be deemed to be the case.

25.a) Article 123(3) of the Constitution stipulates thus: (Emphasis added)

 “123.(3)In the case of a Bill endorsed as provided in Article 122, if the Supreme Court entertains a doubt whether the Bill or any provision thereof is inconsistent with the Constitution, it shall be deemed to have been determined that the Bill or such provision of the Bill is inconsistent with the Constitution, and the Supreme Court shall comply with the provisions of paragraphs (1) and (2) of this Article.”

b)Article 123(3) is specifically in relation to Bills endorsed as ‘Urgent Bills’ by the Cabinet of Ministers as per Article 122 of the Constitution.

c)Hence, whilst providing for an emergency / urgency, the Constitution has stipulated a check put in place, that if the Supreme Court entertains a doubt whether the Bill or any provision thereof is inconsistent with the Constitution, that it shall be deemed to have been determined that the Bill or such provisions of the Bill is inconsistent with the Constitution.

d)It is most respectfully submitted that the threshold therefore is the question or whether there is in fact any ‘doubt’ when considering an Urgent Bill submitted under Article 122 of the Constitution.

e)The Petitioner with utmost respect submits that the Determination by Your Ladyship’s Court marked (“X6(a)”) is per-incuriam and not in conformity with and/or is ultra-vires the stipulations in Article 123(3) of the Constitution.

f)Specific submissions in respect of the foregoing, with reference to Determination marked (“X6(a)”) would be made by the Petitioner at the time of supporting this Application before Your Ladyship’s Court.

27. a)     In the context of HDL, the owning Company of Hilton Hotel, having been categorised, as the only ‘Underperforming Enterprise’ under Schedule 1 to the Law, the Petitioner sets out hereinbelow in outline the salient facts pertaining to HDL, respectfully reserving the right to submit such facts morefully and comprehensively by way of an Addendum hereto, together with any further Documents, which may be necessary, to be read and construed, as a part and parcel hereof.

b)“Underperforming Enterprise” has been defined in the Law

‘as a Company or authority, institution or body established under any written law in which the Government owns Shares and where the Government has paid contingent liabilities of such Enterprise and the Government is engaged in protracted litigation with regard to such Enterprise, which is prejudicial to the national economy and public interest’.

c)It is lucidly clear, that the foregoing definition has been specifically constructed, solely and exclusively targeting HDL, without the warranted disclosure of the totality of the facts; with the Schedule 1 ‘Heading’ i.e. “Underperforming Enterprise” defying known interpretation of the English language !

d)HDL was and is a separate corporate entity. The Government's status was that of a Shareholder and Guarantor-Creditor.

e) HDL continues to be a Company coming under the ambit of the Companies Act No. 7 of 2007, and is governed by the provisions of the said Act.

43. a) By the Settlement Agreements, Mitsui & Taisei wrote-off Jap. Yen 17,586 Mn. (then equivalent to US $ 207 Mn., i.e. SL Rs. 10,200 Mn.) on their stated Claims as at 30.6.1995 from HDL and the Government, as its Guarantor, which comprised 30% write-off of Capital and 10 Years’ accrued Interest; amounting to a 63.3% write-off of their stated claims.

b)The aforesaid write-off obtained by the Petitioner by his sole sustained efforts over several years, amidst obstructions and pressures, amounting to Rs. 10,200 Mn., in June 1995, at 12% p. a. interest would today amount to over Rs. 73,500 Mn.

c) The Government has advanced to HDL Rs. 4,435,986,893 Mn., over the years 1997 to 2010, claiming together with compound interest thereon at varying rates given at paragraph 63 hereinbelow, at a simple average interest of 13% p. a, amounting to a total of Rs. 12,098 Mn., as at 10.5.2011 and together with the 7 Acres of Land provided by the Government to HDL in the Colombo City valued at Rs. 10 Mn. per perch would amount to Rs. 11,200 Mn. Therefore in total the Government’s contribution to HDL would be around Rs. 23,298 Mn., as at today.     

d)Therefore, the Petitioner well and truly stood and stands to be a greater Stakeholder of HDL than the Government.

e)Mitsui & Taisei agreed to re-schedule the unwritten-off balance Claims for a further period of 15-years up to 2010, with a grace period of one year to further financially restructure HDL, (originally fully payable by 1999) at a reduced rate of 5.25% p.a interest (originally 6% p.a) ,

f)The foregoing was immensely beneficial to HDL and the Government, as its Guarantor.

g) The crux and the main cornerstone of the Settlement Agreements was that the immense benefit, which was to be derived by HDL, and more importantly by the Government, as its Guarantor, as a consequence of the write-off of 30% of the Capital and all accrued Interests by Mitsui & Taisei and re-scheduling the balance unwritten-off Claims for a further period of 15 years, with a grace period of one year, were to accrue to the Government and none other.

44.a)After having chaired a Media Conference on 28.6.1995, pompously applauding the Settlement and endeavouring to take credit therefor, when he had played no role, whatsoever, in the finalisation of the Settlement, Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent, having discovered a Condition, which personally affected him, precipitating a perverse baseless controversy, unilaterally and arbitrarily caused the Settlement Agreements to be suspended on 24.7.1995

b)The Condition which personally affected Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent was the following, since he had been a Member of the Securities & Exchange Commission of Sri Lanka at the relevant time:

“The Government shall and will take appropriate independent actions on the conduct and actions of the Securities and Exchange Commission of Sri Lanka and/or Members of its Commission and the Colombo Stock Exchange and/or of its Directors, in relation to the representations made by Mr. Ameresekere to the said institutions on matters pertaining to HDL, which matters Mr. Ameresekere also reserves the right to pursue.”

c) Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent also made a baseless and false Statement in Parliament on 8.8.1995 vide Hansard Columns 704 – 707 (4 Columns) but could not refute the fallacy thereof exposed by a comprehensive Statement made on 15.12.1995 in Parliament by Rajitha Senaratne, M.P. vide Hansard Columns 2954 – 2965 (12 Columns).    

d)Acting in a vicious manner, Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent forced the resignation of Secretary Ministry of Finance & Secretary to the Treasury, A.S. Jayawardene, who was as a result appointed as Governor, Central Bank of Sri Lanka.

e)    However, in complete contrast to the aforesaid conduct, Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent, now Minister of External Affairs, has been significantly silent on the conduct and actions of Secretary Ministry of Finance & Secretary to the Treasury P.B. Jayasundera, 3rd Respondent ,whose conduct and actions had been castigated by Your Ladyship’s Court in SC (FR) Nos. 209 and 158/2007 and in Reports to Parliament by the Committee on Public Enterprises and by the Auditor General.

45.a)    Thereafter, with the oncoming Sri Lanka Aid-Group Meeting in November 1996, at which the Government expected the Japanese Government to pledge US $ 245 Mn., as Aid, the Japanese Governmental Authorities exerted pressure on the Government, on the foregoing unilateral and arbitrary suspension of the Settlement Agreements, which had been signed, as had been finalised by the Attorney General.

b)Petitioner once again reiterated that he could pursue with the litigation, since he was confident in proving the fraud, which had been upheld by the Supreme Court on 2.12.1992, also affirming the interim injunctions, and that as a consequence monies over US $ 30 Mn., had accumulated with HDL by March 1996, and that further monies would accumulate with HDL, enabling HDL to complete the construction of the planned 3rd Tower, increasing the number of Hotel Rooms from 408 to 612, thereby enhancing the profitability and debt-service ability of HDL, and thereafter to negotiate and settle with Mitsui & Taisei for just and equitable basis.

46. a) Nevertheless in the given circumstances, President Chandrika Bandaranaike Kumaratunga, Attorney General, Sarath N. Silva P.C., Secretary Ministry of Finance & Secretary to the Treasury, B.C. Perera,. and Deputy Secretary to the Treasury, P.B. Jayasundera, 3rd Respondent, prevailed upon the Petitioner to agree to immediately give effect to the Settlement Agreements signed in June 1995, without the fulfillment of certain ‘conditions precedents’, which had been agreed to have been fulfilled, prior to the settlement and withdrawal of the Petitioner’s litigations, which had prevented any payments, whatsoever, to Mitsui & Taisei.

b) In such circumstances, an Addendum was signed in October 1996 to the Settlement Agreements, by and between the Government, the Petitioner, Mitsui & Taisei, only excluding the aforesaid Condition, which affected Justice Minister & Deputy Minister of Finance, G.L. Peiris, 4th Respondent.

c)The Petitioner acquiesced to the foregoing at the behest of then Attorney General, Sarath N. Silva, P.C., Secretary, Ministry of Finance, B.C. Perera and Deputy Secretary to the Treasury P.B. Jayasundera, 3rd Respondent, who intimated that this condition was an embarrassment to their own Minister !

47. a) In deference to the requirement of the Government, to enable the payments to be made to Mitsui & Taisei, the Petitioner by the said Addendum, acting in utmost good faith agreed to convert certain ‘conditions precedent’ to ‘conditions subsequent’, which had to be performed prior to the withdrawal of the two derivative actions in law, D.C. Colombo Cases Nos. 3155/Spl and 3231/Spl, as had been agreed in June 1995; which were promised to be fulfilled subsequently as per the said Addendum.

b) On Petitioner’s insistence, as per the said Addendum, voting power of the Shares of Mitsui & Taisei were irrevocably given to the Secretary to the Treasury, for the fulfillment of the said ‘conditions precedent’, as ‘conditions subsequent’.