Hoisted in a Penthouse: Forty years of Open Sesame
August 5, 2017, 12:00 pm
by Rajan Philips
The evidentiary revelations about the leaser-dealing over a Colombo penthouse could not have come at a worse time for the government. It has pushed the wedge between the President Sirisena and the Prime Minister even deeper, as there is bound to be disagreement between them about what to do with a ‘minister terrible’ like Ravi Karunanayake. The penthouse saga has also marred the sycophantic celebrations of Prime Minister Ranil Wickremesinghe’s forty years in public life. Perhaps, it is poetic comeuppance for the government’s brazen sordidness. What the Rajapaksa brothers could not complete in ten years, the present scallywags have done in two. If it was farce under the Rajapaksas it is also farce with the present government.
The people voted to stop the earlier farce from turning into tragedy, like what Venezuela is now going through. Only the voters can stop the current farce becoming a different tragedy, unless the president whom they elected has it in his guts to stop it sooner. President Sirisena will have a lot to answer if Ravi Karunanayake were to continue as cabinet minister on the poppycock premise that he was innocent of what his family was doing in first leasing and later buying the luxury penthouse with the support of their perpetual benefactors. If what was reported yesterday was correct, the President has indeed asked for the Minister’s resignation. The advice was purportedly given during the dinner at Temple Trees to felicitate the Prime Minister. We can only wait to see if the advice is taken, and if more than one head will start rolling.
There is also amoral message emanating from the storied penthouse for the fortieth anniversary of Sri Lanka’s open economy. For what has been hoisted in the Colombo penthouse is nothing less than the moral decadence and cultural debauchery emblematic of the crony beneficiaries of the open economy and their political benefactors. It is not the open economy that is to be faulted, but the cronies who hijacked it and the politicians who aided and abetted the hijacking. Beneficiaries and benefactors play alternating roles in the open economy and the rotten politics that goes with it. Those who benefit from the economy look after their political guardians, and the political guardians protect their cronies from laws and regulations that apply only to ordinary people.
And the political message is no less sickening. Apart from being asked by the President, and seemingly not at all by the Prime Minister, the minister has shown no intention, let alone shame, of resigning because he is electorally secure under the proportionate/preferential voting system, and he can bully his party to give him a safe top spot on the candidate list. Imagine the long gone days of energized parliaments. Day in day out the opposition would have been screaming for answers from ethically faltering ministers or government members. Now there is only a half-hearted no-confidence motion, with minimum signatures, and brought up after the fact, so to speak – after everything was brought out at the Commission of Inquiry probing the Central Bank bond scam.
One great merit of the parliamentary system is that it provides a daily forum for holding the government’s feet to the fire. Donald Trump and the United States are the perfect example of what happens in a country when there is no forum to force the head of government to rise on his feet and be accountable on a daily basis before his elected peers. Imagine, Donald Trump as Prime Minister in the British House of Commons Question Period. What an incoherent spectacle Mr. Trump would be in a fiery parliament, where he will have to speak full sentences and not just type 140-character tweets. Sri Lanka now provides the perfect example of an emaciated parliament where hard questions are avoided and serious answers are not needed.
If the Minister resigns, as he has supposedly been asked to at long last by the President, that will be the end of the matter for one and all. There will be an audible sigh of relief within the UNP higher-ups and among the Rajapaksas. But the relief could be short-lived if the Commission of Inquiry is given the time and support to complete its probe and present its findings without fear or favour. It is the best chance the country has to at least start dismantling the web of quid-pro-quo culture of corruption that binds our political and financial establishments.
The evolution of corruption
To go back another thirty years, the years soon after independence, it was all about the UNP being the Uncle Nephew Party and about joining the UNP (not the Navy) to see the world. The Left, especially Pieter Keuneman, was having the time of its life coining phrases to mock the UNP for its nepotism and favouritism. Those were the days of ‘Old School’ bonds and ‘family bandyism’. They have not attenuated or disappeared but have morphed and magnified into a complex web of new families, newly mushroomed international schools, and bonds of many kinds. The web of relationships and ties and bonds is now stretched far and wide. It is perpetual in more sense than one.
“Loyal to Royal” is the title of a salivating hagiography published in the Daily News last week to mark the PM’s 40th anniversary of entering parliament. It is also forty years since President Jayewardene ushered in International Schools as a counter to native schools producing and reproducing the ‘children of 1956.’ Now we have the alumni of international schools wheeling and dealing over their parents’ and grandparents’ hard-earned wealth. Two of the more illustrious of these alumni took centre stage in the penthouse drama of 2016, adding a new dimension to the original bond scam.
The scale of transactions is as mind boggling as the undocumented sources of bags of money moved by cars and stored in unaudited company safes. A fifth floor penthouse is as low as you can get in the new global market of competing high rises. But the casual mention of US$ 8,000.00 as its going monthly rent shows how very casually the property assets have been inflated to keep up with the global Joneses and to the detriment of local Silvas and Sinniahs. The urge for keeping up is also the source of corruption that pervades individual and institutional transactions involving tenders, contracts and purchases of goods and services of all kinds.
Far from shrinking government involvements, the open economy in Sri Lanka has expanded them. Before 1977, it was the era of state corporations inefficiently producing consumer and capital goods. There was plenty of political jobbery in the corporations but little surplus to foster anything like penthouse corruption. The floodgates were opened quite literally, after 1977, with the state impetus being directed to mega infrastructure projects. The UNP invited international contractors and their state sponsors to implement the far flung Mahaweli projects. The Rajapaksas turned to China for developing Hambantota and the Colombo Port City, and more disastrously to Iran to divert Uma Oya. The accelerated development blast created a fertile terrain for all manner of corruption involving contractors, commission agents, money lenders and of course the political masters.
There is no letting up in spite of all the promises of yahapalanaya. In fact, the new Minister of Finance, who gave up his old Foreign Affairs portfolio to the old Minister of Finance, completed the forty-year open economy circle when he declared Hambantota as the new Mahaweli. By that token, Mahinda Rajapaksa could be the later-day JR Jayewardene. After all, the Rajapksas find much common ground with the UNP. Their antagonists are Maithripala Sirisena and Chandrika Kumaratunga.
One has to only listen to President Sirisena as to why no one from the old regime is being prosecuted. And one can only feel sorry for the daughter who is bewildered as to why only her father is being singled out for public ridicule and political punishment. We can also blame it on the open economy and the penthouse cravings it created among its crony beneficiaries.
The invisible hand behind Ravi K’s undoing
August 5, 2017, 7:45 pm
The appearance of Foreign Minister Ravi Karunanayake before the Bond Commission was the talk of the week. No one can fail to notice that there is a major difference in the way Ravi Karunanayake has been treated when compared to how Hirunika Premachandra was treated when it came to her abduction case and Galagodaatte Gnanasara thera was treated recently with regard to the multiple cases against him. Despite the fact that the men who abducted a youth from a shop had no motive to do that except for the instructions given to them by their boss, Hirunika did not have to spend even an hour in police custody. She was granted bail almost immediately. It all depends on the police and the AG’s Dept. if there are no objections to bail, the Magistrate is more often than not obliged to grant that person bail. We saw the same thing happening with regard to Gnanasara thera – he set an all time record by being granted bail three times in three different cases within minutes of one another.
Incidentally, the nexus that has built up between the yahapalana government and the Bodu Bala Sena was revealed last week once again. When Ven.Watareka Vijitha staged a one man protest in front of the presidential secretariat saying that the newly appointed SLFP organizer for Mahiyangana is also the organizer for the BBS for that area and that he has no protection, the BBS had turned up at the spot within minutes and in fact just before they turned up, the police had tried to frighten Ven Vijitha away by saying that the BBS will be there soon.
And sure enough Ven Gnanasara and Ven Magalkande Sudatta theras did turn up at the spot. How is it that the BBS can turn up within minutes of someone beginning a protest at the presidential secretariat unless there was someone in the Presidentail Secretariat to inform them? While it is true that both Hirunika and Galagodatte thera did their part in different ways to usher in this present government, Ravi K also made a major contribution to that cause.
Ravi K was one of the key persons in the UNP who paved the way for Maithripala Sirisena to contest as the common candidate by dissuading party leader Ranil Wickremesinghe from contesting the presidency in 2015 as he had planned to do. It was also through the political party owned by Ravi K – the swan party – (nobody remembers its name) that the common opposition candidates in 2010 and 2015 contested the presidential elections. Ravi K had also dipped into his own pocket to bail out the UNP when it was in opposition. Yet it is clear that he has been chosen to be the fall guy for the rest of the government to be able to save their own skins. First he was shunted out of the finance ministry and made foreign minister so that the yahapalana government could claim that they were removing unsuitable or corrupt persons from office.
Now after Ravi K gave evidence before the Bond Commission, yahapalana NGO activist Gamini Viyangoda has written an opinion piece, saying that Ravi K has treated the people of this country as poonac eating fools by saying that he was unaware that the rent for the flat he was living in was paid by Arjun Aloysius. Viyangoda has more or less said that Ravi K should bow out of the scene. To be sure, most of what Ravi K said in his defence does not sound convincing even to the most sympathetic listener, but then it’s not as if this was a sensitive and thin-skinned government that is outraged by Ravi K’s lack of convincing answers. This is a government that has postponed the local government elections for more than two years and is openly making preparations to postpone the provincial council elections that are coming due in the Sabaragamuwa, North Central and Eastern provinces with scant regard for public opinion.
So how is it that they seem to be concerned about public opinion only when it comes to the bond scam and Ravi K’s statement? Ravi K has now been brought to a position where his entire political career hangs in the balance by the very government he did so much to bring into power. Ravi K was much better off under the Rajapaksa regime. The question here is whether what happened to him can happen unless it was sanctioned at the highest levels of the government – the same levels that decided that he should be removed from the position of finance minister? It was not only Ravi K who was implicated in the bond scam through the examination of Arjun Aloysius’s phone records, but someone called the ‘Hon. PM’. It’s not difficult to imagine the identity of this Hon. PM. It should be borne in mind that however sensational the revelations that have been coming out of the bond commission, it’s not a court of law and once the commission concludes its sittings and submits its report to the President, the latter will have a useful tool to keep the entire UNP in check.
The next presidential election has to take place between 9 November and 9 December 2019. Time is running out fast. If the UNP becomes too independent, President Sirisena will cease to be a political factor by 2019. The UNP did show signs of becoming independent as for instance in the draft interim report of the Steering Committee of the Constitutional Assembly which was released last May which (for the first time in the formal Constitution making process) said that the executive presidential system would be abolished. If this independence was to continue President Sirisena would be teetering on the brink of irrelevance. His position would have become more precarious by the day as the last quarter of 2019 approaches. The Bond Commission is in that respect, an ideal tool to enslave the UNP and to keep it under his thumb up to and beyond 2019 as well.
When this Bond Commission was formed, Sirisena knew what he was doing. Arjuna Mahendran was in on many of the things that took place in the yahapalana conspiracy at the end of 2014. The whole country saw a procession of politicians going to Singapore and then coming back to declare their support for the common candidate. Mahendran is one of those who knew of all these goings on. At least some of these meetings would have taken place in his presence. Yet he was the first to lose his job under the yahapalana government with the SLFP segment of the government literally leading the campaign against him. Even the joint opposition had no role to play given the ferocity of the SLFP government group’s attack on Mahendran. Now this has been extended to Ravi K with even the ‘Hon. PM’ getting drawn in.
According to the rumours floating around, many other UNP ministers and deputy ministers are also implicated directly or indirectly in the bond scam which makes it the ideal tool to keep the UNP on a leash. Once the Bond Commission submits its report, Sirisena will have the entire UNP by its ding dongs. Sirisena needs to keep the UNP tied to the present governing arrangement. Unless the UNP nominates Sirisena as their presidential candidate in 2019 as well, he will be nowhere. The problem however is that even if the UNP nominates him, the UNP rank and file will not vote for an outsider again, and there will be a significant drop in the voter turnout. That however appears to be the least of Sirisena’s worries. His immediate problem is ensuring that the UNP does not go its separate way at any election between now and the time he decides to leave politics.
For its part, the public scandal created by the bond scam has made it difficult for the UNP to field a candidate of its own at the next Presidential election, which makes Sirisena secure in his present position as the leader of the yahapalana coalition. The fact that the bond commission appears to have been given a free hand is due to several factors, the first being of course the inherent independence of the commissioners who are known to be independent individuals who will not put up with political interference. The second is that the AG’s Dept. appears to have been given a free hand in this case unlike in other cases. The third is the President’s own personal interest in allowing things to take its own course without interference so that he will have a yoke to restrain the UNP with.
Unconstitutionality of the Inland Revenue Bill
One of the main reasons why the government got another tranche of the IMF extended fund facility recently, was because the government had presented the proposed Inland Revenue Bill to parliament with the objective of streamlining revenue collection. When parliament met last Friday, among the announcements that the Speaker made was that the Supreme Court had informed him that certain Clauses of the Inland Revenue Bill were inconsistent with the constitution and that some Clauses would require a two thirds majority in parliament and one would require a referendum as well if it was to be passed. The Joint Opposition and particularly parliamentarian Bandula Gunawardene had been opposing this Bill with some vigour. This proposed Inland Revenue legislation had generated much interest among officers of the Inland Revenue Department as well, and there was at least one strike and several demonstrations against this Bill. Among the Clauses that were deemed to be inconsistent with the constitution were the following:
Clauses 97 and 98 of the Bill deal with the appointment of the Commissioner General of Inland Revenue and his ability to delegate his powers. Clause 97 says that there shall be appointed a Commissioner-General, and that any tax official exercising power conferred on the Commissioner-General shall be deemed to be authorized to exercise that power until the contrary is proved. Clause 98 says that the Commissioner-General may delegate to an officer of the Department any power conferred on him by this Act, other than the power of delegation and that in doing so, he can delegate a power either to a specific individual or to the incumbent of a specific post within the Department. And further, the Commissioner-General may specify that any information, declaration, or document required to be furnished to the Commissioner-General is to be supplied to such other person as he may nominate.
President’s Counsel Mahohara de Silva appearing on behalf of one of the petitioners before the SC had stated in his submissions that while in the existing Inland Revenue Act No.10 of 2006, the words ‘Commissioner General’ was interpreted to include a Senior Deputy Commissioner-General, a Deputy Commissioner-General, Senior Commissioner and Deputy Commissioner who is specially authorized by him to act on his behalf, in the proposed Bill, no such powers are directly conferred on any officer of the Inland Revenue Service, other than the Commissioner General. In terms of the provisions of the proposed Bill all powers are reposed in the Commissioner General.
Therefore the power reposed in the Commissioner General can only be exercised by any officer of the IRD only if the Commissioner General delegates such authority to that individual. There is no compulsion for the Commissioner General to delegate such power to any particular officer, and therefore if the Commissioner General so wishes, he could refrain from delegating such power to any one or more of the Petitioners who in the opinion of the Commissioner General is independent and not subservient to him. Therefore, the absence of provisions directly granting authority on officers other than the Commissioner General and the wide, unguided power of the Commissioner General to delegate power to officers of his choice drastically affects the independence of the Department of Inland Revenue, and violates Article 12 (1) of the Constitution. (What Article 12(1) of the Constitution says is that ‘all persons are equal before the law and are entitled to the equal protection of the law.’
De Silva had also argued that Clause 97(2) which states that a tax official exercising power conferred on the Commissioner- General shall be deemed for all purposes to be authorized by the Commissioner-General to exercise that power, until the contrary is proved” would also imply that where there is no lawful delegation in terms of Clause 98, any act done on the purported delegation by a tax official would be deemed to be done by the Commissioner General, until the contrary is proved and that this leaves unfettered room for abuse of power and abuse of discretion by any tax official, in a manner violating Article 12 (1) of the Constitution.
Another matter that was deemed to be a violation of Article 12(1) of the constitution, was Clause 100 of the IR Bill which was about secrecy in relation to the information in the possession of the Inland Revenue Department. Counsel for the petitioners Manohara de Silva had argued that under the existing Inland Revenue Act, there are exhaustive and severe restrictions on the sharing of information pertaining to files maintained by the Department of Inland Revenue. Furthermore, it is specifically stated in the existing law that the Minister or the Ministry Secretary will not have access to any records or documents relating to the affairs of any person, in the possession, custody or control of the Commissioner-General. De Silva pointed out that no such safeguards are contained in Clause 100 of the proposed Bill and that what has taken place instead is that there has been an expansion of the types of persons entitled to receive information.
While it is said in the proposed legislation that ‘employees of the Department’ can receive information, there is no interpretation given for the word ‘employee’ and therefore any person employed by the Commissioner General, not being an officer of the Inland Revenue Service would be entitled to receive sensitive information.
Among the persons entitled to receive information was the Atttorney General. De Silva pointed out in his submission that while under the existing law, the Attorney General was entitled to receive such information only for the purpose of various crime related matters or prosecutions, the proposed Bill seeks to expand this access to civil proceedings as well. He pointed out that the Attorney General in Sri Lanka can be retained by numerous public corporations and in the circumstances the Attorney General having access to information from the Department of Inland Revenue for the purpose of civil proceedings, violates Article 12 (1) of the Constitution.
Another matter that was deemed to violate the Constitution was Clause 167 of the Inland Revenue Bill. What Clause 167 says according to sub-section(1) is that Where the Commissioner-General or an authorized officer has reasonable grounds to believe that a person may leave Sri Lanka without paying a tax that is, or will become payable by that person, the Commissioner-General or authorized officer may issue a departure prohibition order to the Controller of Immigration preventing the person named in the order from departing Sri Lanka. A departure prohibition order shall remain in force until revoked by the Commissioner-General or authorized officer. This was deemed to violate Articles 12, 13, and 14(1) of the constitution which go as follows.
12 (1) All persons are equal before the law and are entitled to the equal protection of the law. 13(2) Every person held in custody, detained or otherwise deprived of personal liberty shall be brought before the judge of the nearest competent court according to procedure established by law and shall not be further held in custody, detained or deprived of personal liberty except upon and in terms of the order of such judge made in accordance with procedure established by law. Any person charged with an offence shall be entitled to be heard, in person or by an attorney-at-law, at a fair trial by a competent court. Every person shall be presumed innocent until he is proved guilty, 14(1)(h) Every citizen is entitled to the freedom of movement and of choosing his residence within Sri Lanka.
The Clause in the Inland Revenue Act which was deemed to require a referendum by the SC was Clause 200 which contained provisions aimed at the Interpretation of the proposed Inland Revenue law. Clause 200(2)&(3) states that in interpreting a provision of this Act, if any material that does not form part of the law is capable of assisting in ascertaining the meaning of the provision, consideration may be given to that material; material that may be considered in interpreting a provision of this Act shall include: (a) all matters not forming part of the Act that are set out in the document containing the text of the Act, as printed by the Department of Government Printing; (b) any treaty or other international agreement or international assistance agreement that is referred to in the Act; (c) any explanatory memorandum relating to the Bill containing the provision, or any other relevant document, that was laid before, or furnished to the members of Parliament, by a Minister, before the time when the provision was enacted; (d) the speech made to Parliament by a Minister on the occasion of a motion related to the Bill containing the provision; and (e) any relevant material in any official record of proceedings of debates in Parliament or debates of any Parliamentary committee that considered the related Bill.
The above was deemed to be inconsistent with Articles 3 and 4 of constitution. Article 3 of the constitution states that sovereignty is in the People and is inalienable and that Sovereignty includes the powers of government, fundamental rights and the franchise. Article 4 lays down the manner in which the Sovereignty is to be exercised with the legislative power of the people being exercised by Parliament, and by the People at a Referendum; and the executive power of the People, by the President. Even a cursory glance at the wide leeway left for the interpretation of this Bill in Clause 200 makes it clear that it may impinge on the exclusive lawmaking powers of Parliament.