Rarely has a Supreme Court, in any country, dealt stinging slaps simultaneously to an apex company at the pinnacle of the stock market and a public servant on the top rung of the ladder. The fundamental rights case filed by Vasudeva Nanayakkara against John Keells Holdings (JKH), Treasury Secretary Dr P.B. Jayasundera (PERC Chairman in 2002, the time of the transaction in contention), a host of ministers, and the then president and prime minister, alleging gross misconduct in the alienation of public property, elicited a damning verdict from the court. As far as JKH is concerned the buck stops right there; this and numerous similar deals is the Lankan version of the grand larceny Russian oligarchs perpetrated in the robbery of the millennium, the theft of trillions of roubles worth of state property of the fallen Soviet Union. But when it comes to Dr Jayasundera (PBJ), where does the buck stop; surely considerably higher up? Why do I say this?

The grotesque scene

First a summary of the basics; ninety percent, purportedly, of the shares of state owned Lanka Marine Services (LMS) were sold to JKH without proper valuation and cabinet approval, and more significantly, bundled afterwards into the deal was the transfer to JKH of eight acres of prime land in the heart of Colombo (Bloemendhal Road) belonging to the Ports Authority, that is state owned land. The court has now determined that the entire transaction was "illegal, unlawful and arbitrary" and that JKH and PBJ had worked "hand in glove" to fraudulently undermine the public interest. The court held that the allegation of Mr Nanayakkara that Dr Jayasundera worked in collusion with S. Ratnayake of John Keells to secure illegal advantages to the latter, adverse to the public interest, is established.

The eight acre property is worth about one billion rupees and the court made void the land transfer and directed JFH to vacate within 30 days. Harshly critical of the entire transaction the court annulled its BOI status with retrospective effect and directed that all outstanding taxes be collected. PBJ was ordered to pay Rs 500,000 as compensation to the state and Mr Nanayakkara was awarded legal costs of Rs 250,000 to be paid by JKH.

The most celebrated part of the judgement, however, is that the court annulled the privatisation of LMS; probably the first time such a thing has happened in this country. Ownership of LMS has now, legally, reverted to the Petroleum Corporation. What about the money JKH paid to purchase, purportedly 90%, of LMS shares? Well JKH will become a shareholder in the reverted LMS but only in proportion to its investment measured against a truthful valuation of LMS, instead of the bogus valuation used at the time of privatisation. The biggest loss to JKH is the termination of the Common User Facility, a monopoly right to bunkering in the Colombo Port. The full implications of the financial picture are not yet clear and accountants are still beavering away into the details.

What the Court didn’t say

Interestingly, the court did not say that PBJ’s motive was to line his own purse, it did not determine that he had been financially corrupt for personal profit; nor did the petitioner allege this in his complaint. Then why did PBJ engage in a misdemeanour of such magnitude? It could not possibly have been a genuine error of judgement since he knowingly flouted procedures such as valuation of assets and obtaining cabinet approval which was all mother’s milk to a senior public servant. It is not possible to imagine that PBJ was unaware of the impropriety of what he was doing since he has been a highly positioned administrator with decades of experience and now the doyen of the public service. If it was not for personal gain, and if he must have known the scale of his wrong doing, then why did he do it?

To understand this we have to look at the other names in the list of 31 in Mr Nanayakkara’s submission to court. They include a former president and a prime minister, Mrs Kumaratunga and Mr Wickremesinghe, respectively, and the subject ministers at the time, Milinda Moragoda and Karu Jayasuriya. The conclusion staring one in the face is that PBJ was acting in the interests of and under instructions from powerful politicos above him. This is not to absolve him of responsibility but to indicate where the answer to the question ‘Where does the buck stop?’ is to be found.

The Presidential grant under which the land transfer was executed, for example, was issued under the instructions of Mrs Kumaratunga. The cross-over of leading UNPers, including Mr Moragoda and Mr Jayasuriya from the opposition to the government was in all likelihood to stall inquiries into this and into other findings of corrupt or improper behaviour spelt out in the COPE report. It is imperative to open inquiries and bring to justice, in the criminal courts, all those against whom prima face cases on any of these matters is established. Will any of this happen? Not on your life!

The tip of the iceberg

You think this is the bottom of the cesspit? No brother the fact of the matter is you ain’t seen nothing yet. Numerous instances of privation, not just in Lanka but elsewhere too, are being exposed as fraud; the most egregious example is the aforementioned case of the countries issuing from the break up of the Soviet Union. There is another, even larger, fundamental rights petition filed by the same petitioner, Vasudeva Nanayakkara, in the shape of the sale of the Sri Lanka Insurance Corporation to Harry Jayawardena, also pending before the Supreme Court. The allegation, again, is about improper alienation of state assets to a private party resulting in huge losses to the public purse. The findings of the court are expected soon and when available will provide an opportunity to see whether these events fall into a systematic pattern.

Irrespective of whether a legally relevant pattern emerges from the court’s judgements on these two cases, a very significant general pattern has already emerged from many examples of the improper use of billions of rupees of pubic funds. The monstrous Mihin Air scandal comes to mind at once. The point is not that bad business decisions, the mendacity of those involved, or the incompetence of those who appointed them to manage Mihin, are the root cause of the loss of Rs 3 billion of treasury, bank and pension fund money. The real point is that as with the JKH deal it is entirely possible that there is knowing fraudulent misconduct. If new petitioner could come forward to lighten the burden on Mr Nanayakkara and his legal and advisory team, Mihin is the next big-time fundamental rights violation petition of a business nature that should go before the courts.

There is a spreading culture of impunity in respect of human rights violations; we read about this in the papers every day. Less frequently we read about the fraudulent use of billions of rupees of public funds with impunity, though the harm done is no less severe. It is this growing culture of multiple immunities that defines one dimension of a failed or failing state. The true beneficiaries of both impunities are not the political and business middlemen who a regime appears to be shielding. No, as a state fails the leading actors in the ruling cabal increasingly need impunity for themselves. It is not that the powers-that-be are protecting the likes of Mervyn and PBJ; no, they are protecting themselves. In its eventual and most distilled form, as in Zimbabwe, impunity for the underlings is at root a reflection of essential impunity for Mugabe himself; in his case, impunity from the gallows, literally.

Though, thankfully, we are still a long way off from a Zimbabwe like hell, a systemic degeneration is creeping forward in the spread of generalised impunity. When the Public Accounts Committee and the Committee on Public Enterprises were reconstituted, after the recent prorogation and recalling of parliament, both chairmanships were taken by government ministers, Anura Priyadharshana. Yapa and John Seneviratne, respectively. This is shocking since the function these committees is to exercise effective supervision in the use of public funds and the management of public enterprises. Inquiring into misconduct on these matters will, in future, be a mockery, a case of: horage amageng pena ahanawa.

Transparency International Sri Lanka (TI) has called upon the two ministers to step aside and make way for persons who are not placed in conflict of interest stances. TI has gone so far as to assert that these appointments amount to "An intentional undemocratic move to weaken legislative scrutiny so that the irregular financial expenditure of the executive would continue unabated". Chairmanship of such parliamentary committees is invariably and almost as a matter of necessity assumed by opposition members. Will the government take note of concerns such as these and do something about it? Not on your life!