Business tycoon Harry Jayawardena was, in our view, partly correct when he recently told a meeting at the foreign ministry that foreign investors will not be keen on investing in Sri Lanka due to the impact of judicial decisions on business related matters. He has made this reported observation when Foreign Minister Rohitha Bogollagama invited the honorary consuls accredited to Colombo - Jayawardena is Denmark's consul here - to discuss how they could help promote Sri Lanka.
As is well known, the Supreme Court reversed the sale of the Insurance Corporation of Sri Lanka (ICSL) to the Distilleries conglomerate that Jayawardena controls and this, no doubt, would have been in the back of his mind when he made his comment. Given the reversals of the privatization of Lanka Marine Services (LMS) and ICSL as well as the judgment in the Water's Edge case, foreigners, we are sure, will be hesitant to throw their hats into the ring as buyers of state-owned companies that government may wish to divest in the future. Remember they did that in the past when Norway's Norsk Hydro took control of the Government Owned Business Undertaking of Ceylon Oxygen when that company was divested and India's Lanka Indian Oil Corporation took a part of the business of the Ceylon Petroleum Corporation.
But they may not be as forthcoming in the future fearing reversal of concluded transactions and to that extent Jayawardena could not have been more correct. Foreigners, after all, may very well feel that what happened to local companies, ICSL, LMS and Asia Pacific Golf Courses Ltd. who ran Water's Edge, could happen to them too in the future. With millions of dollars involved in buying into undertakings that government may wish to divest, judicial interventions in such matters may be a deterrent to buyers, be they foreign or local. But it is most unlikely that foreign investors will give Sri Lanka a wide berth merely because of these judgments. Investors are interested in earning a return, the fatter the better, and if they see opportunities here, they will no doubt come. Some would say that prevailing corruption in this country will be a greater deterrent than fear of judicial intervention or public interest activism. But it can be argued that it could be an attraction in the sense that robber barons will be most willing to buy themselves concessions that are not in the country's interest by greasing willing palms.
In his chairman's review in the annual report of Distilleries Company of Sri Lanka on which we have focused in our business pages today, Harry Jayawardena has made the point that the buyer was not found guilty of any wrongdoing in the ICSL case. In fact, unlike in LMS, where some of the respondents were penalized and there was no order that the purchase consideration be refunded, the ICSL buyer will get back his money in bonds and be permitted to keep the profits earned when he controlled the company as interest on his money for that period. But the fact that the privatization was reversed obviously suggests wrong doing somewhere wherever that be. If so, who were the wrongdoers? That is not clear and it is to be hoped that in the discussions following the judgment which we are now seeing, these issues will be thrashed out. The recent Chief Executives Forum organized by Lanka Business Report and Lanka Business Online produced a most lively discussion. We carried the first part last Sunday and the concluding instalment runs today.
We are glad that we are seeing public discussion, even though late, on matters like this. There has been a misconception that disagreeing with a court determination can be cause for contempt. This is not true at all with the judicial system itself providing for correction of wrong decisions by an appeal process. The Supreme Court is the final authority but may, if necessary, review a judgment as was recently done in the P.B. Jayasundera case where a seven-judge bench, including two judges who sat on the previous three-judge bench, considered arguments adduced on Jayasundera's behalf. By a majority of six to one, the judges permitted the petitioner to withdraw his original undertaking of not accepting any future state sector appointment as President Rajapaksa wanted him to return to his job of Treasury Secretary. The publication of Justice Shirani Tilakawardene's dissenting judgment as well as the majority judgment is no doubt eagerly awaited. The ex-CJ has also had his say on the Jayasundera decision, seeing it as ``extraordinary,'' and his comments have been published in the newspapers.
Without scandalizing the court, it is possible to criticize a judgment in what authorities call chaste language. This is often done particularly in academic analysis. In the forum we have referred to here, Mr. Arittha Wikremanayake, a highly respected lawyer often consulted on intricate commercial matters, describing the former chief justice as ``very very strong'' and ``brilliant'' said that ``nobody had the guts to stand up to him'' and ``everybody caved in.'' That is a perfectly legitimate point of view which, we are sure, will be shared by many and it is all to the good that such viewpoints are being presented. Clearly those who felt aggrieved by the judgments waited for Chief Justice Sarath Silva's retirement before they canvassed their case. It will be of interest to see whether there will be a reference to that when reasons for the Jayasundera ruling and the dissent are published.
Returning to the issue of whether foreign investors will be scared off by the judgments under discussion, we would opine `No.' Clearly John Keells Holdings, the company which controlled LMS and lost it on a court ruling, is the girl on the beach where foreign stock market investors are concerned in the current boom. Investors are profit seekers and they will invest where they see profit. Prevailing labour laws, however, are a greater deterrent to investment, both local and foreign than judicial intervention in business matters. It is not easy to fire a workman (or woman) in this country once you hire him or her, whatever the justification for discontinuance. While we do not favour giving employers carte blanche to sack workers at will, it is necessary to decide whether excessive protectionism is a cause for slowing much needed job creation. The right balance must be struck in this sphere.