In disturbingly characteristic fashion, authorities have allowed oil hedging cases to be heard outside the country when the Sri Lankan legal system could have dealt with the issue here in the country, which would have cost the public purse a pittance compared to what has already been paid to foreign law firms, not to mention travelling and accommodation costs for officials involved in the cases, while the fiasco of importing contaminated petrol and diesel could have been avoided had steps been taken to rectify dubious procurement methods which were highlighted much earlier, with the state acting on this warning by doing what seems to come easiest to it; nothing!

"The Attorney General appearing for the Secretary to the Treasury and Ceylon Petroleum Corporation missed an opportunity to try the controversial oil hedging deals, involving three international banks and two local, here in this country, under Sri Lankan law, which has cost the country Rs. 467 million in legal fees, compared to the Attorney General’s Departmentsentire Annual Budget for 2012of Rs. 372 million, with the case by Standard Chartered Bank lost in Appeal in London, with a Claim of US$ 162 million plus Interest."

This was stated in a comprehensive Letter public interest activist Nihal Sri Ameresekere had addressed to Minister of Petroleum Industries, Susil Premajayantha, with copies to Auditor General and Secretary to the President.

The Letter also disclosed that the authorities had failed to take legal action against officials, who had entered into the oil hedging deals, and this could have been one of the reasons, as to why the Sri Lankan government’s position, that these deals were ultra-vires and illegal, would have lost credibility, and Ceylon Petroleum Corporation lost the recent Case against Standard Chartered Bank in London, he said.

"Having failed to punish those officials who perpetrated the oil hedging deals, which the Attorney General himself having asserted, as ultra-vires and illegal, the very same officials had been taken to London to give evidence in the Case filed by Standard Chartered Bank, the appeal of which was lost recently. An appellate court would be confined to the evidence before the primary court."

Ameresekere in 2009 had applied to the Supreme Court to try the cases against Standard Chartered Bank, Deutsche Bank and Citibank in Sri Lanka itself, citing precedence foranti-suit injunctions, to prevent litigations in foreign countries, since the transactions had been taken place in collusion in this country, with parties involved also being present here, as it was one inter-connected matter. The local costs for the Government would have been nothing, since Ameresekere had filed his Cases in the public interest. Supreme Court had previously suspended these oil hedging deals ex-facie, and had terminated the proceedings on a controversy regarding the reduction of petroleum prices.

"Rather than support me, Attorney General, Mohan Peiris P.C., intriguingly vehemently opposed me on a preliminary objection, on a purported ‘time bar’, I verily believe not wanting the facts pertaining to this matter of national economic proportions, being heard and exposed before the Supreme Court and the people of this country," Ameresekere said in his Letter. Since Petroleum Minister, Susil Premajayantha had indicated that he would instruct the Attorney General to support him, in his Letter Ameresekere states : "Hence, you ought to ascertain, as to who instructed him to so oppose me, whilst appearing for CPC, which came under your purview, as the Minister in charge?"

The Supreme Court had earlier granted Interim Orders directing investigations holding that the CPC was not authorised to enter into transactions other than that of importing and exporting petroleum products. Ameresekere attempted to move the Supreme Court once again, after he had come to know in May 2009 that Standard Chartered Bank had remitted US$ 108 million to UK, and had come know in June 2009, that all three banks, Standard Chartered, Deutsche and Citibank had commenced legal proceedings abroad. Ameresekere asserts that he had made in his Applications within 30 days of such events, whereas the Attorney General had "misled the Supreme Court assuring that he would succeed in defending the foreign litigations, which has caused utter wastage of public money for which he would stand responsible".

In a separate Letter addressed to the Attorney General on 24.6.2010 Ameresekere had asserted: "the Attorney General gave the Supreme Court an unqualified assurance and guarantee, that he would certainly succeed in the foreign legal proceedings against the Government of Sri Lanka and the CPC, and that therefore no payments, whatsoever, would thereby have to be made from public funds to the respondents banks,under these illegal deals as admitted by the Attorney General and that he would also recover the costs, reckoned to be in the region of Rs. 150 million incurred utilizing public funds, to defend these foreign legal proceedings, in retaining foreign Counsel and Experts, including costs incurred in overseas travel by you and other Counsel."

In the said Letter Ameresekeresaid, "In addition, on 11.5.2010 you reiterated to the Supreme Court the averments in the Statement of Objections of the CPC, settled by you, in SC (FR) Application No. 404/2009, concurring with my stances taken in the said Application, that - ‘the saidtransactions are illegal, ultra-vires and/or unauthorized and that the Respondent Banks had misrepresented the true nature of the these transactions and that they are inter-alia null and void and/or unenforceable’."

In his Letter Ameresekere urged stringent action be taken against all those persons, who had been involved in these illegal deals, as admitted by the Attorney General to the Supreme Court, which illegal deals jeopardising colossal public funds had been perpetrated on the State/a State Corporation, with known intent to cause colossal losses to the State/a State Corporation, with public officers having been compromisedwith overseas jaunts.After his Cases were filed, the Criminal Investigation Department raided the CPC Head Office and had taken into custody relevant documents, recording statements, but what action followed?he asks.

"It would clearly demonstrate that the Attorney General does not want the truth to be out and the facts be known to the public on these illegal deals, whereas it involved colossal sums of public funds. To me this is a matter of national and public importance and interest, with potential threat of colossal claims of monies in foreign exchange, reckoned to be in the region of US$ 800 million in the context of the actual claims being mysteriously and intriguingly suppressed from the public, including the real facts pertaining thereto. Do not thepublic have a right to know, particularly as statutorily mandated by the Fiscal Management (Responsibility) Act No. 3 of 2003?" he asked in his previous Letter in 2010.

Dubious procurements…

In another startling revelation, Ameresekere has disclosed in June 2009 that petroleum procurement had been on a dubious basis,stating and praying as follows in his Petition to the Supreme Court::

"The Petitioner very respectfully brings to the kind attention of Your Lordships’ Court that:

(a) Petroleum Oil Imports, which causes the public a huge burden, are being carried out in the most questionable and dubious manner.

(b) In one instance, in respect of the purchase of 220,000 to 300,000 Barrels of Gas Oil, Invitations for Offers dated 4.6.2009had been faxed on the same night by the Ministry  of Finance & Planning, with the closing date and time for Offers being the following dayi.e. 5.6.2009 at 3.00 p.m.

(c) According to practicalities and realities, making of such competitive Offers, is an impossibility; and that it is quite apparently evident that this has been a ‘fix’.

"(s) make Interim Order directing the 2nd Respondent and/or the 1st Respondent (CPC) to tender to Your Lordships’ Court formulated Guidelines with stipulated Time Schedules for the procurement of Petroleum Oil Products, to ensure transparency and competition, so that Petroleum Oil Products are procured at the most competitive prices, and that after approval by Your Lordships’ Court of such Guidelines, with the Time Schedules, they be made public and always adhered to; and to make Order converting the Interim Order into a Permanent Order upon the Final Determination of this Application,"

"In objecting to his aforesaid Application, Attorney General, also there by objected to the foregoing. Though having been put on notice of the foregoing facts, apparently no remedial action had been taken or caused to have been taken by the CPC, Secretary, Ministry of Finance & Secretary to the Treasury and the Attorney General, who had all been Respondents in the said Application.

"Consequently, in July 2011 a scandal was reported in the media on the import of low quality Petrol, with the CPC reported to having paid compensation to consumers affected by the use thereof. At present the Petroleum Minister has acted to replace the CPC Board for a controversy vis-à-vis the import of low quality Diesel, which has affected motor vehicles, buses and trains," said Ameresekere.