Features
SC judgment on MR, GR, BR, PB and Cabraal
By C. A. Chandraprema
The judgement delivered by a divided five-member bench of the Supreme Court with regard to two fundamental rights cases numbered 195/2022 and 212/2022 filed by several individuals including Mahim Mendis, Chandra Jayaratne, Julian Bolling and the NGO Transparency International has stirred up a political storm. The majority judgment was delivered by Chief Justice Jayantha Jayasuriya, and Justices Buwaneka Aluwihare, Vijith Malalgoda, and Murdu Fernando while Justice Priyantha Jayawardene dissented.
Some of the headlines by which the local English language media carried on the judgement were as follows. I have left out the names of the media outlets concerned.
“Supreme Court finds Rajapaksa brothers guilty over economic crisis”
“Gotabaya Mahinda Basil & others responsible for economic crisis – SC rules”
“Econ. crisis perpetrators: SC majority finds Gota, MR, Basil et al. responsible”
“Supreme Court finds Rajapaksa brothers responsible for economic crisis”
Of all the English language news outlets that I checked, only Reuters got the nuances of the SC judgement right. The Reuters headline said “Sri Lanka’s top court says ex-president among those who contributed to economic crisis”. Even in the body of the Reuters news item on the judgement, they have been careful in reporting on what the petitioners claimed and what the Supreme Court said. However due to the manner in which the majority of the media outlets reported on the judgement, politically interested parties have gone overboard in paroxysms of hatred and triumph. In the aftemath of the SC judgement, there have been calls for the deprivation of civic rights of those named in the judgement, there have been calls to claim compensation from the Rajapaksa brothers and even calls for the dissolution of the Sri Lanka Podujana Peramuna (SLPP).
It is quite clear that those who have been making such calls have not read the 119-page-long majority judgement or the 127-page-long dissenting judgement pertaining to this case. The majority judgement never used the word ‘responsible’. What it stated was that certain named individuals namely, Mahinda Rajapaksa, Basil Rajapaksa, Nivard Cabraal, W. D. Lakshman, S. R. Attygalle, Samantha Kumarasinghe, Gotabaya Rajapaksa, P. B. Jayasundra and the Monetary Board collectively had by their “actions, omissions, decisions and conduct hereinbefore identified to have demonstrably contributed to the economic crisis …”
Scope of judgment
There is a significant difference between saying that someone is ‘responsible’ for a certain situation and saying that someone has ‘demonstrably contributed’ towards a situation. It is obviously this nuance that motivated the majority of the bench to state, “We are of the view that it would not be appropriate to order the respondents to pay compensation to the petitioners and as such we are not inclined to order compensation. We order however that each petitioner in both applications would be entitled to costs in sum of rupees 150,000.00 each.” The parameters within which the majority judgment had been given were stated as follows (quoted verbatim):
· “When we considered these two applications, the main focus was on the economic situation of the country between November 2019 and April 2022”.
· “Many of the respondents argued that the root causes for this debacle spread well beyond this time period and therefore no responsibility could be attributed to these respondents in the manner alleged by the petitioners. They claimed that heavy borrowings of previous Governments and the mismanagement of such funds had a direct impact on the debt sustainability of the country. While we take note of this argument, in considering the responsibility of the respondents, our attention was drawn to the issue as to whether the conduct of the respondents during the relevant period directly contributed to the economic crisis”.
· “In deciding this issue, we are of the view that the respondents ought to have known the factual situation that prevailed when they assumed public office and they should have fashioned their acts and efforts to ensure that the situation is not further aggravated but resolved”.
· “It is common ground that the country’s economy deteriorated not overnight but over a period of time under consideration in the matters before us”.
The above-mentioned passages tell us something that we should not miss. Firstly, the majority of the bench agrees that the economy deteriorated not overnight but over a period of time. Secondly, that the respondents ought to have known the factual situation that prevailed when they assumed public office. Thirdly, the majority of the bench took note of the argument that the ‘root causes for this debacle spread well beyond’ the time period considered in the judgement and that ‘heavy borrowings of previous governments and the mismanagement of such funds had a direct impact on the debt sustainability of the country’. Fourthly, that with regard to this case, ‘the main focus was on the economic situation of the country between November 2019 and April 2022’.
Furthermore, the body of the written judgement shows that in arriving at its conclusion, the SC has taken into account three key issues – the tax reductions in November 2019, the delay in allowing the Rupee to depreciate and the delay in seeking IMF assistance. In a nutshell, what the judgement said about each of these issues is as follows:
Tax reductions
“In November 2019, the new government of President Gotabaya Rajapaksa had reduced taxes. The Inland Revenue Department had estimated the potential loss from tax income resulting from the proposed tax for the year 2020 amounts to Rs. 493 billion. The loss of government revenue due to the measures referred to resulted in an unmanageable budget deficit …. Furthermore, a major adverse consequence that resulted directly from the tax revisions was lowering of the country’s credit rating by the international agencies ….The main impact of such downgrading was the loss of access to capital markets at reasonable costs which resulted in drying up foreign exchange inflows from such sources … the Gross Official Reserves which stood at USD 7,780.08 million as at 31st October 2019 had decreased to USD 5,555 million by November 2020. It had further depleted to USD 2,362 million in January 2022. It is apparent that the continued inaction to reintroduce and/or to raise taxes and regain the government revenue that was lost, brought about an adverse impact on the economy….”
Seeking assistance from IMF
“This was not a straightforward case of assessing the suitability of seeking IMF assistance under normal circumstances but the call to seek IMF assistance was critically relevant given the unique circumstances our economy was placed in. The depleted official reserves; the need to secure foreign exchange on an urgent basis; the reluctance of the other agencies to extend support without an IMF programme were critical factors in deciding whether seeking assistance was in the best interest of the country at the relevant time …. According to the material available a decision to seek assistance from the IMF was ultimately taken by the President on 16th March 2022.”
“Comments and the conduct of the officials of the Central Bank over this period clearly point to the direction that the need to seek assistance from IMF did exist over a period of time and any prudent person who did not act arbitrarily would have foreseen the serious repercussions in the failure to act swiftly to remedy the situation …. Deputy Governor K. M. M. Siriwardane in his comments says that “the little experience I had in working with macroeconomic policy making enabled me to foresee well in advance the economic crisis that the country is experiencing at present. This is the exact reason for me to recommend and emphasize to the MB to approach IMF… The pain to the economy and the people of Sri Lanka would have been less if this decision was taken at least one year ago ….” All factors referred to above clearly establishes that the relevant state organs/officials demonstrated reluctance to reach out to the IMF in the face of the critical situation the country’s economy was facing in spite of the fact there was no other viable alternative.”
Depreciating rupee
“The Monetary Board as well as the Minister had failed to take correct decisions at the relevant time to float the rupee and thereby caused a loss to the Government ….”
“… During the period 2019 and 2021 (especially after March 2020) Sri Lankan economy experienced a drop in foreign remittances by Sri Lankan workers abroad due to the COVID-19 pandemic. There was a significant drop in Foreign Direct Investment and the inflow of foreign earnings from export markets too. As revealed before us, it appears that although the need was to retain the meagre remittances received and create a conducive environment to enhance the inflow, the Finance Ministry and the Central Bank worked towards maintaining the exchange rate at around Rs. 200…”
“… the exchange rate is expected to be an automatic adjuster under the flexible exchange rate regime, but if the exchange rate is to be maintained at a stable rate, then a depletion of reserves would take place as foreign exchange will have to be pumped to the market to meet the demand.”
“… a significant increase in the use of informal methods in transferring money such as Hawala/ Undial by Sri Lankan workers abroad was observed mainly due to the high exchange rates offered in the “Gray market” compared to the exchange rate maintained by the Central Bank ….”
During this period (April 2021 to 7 March 2022) “the Central Bank had sold USD 1,773.8 million and purchased USD 746.2 million from the Domestic Exchange Market, making a net sale of USD 1,027.6 million. This outflow of USD had led to further depletion of the reserves”.
“… a series of discussions had been held with a view to permitting the exchange rate to be determined by market forces, supply and demand of USD, but we note with dismay that no positive steps were taken to implement a ‘moderate method’ to protect the reserves and stem the depletion when the need to do so was felt but waited till the 11th hour to take the decision to float the Sri Lanka Rupee …”
It is due to these three matters – the decision of the respondents to reduce the taxes, the delay in allowing the rupee to depreciate and the delay in seeking the assistance of the IMF that the majority of the bench held that the respondents had ‘demonstrably contributed’ to the economic crisis.
Tomorrow: The dissenting
judgment
by Dr Gotabhya Ranasinghe
Senior Consultant Cardiologist
National Hospital Sri Lanka
When we sought a meeting with Hon Dr. Ramesh Pathirana, Minister of Health, he graciously cleared his busy schedule to accommodate us. Renowned for his attentive listening and deep understanding, Minister Pathirana is dedicated to advancing the health sector. His openness and transparency exemplify the qualities of an exemplary politician and minister.
Dr. Palitha Mahipala, the current Health Secretary, demonstrates both commendable enthusiasm and unwavering support. This combination of attributes makes him a highly compatible colleague for the esteemed Minister of Health.
Our discussion centered on a project that has been in the works for the past 30 years, one that no other minister had managed to advance.
Minister Pathirana, however, recognized the project’s significance and its potential to revolutionize care for heart patients.
The project involves the construction of a state-of-the-art facility at the premises of the National Hospital Colombo. The project’s location within the premises of the National Hospital underscores its importance and relevance to the healthcare infrastructure of the nation.
This facility will include a cardiology building and a tertiary care center, equipped with the latest technology to handle and treat all types of heart-related conditions and surgeries.
Securing funding was a major milestone for this initiative. Minister Pathirana successfully obtained approval for a $40 billion loan from the Asian Development Bank. With the funding in place, the foundation stone is scheduled to be laid in September this year, and construction will begin in January 2025.
This project guarantees a consistent and uninterrupted supply of stents and related medications for heart patients. As a result, patients will have timely access to essential medical supplies during their treatment and recovery. By securing these critical resources, the project aims to enhance patient outcomes, minimize treatment delays, and maintain the highest standards of cardiac care.
Upon its fruition, this monumental building will serve as a beacon of hope and healing, symbolizing the unwavering dedication to improving patient outcomes and fostering a healthier society.We anticipate a future marked by significant progress and positive outcomes in Sri Lanka’s cardiovascular treatment landscape within the foreseeable timeframe.
by Fr. Emmanuel Fernando, OMI
Jesuit Fr. Aloysius Pieris (affectionately called Fr. Aloy) celebrated his 90th birthday on April 9, 2024 and I, as the editor of our Oblate Journal, THE MISSIONARY OBLATE had gone to press by that time. Immediately I decided to publish an article, appreciating the untiring selfless services he continues to offer for inter-Faith dialogue, the renewal of the Catholic Church, his concern for the poor and the suffering Sri Lankan masses and to me, the present writer.
It was in 1988, when I was appointed Director of the Oblate Scholastics at Ampitiya by the then Oblate Provincial Fr. Anselm Silva, that I came to know Fr. Aloy more closely. Knowing well his expertise in matters spiritual, theological, Indological and pastoral, and with the collaborative spirit of my companion-formators, our Oblate Scholastics were sent to Tulana, the Research and Encounter Centre, Kelaniya, of which he is the Founder-Director, for ‘exposure-programmes’ on matters spiritual, biblical, theological and pastoral. Some of these dimensions according to my view and that of my companion-formators, were not available at the National Seminary, Ampitiya.
Ever since that time, our Oblate formators/ accompaniers at the Oblate Scholasticate, Ampitiya , have continued to send our Oblate Scholastics to Tulana Centre for deepening their insights and convictions regarding matters needed to serve the people in today’s context. Fr. Aloy also had tried very enthusiastically with the Oblate team headed by Frs. Oswald Firth and Clement Waidyasekara to begin a Theologate, directed by the Religious Congregations in Sri Lanka, for the contextual formation/ accompaniment of their members. It should very well be a desired goal of the Leaders / Provincials of the Religious Congregations.
Besides being a formator/accompanier at the Oblate Scholasticate, I was entrusted also with the task of editing and publishing our Oblate journal, ‘The Missionary Oblate’. To maintain the quality of the journal I continue to depend on Fr. Aloy for his thought-provoking and stimulating articles on Biblical Spirituality, Biblical Theology and Ecclesiology. I am very grateful to him for his generous assistance. Of late, his writings on renewal of the Church, initiated by Pope St. John XX111 and continued by Pope Francis through the Synodal path, published in our Oblate journal, enable our readers to focus their attention also on the needed renewal in the Catholic Church in Sri Lanka. Fr. Aloy appreciated very much the Synodal path adopted by the Jesuit Pope Francis for the renewal of the Church, rooted very much on prayerful discernment. In my Religious and presbyteral life, Fr.Aloy continues to be my spiritual animator / guide and ongoing formator / acccompanier.
Fr. Aloysius Pieris, BA Hons (Lond), LPh (SHC, India), STL (PFT, Naples), PhD (SLU/VC), ThD (Tilburg), D.Ltt (KU), has been one of the eminent Asian theologians well recognized internationally and one who has lectured and held visiting chairs in many universities both in the West and in the East. Many members of Religious Congregations from Asian countries have benefited from his lectures and guidance in the East Asian Pastoral Institute (EAPI) in Manila, Philippines. He had been a Theologian consulted by the Federation of Asian Bishops’ Conferences for many years. During his professorship at the Gregorian University in Rome, he was called to be a member of a special group of advisers on other religions consulted by Pope Paul VI.
Fr. Aloy is the author of more than 30 books and well over 500 Research Papers. Some of his books and articles have been translated and published in several countries. Among those books, one can find the following: 1) The Genesis of an Asian Theology of Liberation (An Autobiographical Excursus on the Art of Theologising in Asia, 2) An Asian Theology of Liberation, 3) Providential Timeliness of Vatican 11 (a long-overdue halt to a scandalous millennium, 4) Give Vatican 11 a chance, 5) Leadership in the Church, 6) Relishing our faith in working for justice (Themes for study and discussion), 7) A Message meant mainly, not exclusively for Jesuits (Background information necessary for helping Francis renew the Church), 8) Lent in Lanka (Reflections and Resolutions, 9) Love meets wisdom (A Christian Experience of Buddhism, 10) Fire and Water 11) God’s Reign for God’s poor, 12) Our Unhiddden Agenda (How we Jesuits work, pray and form our men). He is also the Editor of two journals, Vagdevi, Journal of Religious Reflection and Dialogue, New Series.
Fr. Aloy has a BA in Pali and Sanskrit from the University of London and a Ph.D in Buddhist Philosophy from the University of Sri Lankan, Vidyodaya Campus. On Nov. 23, 2019, he was awarded the prestigious honorary Doctorate of Literature (D.Litt) by the Chancellor of the University of Kelaniya, the Most Venerable Welamitiyawe Dharmakirthi Sri Kusala Dhamma Thera.
Fr. Aloy continues to be a promoter of Gospel values and virtues. Justice as a constitutive dimension of love and social concern for the downtrodden masses are very much noted in his life and work. He had very much appreciated the commitment of the late Fr. Joseph (Joe) Fernando, the National Director of the Social and Economic Centre (SEDEC) for the poor.
In Sri Lanka, a few religious Congregations – the Good Shepherd Sisters, the Christian Brothers, the Marist Brothers and the Oblates – have invited him to animate their members especially during their Provincial Congresses, Chapters and International Conferences. The mainline Christian Churches also have sought his advice and followed his seminars. I, for one, regret very much, that the Sri Lankan authorities of the Catholic Church –today’s Hierarchy—- have not sought Fr.
Aloy’s expertise for the renewal of the Catholic Church in Sri Lanka and thus have not benefited from the immense store of wisdom and insight that he can offer to our local Church while the Sri Lankan bishops who governed the Catholic church in the immediate aftermath of the Second Vatican Council (Edmund Fernando OMI, Anthony de Saram, Leo Nanayakkara OSB, Frank Marcus Fernando, Paul Perera,) visited him and consulted him on many matters. Among the Tamil Bishops, Bishop Rayappu Joseph was keeping close contact with him and Bishop J. Deogupillai hosted him and his team visiting him after the horrible Black July massacre of Tamils.
Sri Lanka-Singapore Free Trade Agreement
By Gomi Senadhira
senadhiragomi@gmail.com
“You might tell fairy tales, but the progress of a country cannot be achieved through such narratives. A country cannot be developed by making false promises. The country moved backward because of the electoral promises made by political parties throughout time. We have witnessed that the ultimate result of this is the country becoming bankrupt. Unfortunately, many segments of the population have not come to realize this yet.” – President Ranil Wickremesinghe, 2024 Budget speech
Any Sri Lankan would agree with the above words of President Wickremesinghe on the false promises our politicians and officials make and the fairy tales they narrate which bankrupted this country. So, to understand this, let’s look at one such fairy tale with lots of false promises; Ranil Wickremesinghe’s greatest achievement in the area of international trade and investment promotion during the Yahapalana period, Sri Lanka-Singapore Free Trade Agreement (SLSFTA).
It is appropriate and timely to do it now as Finance Minister Wickremesinghe has just presented to parliament a bill on the National Policy on Economic Transformation which includes the establishment of an Office for International Trade and the Sri Lanka Institute of Economics and International Trade.
Was SLSFTA a “Cleverly negotiated Free Trade Agreement” as stated by the (former) Minister of Development Strategies and International Trade Malik Samarawickrama during the Parliamentary Debate on the SLSFTA in July 2018, or a colossal blunder covered up with lies, false promises, and fairy tales? After SLSFTA was signed there were a number of fairy tales published on this agreement by the Ministry of Development Strategies and International, Institute of Policy Studies, and others.
However, for this article, I would like to limit my comments to the speech by Minister Samarawickrama during the Parliamentary Debate, and the two most important areas in the agreement which were covered up with lies, fairy tales, and false promises, namely: revenue loss for Sri Lanka and Investment from Singapore. On the other important area, “Waste products dumping” I do not want to comment here as I have written extensively on the issue.
1. The revenue loss
During the Parliamentary Debate in July 2018, Minister Samarawickrama stated “…. let me reiterate that this FTA with Singapore has been very cleverly negotiated by us…. The liberalisation programme under this FTA has been carefully designed to have the least impact on domestic industry and revenue collection. We have included all revenue sensitive items in the negative list of items which will not be subject to removal of tariff. Therefore, 97.8% revenue from Customs duty is protected. Our tariff liberalisation will take place over a period of 12-15 years! In fact, the revenue earned through tariffs on goods imported from Singapore last year was Rs. 35 billion.
The revenue loss for over the next 15 years due to the FTA is only Rs. 733 million– which when annualised, on average, is just Rs. 51 million. That is just 0.14% per year! So anyone who claims the Singapore FTA causes revenue loss to the Government cannot do basic arithmetic! Mr. Speaker, in conclusion, I call on my fellow members of this House – don’t mislead the public with baseless criticism that is not grounded in facts. Don’t look at petty politics and use these issues for your own political survival.”
I was surprised to read the minister’s speech because an article published in January 2018 in “The Straits Times“, based on information released by the Singaporean Negotiators stated, “…. With the FTA, tariff savings for Singapore exports are estimated to hit $10 million annually“.
As the annual tariff savings (that is the revenue loss for Sri Lanka) calculated by the Singaporean Negotiators, Singaporean $ 10 million (Sri Lankan rupees 1,200 million in 2018) was way above the rupees’ 733 million revenue loss for 15 years estimated by the Sri Lankan negotiators, it was clear to any observer that one of the parties to the agreement had not done the basic arithmetic!
Six years later, according to a report published by “The Morning” newspaper, speaking at the Committee on Public Finance (COPF) on 7th May 2024, Mr Samarawickrama’s chief trade negotiator K.J. Weerasinghehad had admitted “…. that forecasted revenue loss for the Government of Sri Lanka through the Singapore FTA is Rs. 450 million in 2023 and Rs. 1.3 billion in 2024.”
If these numbers are correct, as tariff liberalisation under the SLSFTA has just started, we will pass Rs 2 billion very soon. Then, the question is how Sri Lanka’s trade negotiators made such a colossal blunder. Didn’t they do their basic arithmetic? If they didn’t know how to do basic arithmetic they should have at least done their basic readings. For example, the headline of the article published in The Straits Times in January 2018 was “Singapore, Sri Lanka sign FTA, annual savings of $10m expected”.
Anyway, as Sri Lanka’s chief negotiator reiterated at the COPF meeting that “…. since 99% of the tariffs in Singapore have zero rates of duty, Sri Lanka has agreed on 80% tariff liberalisation over a period of 15 years while expecting Singapore investments to address the imbalance in trade,” let’s turn towards investment.
Investment from Singapore
In July 2018, speaking during the Parliamentary Debate on the FTA this is what Minister Malik Samarawickrama stated on investment from Singapore, “Already, thanks to this FTA, in just the past two-and-a-half months since the agreement came into effect we have received a proposal from Singapore for investment amounting to $ 14.8 billion in an oil refinery for export of petroleum products. In addition, we have proposals for a steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million), sugar refinery ($ 200 million). This adds up to more than $ 16.05 billion in the pipeline on these projects alone.
And all of these projects will create thousands of more jobs for our people. In principle approval has already been granted by the BOI and the investors are awaiting the release of land the environmental approvals to commence the project.
I request the Opposition and those with vested interests to change their narrow-minded thinking and join us to develop our country. We must always look at what is best for the whole community, not just the few who may oppose. We owe it to our people to courageously take decisions that will change their lives for the better.”
According to the media report I quoted earlier, speaking at the Committee on Public Finance (COPF) Chief Negotiator Weerasinghe has admitted that Sri Lanka was not happy with overall Singapore investments that have come in the past few years in return for the trade liberalisation under the Singapore-Sri Lanka Free Trade Agreement. He has added that between 2021 and 2023 the total investment from Singapore had been around $162 million!
What happened to those projects worth $16 billion negotiated, thanks to the SLSFTA, in just the two-and-a-half months after the agreement came into effect and approved by the BOI? I do not know about the steel manufacturing plant for exports ($ 1 billion investment), flour milling plant ($ 50 million) and sugar refinery ($ 200 million).
However, story of the multibillion-dollar investment in the Petroleum Refinery unfolded in a manner that would qualify it as the best fairy tale with false promises presented by our politicians and the officials, prior to 2019 elections.
Though many Sri Lankans got to know, through the media which repeatedly highlighted a plethora of issues surrounding the project and the questionable credentials of the Singaporean investor, the construction work on the Mirrijiwela Oil Refinery along with the cement factory began on the24th of March 2019 with a bang and Minister Ranil Wickremesinghe and his ministers along with the foreign and local dignitaries laid the foundation stones.
That was few months before the 2019 Presidential elections. Inaugurating the construction work Prime Minister Ranil Wickremesinghe said the projects will create thousands of job opportunities in the area and surrounding districts.
The oil refinery, which was to be built over 200 acres of land, with the capacity to refine 200,000 barrels of crude oil per day, was to generate US$7 billion of exports and create 1,500 direct and 3,000 indirect jobs. The construction of the refinery was to be completed in 44 months. Four years later, in August 2023 the Cabinet of Ministers approved the proposal presented by President Ranil Wickremesinghe to cancel the agreement with the investors of the refinery as the project has not been implemented! Can they explain to the country how much money was wasted to produce that fairy tale?
It is obvious that the President, ministers, and officials had made huge blunders and had deliberately misled the public and the parliament on the revenue loss and potential investment from SLSFTA with fairy tales and false promises.
As the president himself said, a country cannot be developed by making false promises or with fairy tales and these false promises and fairy tales had bankrupted the country. “Unfortunately, many segments of the population have not come to realize this yet”.
(The writer, a specialist and an activist on trade and development issues . )
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