SLIC Case-Submissions on behalf of Petitioner – Vasudeva Nanayakkara
September 3, 2008 at 2:58 pm · Posted Public Articles
IN THE SUPREME COURT OF THE
DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
In the matter of an Application under Article 126 of the Constitution of the Democratic Socialist Republic of Sri Lanka
Vasudeva Nanayakkara
Attorney-at-Law
Advisor to His Excellency the President
Secretary, The Democratic Left Front
49 1/1, Vinayalankara Mawatha
Colombo 10.
Petitioner
SC FR Application No. 158/2007 Vs
1. K.N. Choksy M.P.
President’s Counsel
Former Minister of Finance
23/3, Sir Ernst De Silva Mawatha
Colombo 7.
2. Milinda Moragoda M.P.
Former Minister of Economic Reform
3/2, Allen Methiniyarama Road
Colombo 5.
3. Sripathy Sooriyarachchi M.P.
Attorney-at-Law
Former Minister, Public Enterprise Reforms
22, Niwasa Mawatha
Rilaulla
Kadana.
4. Charitha Ratwatte
Former Secretary to the Treasury
16, Jawatte Road
Colombo 5.
5. Faiz Mohideen
Former Deputy Secretary to the Treasury
5/2, Liberty Plaza Flats
250, R.A. De Mel Mawatha
Colombo 3.
6. N. Pathmanathan
Former Deputy Secretary to the Treasury
16, Gregory’s Place
Dehiwela.
7. P.B. Jayasundera
Secretary to the Treasury / Former Chairman,
Public Enterprises Reform Commission (PERC)
The Secretariat
Colombo 1.
8. Chrisantha Perera
Former Chairman, PERC / Sri Lanka Insurance Corporation Ltd. (SLIC)
40/10, Lake Garden, Off Lake Drive
Rajagiriya.
9. M. Kandasamy
Member of the Steering Committee / General Manager SLIC
“Rakshana Mandiraya”
21, Vauxhall Street
Colombo 2.
10. V. Kanagasabapathy
Chartered Accountant
Member of the Steering Committee /
Former Member of PERC
79/3, W.A Silva Mawatha
Colombo 6.
11. Dayanath Jayasuriya
Member Steering Committee /
Former Director General SEC / Member PERC
Apt. 3/1, Seagull Appartments
12, Melbourne Avenue
Colombo 4.
12. Rani Jayamaha
Member Steering Committee / Deputy Governor Central Bank
30, Janadhipathi Mawatha
Colombo 1.
13. Nihal Sri Ameresekere
Chartered Accountant
Former Chairman, PERC
167/4, Vipulasena Mawatha
Colombo 10.
14. M.D. Bandusena
Chairman, PERC
11-01, West Tower, World Trade Center
Colombo 1.
15. Shamalee Gunawardene
Attorney-at-Law
Former Director Legal, PERC
500/111, Thimbirigasyaya Road
Colombo 5.
16. Aneela De Soysa
Chartered Accountant
Former Director PERC / Later Partner PricewaterhouseCoopers, Sri Lanka
207/22, Dharmapala Mawatha
Colombo 7.
17. PT PricewaterhouseCoopers FAS
Gedung PricewaterhouseCoopers
J1 H.R., Rasuna Said, Kav C – 3
Jakarta 12920
Indonesia.
18. Roger De Montfort
Chartered Accountant
Former Attorney – In Fact
PT PricewaterhouseCoopers FAS
Gedung PricewaterhouseCoopers
J1 H.R., Rasunasaid, Kav C – 3
Jakarta 12920
Indonesia.
19. Devasiri Rodrigo
Chartered Accountant
Former Senior Partner
PricewaterhouseCoopers
42/8, Rosmead Place
Colombo 7.
20. Y. Kanagasabai
Chartered Accountant
Senior Partner
PricewaterhouseCoopers
100, Braybrooke Place
Colombo 2.
21. S. Manoharan
Chartered Accountant
Partner
PricewaterhouseCoopers
100, Braybrooke Place
Colombo 2.
22. Asite Talwatte
Chartered Accountant
Senior Partner
Ernst & Young
201, De Saram Place
Colombo 10.
23. Ruwan Fernando
Chartered Accountant
Partner
Ernst & Young
201, De Saram Place
Colombo 10.
24. Distilleries Company of Sri Lanka Ltd.
110, Norris Canal Road
Colombo 10.
25. Aitken Spence & Company Ltd.
305, Vauxhall Towers
Vauxhall Street
Colombo 2.
26. Aitken Spence Insurance (Pvt) Ltd.
305, Vauxhall Towers
Vauxhall Street
Colombo 2.
27. Sri Lanka Insurance Corporation Ltd.
“Rakshana Mandiraya”
21, Vauxhall Street
Colombo 2.
28. Milford Holdings (Pvt) Ltd.
110, Norris Canal Road
Colombo 10.
29. Greenfield Pacific EM Holdings Ltd.
C/o Asia Box Consultancy Services (Pte) Ltd.,
61, Club Street
Singapore 069436.
30. Channa De Silva
Director General
Securities & Exchange Commission of Sri Lanka (SEC)
Level 11-01, East Tower
World Trade Center
Echelon Square
Colombo 1.
31. President
Institute of Chartered Accountants of Sri Lanka
30 A, Malalasekera Mawatha
Colombo 7.
32. F.H. Puvimanasinghe
Chartered Accountant
Senior Partner,
F.H. Puvimanasinghe & Co.
126-2/1, 2nd Floor, YM.B.A. Building
Sir Baron Jayatilleke Mawatha
Colombo 1.
33. Wijeyadasa Rajapakshe M.P.
President’s Counsel
Chairman, Parliamentary Committee on Public Enterprises (COPE)
17, Wijeba Mawatha
Off Nawala Road
Nugegoda.
34. Inspector General of Police
Police Headquarters
Colombo 1.
35. Deputy Inspector General of Police
Criminal Investigation Department
4th Floor, New Secretariat Building
Colombo 1.
36. Chairman
Commission to Investigate Allegations of Bribery or Corruption
36, Malalasekera Mawatha
Colombo 7.
37. Hon. Attorney General
Attorney General’s Department
Colombo 12.
38. D.H.S. Jayawardhene
C/o Milford Holdings (Pvt) Ltd.
110, Norris Canal Road
Colombo 10.
Respondents
TO: HIS LORDSHIP THE CHIEF JUSTICE AND THEIR LORDSHIPS AND LADYSHIPS THE OTHER HONOURABLE JUSTICES OF THE SUPREME COURT OF THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA
WRITTEN SUBMISSIONS OF THE PETITIONER
1. The Petitioner is an Attorney-at-Law and the Secretary, The Democratic Left Front, Advisor to His Excellency the President, Leader of the Opposition, Colombo Municipal Council and former Member of Parliament and filed this Application in the national and public interest representing the rights of the citizens of the country, to enforce the right to equality before the law, which has been denied by unjust, wrongful, unlawful, unreasonable, arbitrary, capricious and mala-fide administrative and executive actions.
2. The Petitioner invoked the jurisdiction of Your Lordships’ Court in terms of Article 126, read with Articles 3, 4 and 17 of the Constitution, to examine the transaction in issue and to make requisite Orders, upholding the Directive Principles of State Policy and Fundamental Duties enshrined in Chapter VI of the Constitution, to protect and safeguard public property that belongs to the People, and which property is held in trust for the People, and any brazen abuse of power to wrongfully alienate or misappropriate the benefit of such public resources, conferring undue and unjust benefit or gain on a privileged few, to the loss and detriment of the People, is an infringement of the fundamental right to equality before the law guaranteed by Articles 12 (1) and 12 (2) of the Constitution, and any such act, if unchecked, uncorrected and not denounced, would render such Constitutional guarantee of equality before the law meaningless.
3. Your Lordships’ Court, in S.C (F.R.) Application No. 503/2005, upheld that good governance and transparency characterise Democracy and the Rule of Law, and where an infringement of equality before the law is alleged by the wrongful and unlawful grant of facilities and benefits at the highest level of the executive, strict rules of pleadings cannot be insisted upon; also citing also “Sed quis custodiet ipsos Custodes ?” i.e. “but who is to guard the guards themselves ?”; and that Cabinet of Ministers were the custodians of public property and public funds, and such property and funds will have to be dealt with according to law for the benefit of the People, and that therefore the law itself is the instrumentality through which custodians are guarded, which is the basic postulate of the Rule of Law.
4. a) The whole process of the privatisation of the SLIC was initiated by the 2nd Respondent by Letter dated 21.1.2002 P1 appointing a Steering Committee.
b) The said Steering Committee, without Cabinet Approval, solicited offers and appointed PWC Indonesia as the Consultants for the Government of Sri Lanka, to provide Investment Banking & Legal Advisory Services at a Fee of around US $ 1.6 million for the Sale of the 90% Shares of SLIC P2.
c) PWC, Indonesia acted through its Attorney, the 18th Respondent, and at all times acted in concert with their local counterparts PWC, Sri Lanka.
d) 16th Respondent, as a Director of PERC and Secretary, Steering Committee, having been involved in the process of privatisation of SLIC, just about one month prior to the execution of the sale Agreement on 11.4.2003, joined PWC, Sri Lanka, as a Partner.
5. a) Having appointed the Steering Committee, 2nd Respondent forwarded a Cabinet Memorandum dated 28.2.2002 P3 and sought Cabinet Approvals to initiate action on the Sale of 90% Shares of SLIC by appointing a Technical Evaluation Committee (TEC) and a Tender Board.
b) The Cabinet on 18.4.2002 P4 approved the above Cabinet Memorandum, subject to a Tender Board being appointed by the Cabinet, itself, and the 2nd Respondent was required to report to the Cabinet on the feasibility of the sale of the ownership of SLIC, retaining a minority Shareholding for the Government.
c) Though Cabinet had not granted approval for the appointment of a Tender Board, disregarding the Cabinet Decision, 6th Respondent by Letter dated 7.8.2002 at the request by Letter dated 29.7.2002, of the 7th Respondent, as then Chairman PERC had appointed a Tender Board, appointing, himself, as its Chairman – P5(a) and 5(b).
d) 6th Respondent could not have so acted in breach of the Cabinet Decision, without the knowledge and approval of the 1st and 4th Respondents, who would have received the Cabinet Decision, where the Cabinet decided to appoint a Tender Board by itself, expressly refusing approval for the Secretary to the Treasury to appoint a Tender Board.
e) In terms of the PERC Act No. 1 of 1996, the 4th Respondent, as the Secretary to the Treasury, was an ex-officio Member of PERC.
f) 6th Respondent by Letter dated 7.8.2002 had appointed a TEC, to handle the evaluation process, drawing specific attention to the Government Tender Procedure Guidelines and Public Finance Circulars.
6. a) Expressions of interests for the Sale of 90% Shares of SLIC were invited from about mid July 2002 on behalf of the Government by the Government’s Consultants PWC, both Indonesia and Sri Lanka, giving the contact names of the 18th Respondent (PWC Indonesia) and 21st Respondent (PWC Sri Lanka).
b) By 23.8.2002, 17 parties had expressed interest in the purchase of 90% Shares of SLIC.
c) On 25.3.2003 the TEC, after an evaluation process, had recommended the 90% Sale of SLIC to a consortium comprising 24th, 25th and 26th Respondents
d) 24th and 25th Respondents were well known, financially strong, listed public companies, whilst the 26th Respondent was to work with Technical Partner, ING Institutional & Government Advisory Services BV, Holland.
e) TEC evaluation has been on ‘ranking’ on a ‘points awarding system’ for factors – ‘operational experience in life and general insurance industry’, ‘financial capacity to operate SLIC’ and ‘business plan to develop future business’ – P7.
7. a) The ‘indicative valuation’ of SLIC by PWC had taken into reckoning both the General Insurance Fund and Life Insurance Fund, and had indicated a value in the range of Rs. 5,102 million to Rs. 5,377 million.
b) The ‘indicative valuation’ had been on the basis of a ‘Net Present Value of a Discounted Cash-flow’. The Net Profits of SLIC for the year ended 31.12.2001 had been around Rs.1,162 million. A ‘price earnings multiple’ of around ‘10’ had been considered, but on an unexplained adjusted annual profit of SLIC of around only Rs.420 million – P8.
c) The ‘net assets value’ of SLIC has been reckoned on historical book values, which disclose the Land, Buildings, Plant and Equipment only at Rs.275 million, as per the SLIC Accounts.
8. On the same day as the TEC Report on 25.3.2003, the Tender Board constituted in violation of the Cabinet Decision, had approved the TEC recommendation - P9.
9. a) 2nd Respondent had forwarded a Cabinet Memorandum dated 27.3.2003, P10, disclosing that 5 parties had been short-listed, recommending the Sale of 90% Shares of SLIC, at a consideration of Rs.6050 million, to the Consortium comprising;
- Distilleries Company of Sri Lanka Ltd., - (24th Respondent)
- Aitken Spence Co. Ltd., - (25th Respondent)
- Aitken Spence Insurance (Pvt) Ltd., - (26th Respondent)
with Technical Partner, ING Institutional &
Government Advisory Services BV (Holland)
b) Cabinet Approval had been granted for the above on 2.4.2003 – P11.
10. a) In blatant violation of the Cabinet Decision, an Agreement P13 structured by PWC and finalised by the 15th Respondent, then Director Legal, PERC, who has also signed as a Witness, for the Sale of 90% Shares of SLIC had been signed on 11.4.2003 on behalf of the Government by the 5th Respondent, as Acting Secretary to the Treasury, not with the above selected and Cabinet approved parties, but with the following new parties, as Purchasers;
- Milford Holdings (Pvt) Ltd., incorporated on 31.3.2003 (28th Respondent)
- Greenfield Pacific EM Holdings Ltd., incorporated in Gibraltar on 28.3.2003. (29th Respondent)
b) Both companies had not been even in existence on the date of the Cabinet Memorandum of 27.3.2003.
c) Distilleries Company of Sri Lanka Ltd., (24th Respondent), Aitken Spence & Co. Ltd., (25th Respondent) and Aitken Spence Insurance (Pvt) Ltd., (26th Respondent) have signed the said Agreement of 11.4.2003, as Guarantors, guaranteeing the payment of the purchase consideration to the Government by the aforesaid Purchasers.
d) D.H.S. Jayawardene (38th Respondent) has signed on behalf of the 2 Purchasers and the 3 Guarantors.
e) P.B. Jayasundera (7th Respondent), who had been Chairman PERC since January 1997, had curiously resigned in or about January 2003 and had continued thereafter as Senior Advisor PERC, in effect de-facto Chairman, whilst G. Hewagama had been Chairman PERC from January 2003.
f) Chrishantha Perera (8th Respondent), Chairman SLIC had been appointed Chairman PERC, after the aforesaid Agreement for the Sale of 90% Shares of SLIC had been signed on 11.4.2003, whilst P.B. Jayasundera (7th Respondent) had continued to be Senior Advisor, PERC until February 2004.
g) Chrishantha Perera (8th Respondent) is now a Director of DFCC, as a nominee of the said D.H.S. Jayawardene / his Companies.
11. a) The two private Companies, Milford Holdings (Pvt) Ltd., (28th Respondent) and Greenfield Pacific EM Holdings Ltd., Gibraltar, (29th Respondent) had never expressed any interest, and therefore had not been evaluated by the TEC.
b) Greenfield Pacific EM Holdings Ltd., Gibraltar (29th Respondent), whose effective owner is Societes General, a Bank whose main area of business activity is in ‘Trust Structures’ has chosen not to disclose to Court who the actual beneficial owners of the money that was invested, raising serious questions as to whether this was also a money laundering exercise..
c) ‘Non-evaluated’ and ‘non-existent parties’, could not be substituted, in place of the duly ‘evaluated and selected parties’, as per Government Tender Procedure Guidelines and Public Finance Circulars, to which the 6th Respondent had specifically drawn attention to by his Letter dated 7.8.2002 [P5(a)] in appointing the Tender Board and TEC.
d) It is grossly in contempt of the norms of government tender evaluation process and a blatant violation of Government tender procedure, to have allowed an ‘unevaluated party’, who had not even expressed interest, to be substituted in place of an ‘evaluated and selected party’, who had been selected and approved by the Cabinet.
e) This is an infringement of the fundamental rights guaranteed under the Constitution of the other parties, who had been evaluated ‘on ranking’ on a ‘point awarding system’ for factors – ‘operational experience in life and general insurance industry’, ‘financial capacity to operate SLIC’ and ‘business plan to develop future business’.
f) Such dubious and surreptitious substitution had made a ‘mockery’ of the entire Government ‘tender evaluation process’, which had been carried out on specific criteria on a ranking system by the TEC.
g) Also, Distilleries Company of Sri Lanka Ltd., (24th Respondent) and Aitken Spence & Co. Ltd. (25th Respondent) both being financially strong listed public companies, had been selected after the above evaluation process.
h) These two listed public companies’ rights and entitlements to purchase 90% Shares of SLIC, as had been selected, had been misappropriated by the said two private Companies, owned and/or controlled by one of the Shareholders of the said two listed public Companies, thereby defrauding the said two listed public Companies and their Shareholders.
i) 30th Respondent, as the Director General, SEC, who is statutorily mandated to protect the interests of public investors, could not have turned a ‘blind eye’ to the investigations before COPE into the transaction in issue carried out by PERC, of which he is an ex-officio Member in terms of PERC Act No. 1 of 1996.
12. a) Audited Accounts of SLIC for the Year Ended 31.12.2001 had been certified by its Auditors, Ernst & Young on 11.6.2002 - P14.
b) Though the Audited Accounts of SLIC as at 31.12.2001 were available on 11.6.2002, the Steering Committee for some ‘mysterious’ reason had required Ernst & Young, Auditors of SLIC, to prepare SLIC Accounts as at 31.3.2002 (to a date just 3 Months after 31.12.2001), which Accounts had been signed by Ernst & Young on 9.8.2002 as un-audited Accounts, containing several comments, expressly stating – “We have not performed an audit, and accordingly do not express an opinion”- P15.
c) Un-audited Accounts of SLIC as at 31.3.2002 dated 9.8.2002 had been held out by Ernst & Young to be Accounts of SLIC, re-presented according to International Accounting Standards.
d) As per Minutes of the Steering Committee, Ernst & Young had sent a proposal to re-state the SLIC Financial Statements, according to International Accounting Standards, and have quoted a fee of around US $ 81,000/- for an IAS Audit. (International Accounting Standards Audit)
e) The above position held out by Ernst & Young that the SLIC Accounts as at 31.3.2002 were in conformity with International Accounting Standards had not been questioned by the Government’s Consultants, PWC, who by their conduct had corroborated such position.
13. a) PWC, as Consultants to the Government, had rendered professional services to carry out the Sale of 90% Shares of SLIC, making necessary arrangements and structuring the Agreement, under the supervision of the Steering Committee in terms of their Contract with the Government (P2).
b) Offers for the Sale of 90% Shares of SLIC had been received, inter-alia, on the basis of the un-audited SLIC Accounts as at 31.3.2002 of Ernst & Young dated 9.8.2002, whilr the audited Accounts of SLIC as at 31.12.2001 dated 11.6.2002 had been available.
c) Whilst the audited Accounts of SLIC as at 31.12.2001, in accordance with accounting policy had shown the Current Assets and Current Liabilities separately on the Balance Sheet, the un-audited Accounts of SLIC as at 31.3.2002 had not shown the Current Assets and Current Liabilities separately on the Balance Sheet or even by a Note thereto, deviating from the accounting policy, which had been followed by SLIC.
d) No explanation had been given on the SLIC un-audited Accounts as at 31.3.2002 of Ernst & Young dated 9.8.2002, as to why there had been a change in the above accounting policy. What had been held out is that the SLIC Accounts as at 31.3.2002 had been re-stated in accordance with International Accounting Standards.
e) It has subsequently been revealed to COPE by the 13th Respondent, that the International Accounting Standards Board had confirmed that Current Assets and Current Liabilities should be shown on the Balance Sheet or disclosed by way of a Note thereto in accordance with International Accounting Standards.
14. a) Agreement P13 dated 11.4.2003 for the Sale of 90% Shares of SLIC structured by PWC had been on the basis of the SLIC un-audited Accounts as at 31.3.2002 dated 9.8.2002.
b) Hence, Clause 4 of the Agreement had provided for an adjustment to the aforesaid purchase consideration of Rs.6050 million for the 90% Shares of SLIC by the increase or decrease in the Net Working Capital between 31.3.2002 and the date of Sale 11.4.2003; Net Working Capital had been defined in Agreement dated 11.4.2003 to be – ‘the Current Assets less Current Liabilities’.
c) For the computation of the aforesaid adjustment to the purchase consideration, in terms of the Agreement P13 structured by PWC, requiring such adjustment to be made to the purchase consideration, the Current Assets and Current Liabilities of SLIC should have been shown on the Balance Sheet as at 31.3.2002 signed by Ernst & Young, on the basis of which 90% Shares of SLIC had been sold.
d) Audited Accounts of SLIC for the year ended 31.12.2002 had been certified by Ernst & Young on 28.11.2003, after the Purchasers had taken over from 11.4.2003 the management of SLIC, once again showing the Current Assets and Current Liabilities of SLIC separately on the Balance Sheet, in conformity with the accounting policy followed by SLIC.
e) The SLIC Balance Sheet as at 31.12.2002 P17, which had shown the comparative figures as at 31.12.2001, had revealed that over Rs.3000 million of Fixed Assets of SLIC had been re-stated as Current Assets retrospectively as at 31.12.2001, without any explanation given therefor; whilst such questionable re-statement had an adverse impact on the New Working Capital increase, for the adjustment to be made to the purchase consideration to be paid to the Government.
f) PERC by Letter dated 9.10.2002 had required SLIC not to commit any material and extra-ordinary transactions, except its ordinarily business, until the finalisation of the re-structuring process underway.
g) PWC in structuring the Agreement for the Sale of 90% Shares of SLIC, as aforesaid, instead of taking into reckoning the increase or decrease of the ‘total Net Assets’, intriguingly had provided for only the increase or decrease in the ‘Net Current Assets’, which is the Net Working Capital.
h) The total investment portfolio under the management and control of SLIC as at 31.12.2002 had been stated to be Rs. 22,616.7 million, as per the SLIC Audited Balance Sheet as at 31.12.2002.
15. a) Ernst & Young, who were Auditors of SLIC, had been required to prepare the Accounts of SLIC as at date of Sale 11.4.2003, and to afford the computation of the increase or decrease in the Net Working Capital of SLIC between the said two dates 31.3.2002 and 11.4.2003 to make the requisite adjustment to the purchase consideration.
b) Ernst & Young forwarded the SLIC Accounts as at 11.4.2003 signed on 26.3.2004, again as un-audited Accounts expressly stating – “We have not performed an audit, and accordingly do not express an opinion”.
c) As per Clause 4 of the Agreement dated 11.4.2003 the above computation to make adjustment to the purchase consideration had to be completed, not later than 60 days from 11.4.2003, i.e., by 11.6.2003.
d) Ernst & Young having undertaken to forward the foregoing and having requested and obtained 16 extensions, (P19) directly by themselves and/or through SLIC, from June 2003 to October 2004, to carry out the above, and having intimated that they had nearly completed the same, however finally had questionably reneged from discharging their duty and obligation. PWC as Government’s Consultants had been aware of this position.
e) A Government transaction of such large magnitude could never be concluded on the basis of un-audited Accounts.
16. a) In December 2005, 3rd Respondent as Minister of Public Enterprise Reform in charge of PERC, had forwarded a Cabinet Memorandum (P23) on the transaction in issue, setting out the conduct of Ernst & Young and PWC, recommending administrative measures to be taken until the matter is resolved, and legal action against the relevant parties to be expedited by the 37th Respondent, who had already forwarded Letters dated 9.2.2005 and 11.4.2005 to both Ernst & Young and PWC - P21.
b) No action appears to have been taken on the 3rd Respondent’s Cabinet Memorandum of December 2005.
17. Various professionals have acted with very serious conflicts of interest in this transaction as shown below:
a) 19th Respondent, Senior Partner of PWC had been a Member, Steering Committee, which had selected PWC as Consultants to the Government, and had continued thereafter as a Member, Steering Committee, supervising the work of PWC and approving payments to them - P24.
b) 16th Respondent had been a Director, PERC and Secretary, Steering Committee, handling this transaction, as the ‘Transaction Manager’ and had joined PWC as a Partner in March 2003, just prior to the execution on 11.4.2003 of the Agreement to sell 90% Shares of SLIC.
c) Ernst & Young, had been Auditors of SLIC, when the Government was 100% owner, and had continued to be Auditors of SLIC after the Sale of 90% Shares of SLIC to the Purchasers, and thereby had failed and neglected to discharge their duty and responsibility to the Government.
d) 7th Respondent, who had handled this transaction as Chairman / Senior Advisor, PERC, and thereafter as Secretary to the Treasury and ex-officio Member of PERC had been a Senior Policy Advisor to Ernst & Young, and had failed and neglected to take action to protect the interests of the Government.
18. It is respectfully submitted that:
a) The impugned Agreement P13 is a nullity for the reason that the parties with whom it was entered into for and on behalf of the GOSL, are not the parties to whom the Cabinet approved the sale of 90% shares in SLIC.
b) The process employed for the preparation of the ‘indicative valuation’ was totally flawed inasmuch as it did not have any prior authorisation from the Cabinet and was seriously riddled with conflicts of interest as has been demonstrated.
c) Admittedly the ‘indicative valuation’ does not include the value of land and buildings. The valuation said to have been made for same by various persons is obviously a sham prepared for the purpose of these proceedings. Even if one goes by that value, together with PWC’s indicative value of the business, the value of the shares would have been at least Rs.7,500 million. The cabinet has been deliberately misled by stating that the offer of Rs.6,050 million was far in excess of the indicative value.
d) There is no explanation as to how only a figure of Rs.420 million was taken as profit for the calculation of the indicative valuation, when for that very year, the actual profit was at least 3 times that amount.
e) The amateurish actions of the professionals in trying to ‘fudge’ the accounts by preparing two sets of ‘unaudited’ accounts for the crucial two dates, without showing the fixed and current assets and liabilities separately, when that very figure was the one that was necessary for this very purpose, is appalling to say the least!
f) Since the ‘price adjustment’ envisaged in P13 has not taken place, and indeed unable to take place, pleas of prescription of time by various Respondents become irrelevant. The transaction is still open.
g) the conduct and actions of some of the Respondents, in the perpetration of the transaction in issue are executive and administrative actions within the meaning of Article 17, read with Article 126 of the Constitution, which said acts have infringed and continue to infringe the fundamental rights of the Petitioner and the citizens of the country, guaranteed under Articles 12 (1) and 12(2) of the Constitution.
h) the 10th , 13th, 16th ,19th, 20th, 21st, 22nd, 23rd, 31st and 32nd Respondents are Members of the Institute of Chartered Accountants of Sri Lanka, a statutory body established by Act No. 23 of 1959, as amended, and to which said statutory body contributions have been made from the Consolidated Fund. The said Respondents hold Membership of said statutory body and their conduct and actions are governed and regulated by the provisions of said Act and the Regulations gazetted thereunder.
i) from the foregoing facts, it is abundantly clear that the Government had been misled and had been taken for a ride, with deliberate intentional pre-designed misleading misrepresentations, resulting in the frustration of the transaction in issue, and in addition, causing grave loss and damage and mischief to the Government, that is the public, wrongfully and unjustly causing the alienation / alienating and/or unjustly causing misappropriation / misappropriating the property of the public held in trust, with the deliberate intent of conferring unjust, wrongful and unlawful enormous benefit on a privileged few, in blatant violation of the constitutional safeguards.
j) the transaction in issue has caused enormous loss and detriment to the Petitioner and the citizens of the country, and continues to cause enormous loss and detriment, conferring unjust, wrongful and unlawful benefit and enrichment to a privileged few, impoverishing the millions of the poor of the country.
k) This transaction discloses an obnoxious, wrongful and unlawful action, causing enormous loss and detriment to the Government and the public, including the Petitioner, wrongfully and unlawfully brazenly conferring unjust enrichment on a privileged few, violating the Rule of Law, with misuse and abuse of power in breach of the trust of the People.
19. In these circumstances, it is submitted respectfully that Your Lordships’ Court will exercise the just and equitable jurisdiction vested in Your Lordships and grant the reliefs prayed for in the Petition.
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