Attorney General’s letter to Parliament

By T. Rusiripala

A letter sent by the Attorney General to the Secretary General of the Parliament has been tabled in the house for the information of the MPs. The said letter is dated 7 February and it states that it is a reply to a letter from the Parliament dated 26 January. 

The COPE report was tabled in Parliament on 28 October 2016 and the Parliamentary debate on the issue was on 24 January. It can be presumed therefore that this letter from the Parliament to the AG has been sent in sequel to the matters arising out of that debate.

The letter is intended to provide information of the steps already taken by the AG’s Department on the bond issue. According to it, advice has been sought by the Prime Minister about the legality/validity of the bonds issued by the Central Bank of Sri Lanka since 2008, now in the hands of the third parties who purchased them for value. As this was not an issue arising out of the COPE recommendations this query would have been made separately on the instructions of the PM. 

The AG has confirmed the validity of all such bonds stating further that it is not affected in any way due to any defect in the procedure followed while issuing them. In fact such a situation or doubt has never arisen because the Central Bank which issued them has not disputed them at any time. An alarm of this nature any way sounds unwarranted.

The AG has stated that the COPE report points to several transgressions in law in the areas of market manipulations, insider dealings and non-compliances of regulatory requirements. All these have been clearly highlighted in the recommendations of the COPE report submitted to Parliament. 

The AG’s letter has cleared the position that civil and criminal remedies can be resorted to in terms of the provisions under the relevant Ordinances and Acts. This is an important view in the context of earlier conjectures that the lapses do not fall within the criminal law. Now we know that offences committed are chargeable under criminal charges.

Another very important indication in the letter by the AG is the fact that action could be taken in respect of any defaulting participants, meaning the Primary Dealers, holding them liable on such amounts on demand by the Government. The public and the civil society organisations who were concerned about this alleged massive fraud raised this issue of recovery of any illegitimate earnings and profits as one of the principal matters.

Section 21D of the Ordinance cited in the AG’s letter inter-alia includes the following provisions highly relevant to this issue:

For the purpose of this sub section “Default” includes—

(a) Any negligence or failure on the part of a direct participant or a dealer direct participant in the carrying out of any function, or the discharging of any duty, assigned to , or imposed on,  him by this ordinance or by any other Law in relation to any matter dealt with by this Ordinance; and

(b) Any act or omission on the part of a direct participant or a dealer direct participant which constitutes an offence under this ordinance or any other written law in relation to any matter dealt with by this ordinance:-

(i) Whether or not there has been any prosecution in respect of such offence; or

(ii) Whether such act or omission was by the direct participant or dealer direct participant, or by any director, office, employee or agent of such direct participant or dealer direct participant.

The AG’s letter refers to the estimation of damages and it states that that the losses or damages have to be assessed by a method that could be substantiated before a court of law. In this regard the letter refers to a bullet point on page no 53 of the COPE report. More specifically the recommendation goes on to state “while it is recommended that the loss incurred by the Government and the general public as a result of those irregular activities should be recovered from those persons or institutions”.

Now this confirmation by the AG that institution of legal action is possible for the recovery of any defrauded sums ascertains the views expressed by the COPE to initiate necessary legal action.

The AG’s letter also emphasises the fact that the CBSL is entitled to exercise regulatory powers over the Primary Dealers in terms of regulations in force.

However the letter points out in order to initiate any criminal prosecution a complaint to the police would be a prerequisite. It also states that the Criminal Investigation Division of the police department has been advised by the AG to treat a written complaint made by the Governor of the Central Bank in relation to the subject matter as first information in terms of Section 109 of the Code of Criminal Act No. 15 of 1979 and commence investigations. The CID also has been directed to expedite such investigations and report progress to the AG’s Department.

The question that arises now is, has the CID initiated any such action? As this letter is dated 7 February, the instructions from the AG to the CID would have gone well before that date. From the information that is available to the public we are not aware of any ongoing CID inquiry or investigation in this regard. We have not heard of any accused being questioned on this issue. It may be that the first complaint that is required as a prerequisite to commence investigations has not been made so far!

The country is at a loss to understand the currents involved in this massive irregularity which has been the focus of public attention.

In the context it is relevant to quote a section from the Extraordinary Gazette notification issued under the hand of the Secretary to the President in appointing a Commission of inquiry to investigate and inquire into and report on this issue:

Viz. “and noting that this investigation and inquiry under this warrant is in addition to and without prejudice to any measures that have been taken or which will be taken by relevant authorities including the CBSL, in the exercise of their statutory and legal responsibilities in the aforesaid manner”.

Authorities have apparently clearly foreseen what is going on and hence the remedy of the presidential commission of inquiry has come into place.