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Tuesday, June 25, 2024

Conclusion of the SC judgement on economic crimes in Sri Lanka that hold Rajapaksa brothers & officials responsible

Conclusion of the Judgement

 When we considered these two applications, the main focus was on the economic situation of the country between November 2019 and April 2022. The reason for this focus was that the core issue the Court was invited to consider was whether the impact of the unprecedented economic crisis on the society resulted in the infringement of fundamental rights of the people and if so, whether any one or more of the respondents were responsible for such infringements due to their actions and/or inaction during this period while holding office in executive and/or administrative branches of the Government. 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.

On assumption of public office, it was their duty to ensure that the existing issues were addressed and resolved in the best interest of the country and take every possible measure to avoid an aggravation to the detriment of the people.

Public trust reposed on them demands resolving of issues. Any conduct which is manifestly unreasonable, arbitrary or irrational that would lead to further aggravation of issues which are detrimental to the public, tantamount a breach of the trust bestowed on them. This is not the recognition of a ‘new right’ – a right to infallible decisions by the public authorities – but recognition of public officers requiring to discharge their duties to the satisfaction of their inherent core obligations, with due respect to the public trust reposed on them.

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.

It was evident from the material placed before us that the Gross Official Reserves and the Reserves of the Central Bank were depleted and had reached unprecedented low levels, creating a situation of which the effects were devastating on the entire citizenry without exception. The severe hardships the people had to suffer due to scarcities in essentials such as fuel, gas and medicines coupled with long hours of power shortages brought the lives of people to a standstill and the suffering the public had to undergo was undoubtedly immeasurable.

The respondents holding high public offices bestowed with powers which bear a direct impact on the lives of the people, we presume, were alive to the Directive Principles of State Policy and Fundamental Duties. They were duty bound to discharge in the manner spelt out in the directive principles in our Constitution.

“The directive principles of State policy are not wasted ink in the pages of the Constitution. They are a living set of guidelines which the State and its agencies should give effect to” per Prasanna Jayawardena, PCJ. in Ravindra Gunawaradane Kariyawasam v CEA, SC FR 141/2015 Sc minutes of 4.4.2019.

They cannot shirk their responsibilities by merely claiming that the decisions that were taken were “policy decisions” they were entitled to take.

Social, Cultural and Economic Rights

We note that Article 27 of the Constitution pledges a democratic socialist society the objectives of which include the realisation by all citizens of an adequate standard of living for themselves and their families including adequate food, clothing and housing, the continuous improvement of living conditions and the full enjoyment of leisure and social and cultural opportunities, which the public were deprived of during this unfortunate period due to mishandling of the economy when it was within the full power of the respondents to take meaningful action to prevent such a calamity. From the material placed before this Court it is as clear as can be, that the respondents had failed to act when they were not only put on notice but were fully alive to the predicament the country would face.

The respondents argued that they took all possible measures within their purview to remedy the situation. They further argued that the time period under consideration overlapped with the time period where serious challenges that resulted due to the COVID-19 pandemic that had to be overcome.

As we have discussed hereinbefore, prolonged inaction due to arbitrary, irrational and/or manifestly unreasonable decisions and inadequate measures over the period under consideration had heavily contributed to disastrous consequences.

The following observations and/or comments as recorded in the minutes of the Monetary Board meeting held on 4th August 2021 shed light on the situation which prevailed at the relevant time.

For the first time in the history of Sri Lanka

During the period between January and June 2021 – within a short period of six months – reserves of the Central Bank and Gross Official Reserves had decreased by 35 and 28 percent respectively. For the first time in the history of our country, the net Central Bank foreign reserves recorded a negative balance of USD 78 million. As at 03rd August 2021 net Central Bank assets were negative by USD 124 million and net Gross Official Reserves remained at USD 155 million. The Deputy Governor (S) had observed that

“Government does not have foreign exchange and the Gross Official Reserves has declined to critical levels, government has no rupees either, government is depending on the CBSL for the foreign exchange as well as rupees for its domestic and foreign financing and very soon the CBSL will be required to meet the obligations of state banks and state entities such as CPC as well. Sri Lanka cannot go to the international market and borrow, foreign governments are not

lending to Sri Lanka because of the credit ratings of the country and its high default risk”. The DG(N) had noted that the

“Minister himself (2A respondent) stated that it is difficult to expect any sizeable funds coming into the country at this stage”.

The above quote aptly depicts the bleak picture and the disastrous state of our economy even by August 2021.

Infringement of Fundamental Rights

It is also pertinent to observe that in deciding the issues before us, this Court while considering each matter separately, had to consider all matters together in a holistic manner to decide the core issue, whether there was any infringement of fundamental rights. The reason being, the matters we considered are intrinsically interwoven and a focus on issues in isolation would fail to capture reality.

In this regard, we are mindful of one of the arguments of the petitioners that the purported imprudent decision brought about a domino effect and led to a series of events to which we paid attention. Such an event being the tax revision introduced in December 2019, which resulted in downgrading by rating agencies, depletion of foreign reserves, losing access to international financing institutions and single digit inflation spiralling to double digits. Additionally, the continued maintenance of an artificial exchange rate and the failure to reverse tax reliefs and seek assistance from the IMF in a timely manner collectively, contributed towards the rapid deterioration of the economy.

The cumulative effect of the conduct of the respondents, in our view, is what contributed to the ultimate debacle. Gross Official Reserves which stood at USD 7,642 million by end 2019 had depleted to USD 155 million by August 2021. The scarcity of foreign exchange with the Government and the Central Bank brought about severe hardships to the people.

Breach of Public Trust

The trust reposed in the respondents was not a higher principle or epithet unique to their offices. ‘Public trust’ is an inherent responsibility bestowed on all officers who exercise powers which emanate from the sovereignty of the People. Therefore, as public officers, the respondents were obliged, at all times, to act in a manner which honoured the trust reposed in them.

We are of the view that by the actions, omissions, decisions and conduct hereinbefore identified to have demonstrably contributed to the economic crisis and we are of the view that the 2nd (Mahinda Rajapaksa), 2A (Basil Rajapaksa), 28th (Monetary Board), 29th (Nivard Cabraal), 30th (W.D.Lakshman),  31st  (S.R.Attygalle),  32nd  (Samantha  Kumarasinghe),  32A  (Gotabaya Rajapaksa) and 38th (P.B.Jayasundra) respondents had violated the Public Trust reposed in them and we hold that they were in breach of the fundamental right to equal protection of the law ordained by Article 12(1) of the Constitution.

These petitioners both in applications SC FR 195/2022 and SC FR 212/2022 have invoked the fundamental rights jurisdiction of this Court in the interest of the public. We note that none of the petitioners are claiming any loss had impacted on the petitioners on an individual basis but their assertion is as a result of the conduct of the respondents the entire citizenry had to undergo hardships which could have been avoided. In the circumstances aforesaid, 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.

Jayantha Jayasuriya, PC. Chief Justice

 Buwaneka Aluwihare, PC. Judge of the Supreme Court

 Vijith K. Malalgoda, PC. Judge of the Supreme Court

 Murdu N.B. Fernando, PC. Judge of the Supreme Court

 

( Sub heading and emphasises are ours – SLB)

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