Colombo Telegraph

Rs 619 Million Public Funds Fraud Case Against Mohan Peiris And PB Jayasundara: The Lawyer Was Threatened

By Mudliyar

The former Attorney General Mohan Peiris, the Finance Ministry Secretary PB Jayasundara and the Colombo Dockyard Company Ltd finally achieved their goal with the withdrawal of the lawyer, Nagananda Kodituwakku, from a case due to threats to his life which he had reported to the Inspector General of  Police and the British High Commission before returning to the UK.  This case would never have come to such an end, had the Supreme Court taken a firm stand and refused the applications made for postponement and instead subjected the conduct of Mohan Peiris and PB Jayasundara to judicial scrutiny, upholding the judicial power its exercise that emanates from the people.

PB and Mohan

This case due to come up before the Supreme Court tomorrow, effectively challenges the integrity and honesty of the then Attorney General Mohan Peiris (who is cited in his personal capacity) and the Secretary to the Ministry of Finance, PB Jayasundara, for their alleged misconduct and abuse of office held in trust. And the Petitioner challengers  with plausible evidence presented before the Court that both of them are directly responsible denying the government of public funds to the tune of over 619 million rupees defrauded by the Colombo Dockyard Company Ltd. In this case, the Director General of Customs (DGC), Sudharama Karunarathna, in her observations on the Petition sent to the AG, effectively questions the conduct and integrity of the AG Mohan Peiris, concerning the role he had played  in this matter.

Modus Operandi

The Colombo Dockyard Company (CDL) is a BOI approved company that is allowed to import raw material to make marine crafts free of all fiscal duties and all finished products were meant for the export market only. However, in any event the CDL decides to sell any finished product in the local market, the law requires it to obtain prior approval from the BOI, and to pay all fiscal levies on the value of the goods so determined by Customs.

The Respondent CDL had sold 21 marine crafts neither with the prior approval of the BOI and nor after the payment of the fiscal levies to Customs. The CDL had collected the entire fiscal duty component of 619 million rupees from the buyers [Sri Lanka Navy and the Ports Authority] and then had misappropriated the total sum so collected without paying a single cent to Customs. The act committed by the CDL was a criminal act of misappropriation of public funds as reaffirmed by the DGC in her observations.

Waste of deserving case for judicial scrutiny

This case has been fixed for support for more than 15 times and yet the Petitioner was never  allowed to support his case for a period of well over two years merely for various delaying tactics adopted by the Respondents headed by the AG, whose official duty is to uphold the rule of law and not to protect the interests of fraudsters and criminals.

Since the evidence presented in this case before the Court plainly exposed the improper conduct of the AG, every attempt was made by the Attorney General’s Department to stop this case being heard before the Supreme Court. And the AG and CDL finally achieved their goal with the withdrawal of the lawyer, Nagananda Kodituwakku, from the case due to come up again for support tomorrow, for threats to his life, which he had reported to the IGP and the British High Commission before returning to the UK. This case would never have come to such a sad end, had the Supreme Court taken a firm stand and refused endless applications made for postponement by the AG and instead subjected the  conduct and integrity of AG Mohan Peiris and ST P B Jayasundara to judicial scrutiny, steadfastly upholding the judicial power that emanates from the people of Sri Lanka.

Narration of the background of the Case

There was a previous Special leave application [SC/SLA/100/2009] before the Supreme Court in relation to the matters discussed in this case, which was initiated by the then Solicitor General, Priyasath Dep to challenge the ruling by the Court of Appeal in Case No CA/ 1413/2005 filed by the Colombo Dockyard Ltd, which was clearly flawed, as it was held that in cases where the Customs duty has been defrauded to ‘recover’ such duties under Section 18A of the Customs Ordinance, without recourse to penal sanctions as provided under the Customs Ordinance.

Even after filing the action that challenged the Court of Appeal order (CA/1414/2005) the AG, Mohan Peiris did not want to proceed with it and he sought further time to reconsider whether to proceed with it or to withdraw it. And finally on 10th May 2010, almost one year after filing action before the Supreme Court, he informed the DGC that he would withdraw the Court action on the next date that fell on 30th August 2010. The AG advised the Customs to initiate action to recover the Customs duties [defrauded by the CDL] in terms of Section 18 A of the Customs Ordinance.

The opinion expressed by the AG, contradicted with his very own opinion expressed at a meeting held on 04th Nov 2009 at the AG’s office with the participation of the Solicitor General Priyasath Dep, Deputy Solicitor General Sanjay Rajarathna and a team of Customs officials headed by the then DGC Sarath Jayathilake. At the said meeting the AG Mohan Peiris had advised the DGC to proceed with the Customs inquiry and that he would defend the right to proceed with the Customs inquiry. The DGC’s letter dated 03rd Aug 2010 sent to the AG marked ‘P10’ filed in this case, reaffirms this meeting and also the decision conveyed to the DGC by the AG Mohan Peiris himself.

When Mohan Peiris ‘changed his stand’ he was aware that the action proposed by him would clearly defeat certain important provisions enacted in the Customs Ordinance that was designed to protect the government revenue. He also knew that recovery process under section 18A of the Customs Ordinance would effectively negate the informant of his legitimate right to a cash reward from the proceeds of additional revenue that would have been realised by way of penalties and forfeitures recovered from the CDL, had the Customs enforced penal sanctions against the Respondent CDL.

Whilst action on the AG’s opinion was pending, on 24th May 2010 the 3rd Respondent, Sarath Jayathilake was removed from the office of the DGC and he was replaced by Sudharma Karunarathna, the 5th Respondent. Having realised the gravity of the matter, the new DGC stood firm and refused to accept the Attorney General’s opinion to recover the duty under Section 18 A and her decision was based on two counts. First, it was a case where a colossal sum of Rs 619 million of fiscal levies were defrauded by the CDL

Secondly, the AG’s opinion clearly contradicted with his own opinion expressed to the high level delegation from the Customs at a meeting held on 04th Nov 2009 at his office. At the said meeting the AG had advised the DGC to proceed with the Customs inquiry and he would defend the right to proceed with the Customs inquiry.

The DGC Karunarathna conveyed her position to the AG on 03rd August 2010 and informed that it was not appropriate to withdraw the Supreme Court action as the government had incurred a colossal revenue loss.

In this setting, the ST, Dr PB Jayasundara intervened to silence the firm stand taken by the DGC Sudharma Karunarathna. And on 16th Aug 2010, at a meeting held at the ST’s office, also attended by the officers involved in the case, the DGC was strongly advised to abide by the AG’s opinion. However, the ST’s directive was never confirmed in writing. And in this backdrop the Customs Officers Union intervened and by a letter dated 23rd Aug 2010 urged the DGC Sudharma Karunarathna to decline to act on the ST’s advice, which they believed was manifestly improper and also against the public interest. They insisted that ST’s stand should be confirmed in writing before any action was taken upon it and accordingly DGC refused to change her stand already conveyed to the AG.

However, when the matter, the Special leave application [SC/SLA/100/2009], was taken up before the Supreme Court on 30th August 2010, the AG informed the Court that the DGC has been duly advised to comply with the Court of Appeal Judgement. This was clearly an act of dishonesty and act of deception of the Supreme Court and the DGC on the part of the AG. In her observations on the Petition, the DGC Sudharma Karuanarathna reaffirms this fact with irrefutable evidence.

After having withdrawn the case, a mysterious letter bearing the date 26th Aug 2010 originated by the AG’s office was surfaced on 31st August 2010. It was ‘delivered by hand’ from AG’s Office to the DGC’s office. The whole purpose of the said letter was to demonstrate that action was withdrawn with the consent and agreement of the DGC. However, the Customs date stamp and the minute by the DGC placed on it clearly confirms that the said letter was delivered to Customs only on 31st August 2010, that is after the withdrawal of the case by the AG on 30th Aug 2010.

This ‘urgent letter’ hand delivered by the AG’s Department appears to have taken 5 days to reach the Customs Head Officeo. According to the content of this letter, the AG advise the DGC to recover the Customs Duties [defrauded by CDL] in terms of Section 18A of the Customs Ordinance.

The deceptive conduct of the AG Mr Mohan Peiris is clearly exposed by this letter delivered to the DGC only after the case was withdrawn without the DGC’s consent. The DGC’s observations [para 47, 48 and 49]  made on this letter is very clear and unambiguous and reaffirm that the so-called AG’s letter dated 26th Aug 2010 was received by her only after withdrawal of the case by the AG, an act which the Petitioner challenges as another disgraceful ploy adopted by the AG Mohan Peiris to cover his back.

AG’s dishonestly contributed to the loss of 619 million rupees of public funds

The AG’s and ST’s deliberate failure to uphold the rule of law and their wrongful decision to recover the Customs duties defrauded by the CDL under Section 18A of the Customs Ordinance (according to para 43 of the DGC’s observations) allowing up to 20 years to pay back the duties it had defrauded), have effectively denied the application of penal sanctions warranted by Section 129 and 50A of the Customs Ordinance against the Respondent CDL. Only these provisions  provide for the recovery of ‘additional revenue’ by way of penalties or forfeitures for the wilful misappropriation of public funds. Therefore, the improper conduct of the AG and the ST, has effectively deprived, the informant who provided a first degree information to the Customs to bust this massive fraud of public funds running into over 619 million rupees, and his right to a cash reward promised by the Customs.

The informant totally relied on the assurance given by the Customs for a cash reward but finally his position was made untenable by the improper and dishonest decisions taken by the Attorney General, Mohan Peiris and the ST Dr PB Jayasundara, completely disregarding the DGC’s firm stand taken against the withdrawal of the Supreme Court action.

Unlike in most of the other cases the information provided herein becomes more significant, particularly concerning the value of the subject matter and the accuracy of the information provided by the Customs informant. Yet instead of commending the informant and the investigating officers, all of them have been penalised and their contribution has been clearly undermined by the AG and the ST.

In this case, T R Ratnasiri, the Customs investigator and the petitioner, has came before the Supreme Court praying justice denied to his informant and to him for doing the right thing according to law, but all their contributions, possibly under threats to their life, have been utterly wasted by the dishonest conduct of the AG and the ST whose conduct clearly deserve to be subjected to judicial scrutiny.

Yet, due to withdrawal of the lawyer from the case and in the absence of any other lawyer to present this case, both these officials who holds very high profile public officers in the Rajapaksa administration have apparently avoided the judicial scrutiny of their conduct, thanks to the anarchic Rajapaksa administration that provide effective cover to all influential lawbreakers, so long as they remain to be the ‘obedient servants’ of the government.

Read the DGC Sudharma Karuanarathna’s observations here 

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