Namal ‘preps’ for jail while Govt. copes with VAT

A few weeks before the release from prison of former Army Commander Sarath Fonseka, in 2012, MP Namal Rajapaksa, one of the most influential members of the previous government, made a very interesting statement in an brief interview with a vernacular newspaper.

The parliamentarian, who did not hold any official ministerial or deputy ministerial portfolio under the previous administration, said the former Army Commander would be pardoned if he wrote a letter to the former President.

This statement, not so surprisingly, raised many an eyebrow as it explicitly showed the authority the former parliamentarian wielded under the previous administration. The parliamentarian enjoyed such an authority in the previous government not because he received a mandate from the people. The unrestricted executive powers enjoyed by his father elevated him to an unchallengeable position in the Rajapaksa government, allowing him to operate seemingly above the country’s legal system.

JO MPs and others on their way to visit Namal Rajapaksa at the New Magazine Remand Prison. Pic: Siripala Halwala

Four years down the line, the same parliamentarian was summoned to the Police Financial Crimes Investigations Division (FCID), last Monday, to record a statement with regard to alleged misappropriation of Rs. 70 million belonging to Indian real estate company, Krrish Group, granted for development of rugby in Sri Lanka. This time, his father did not have excessive executive powers and the young politician had no option but to comply with the ongoing Police investigation.

However, a day before Namal Rajapaksa’s arrest, Finance Minister Ravi Karunanayake made an inadvertent prediction about Rajapaksa’s arrest, making the Police FCID’s job tougher. When asked by a journalist about the shadow cabinet announced by the Joint Opposition, Karunanayake said the Foreign Minister of the shadow cabinet might end up in jail “very soon.”

After Karunanayake’s statement, Rajapaksa supporters claimed that the top members of the government were aware of Rajapaksa’s arrest, dubbing the investigation as a politically orchestrated one. It was all too evident that Karunanayake, when he made the prediction, shot himself and the government in the foot!

Commenting on the matter, however, a senior UNP Parliamentarian said there was no clear evidence to suggest that Karunanayake was aware of the arrest. “We have seen how newspapers make predictions about Police arrests involving politicians and other high-profile individuals. Newspapers get clues from their Police contacts. Can’t the same theory apply to politicians?” the Parliamentarian asked.

When Finance Minister Karunanayake hinted at the possibility of Namal Rajapaksa’s arrest, the UPFA politician was in Kegalle and Gampaha districts, making preparations for the UPFA rebel group’s pada yatra due to be held on July 28. He held a round of meetings with UPFA rebel group MPs and Local Government councilors in the two districts with regard to the organization of the ‘pada yatra’ campaign.

‘Prepping’ for remand

In the wake of Karunanayake’s remarks, several UPFA MPs, including former Minister Johnston Fernando, ‘prepped’ Rajapaksa for his new life in prison. Over the past 16 months, several UPFA MPs had spent time in remand prison over corruption allegations and their knowledge was useful during the ‘prep’ sessions.

However, the charges against the young UPFA politician were revealed when he was produced before the Colombo Fort Magistrate, a few hours later.

Producing Rajapaksa in Court, the FCID alleged that the Indian company had granted Rs. 70 million for the development of rugby in Sri Lanka and the amount was given to Ceylon Premium Sports President Nihal Perera.

The FCID said the Krrish Company had remitted the money to a HSBC bank account belonging to Nihal Perera and he had later given the money to Rajapaksa.

The FCID alleged that the complaint by Wasantha Samarasinghe had alleged that the money granted by Krrish had been misappropriated by the suspect without using it to develop rugby.

Defence Counsel Jayantha Weerasinghe PC with Sampath Mendis, appearing on behalf of Rajapaksa, denied the allegations leveled against their client and maintained that the charges cannot be maintained under the Prevention of Money Laundering Act. They moved Court that the suspect be released on bail since there was no evidence to prove that the suspect has misappropriated the money.

The magistrate, refusing bail for the suspect, observed that the Police were yet to conclude investigations and the Court was unaware as to how the money was used. The magistrate observed that the suspect also admitted the fact that he received the money and investigations were underway, in this regard.

A day after Rajapaksa was remanded, the police ‘B Report’ pertaining to his arrest seems to have been leaked to some sections of online media. It clearly laid out the charges against the MP and explained as to why the FCID took measures to arrest him. The leaking of the B Report could be construed as a calculated move to prevent the pro-Rajapaksa group from giving a different twist to the incident.

This, however, did not prevent UPFA rebel group members from giving a political twist to the arrest. A day after Rajapaksa was remanded, a group of UPFA rebel group members, Dinesh Gunawardena, Dullas Alahapperuma, Mahindananda Aluthgamage, Bandula Gunawardena, Pavithra Wanniarachchi and Dilum Amunugama visited him at the prison.

Speaking to news media after visiting Rajapaksa, Johnston Fernando severely criticised the officers attached to law enforcement bodies.

“When we come to power, we will investigate the officers who carried out these orders. They will be strictly dealt with,” an angry Fernando told reporters who gathered around him, outside the Welikada prison premises. It was, needless to say, a veiled attack on the officers attached to the law enforcement authorities.

CBK

Fernando also said that the decision to arrest Namal Rajapaksa was made when former President Chandrika Bandaranaike Kumaratunga met several SLFP seniors for a party organisational session at Heritance Hotel, Ahungalla. The parliamentarian, who also spent several weeks in remand prison last year over allegations of corruption, said there was a move to arrest opposition politicians who were involved in organizing the Pada Yatra due to held on July 28.

However, responding to Fernando’s remark, a senior SLFP Parliamentarian said former President Kumaratunga’s meeting with several party stalwarts was focused on the re-organisation of the party and it had nothing to with Rajapaksa’s arrest.

Dinesh Gunawardena, commenting on the arrest, criticised JVP Provincial Council member Wasantha Samarasinghe for lodging a complaint against Rajapaksa. He said it was a UNP-JVP ‘joint exercise’. However, the parliamentarian’s remark was vehemently denied by the JVP stalwart who said he was the first to take action on several corruption allegations leveled against some members of the current administration.

Giving another twist to the entire issue, the former President’s youngest son said his elder brother’s arrest was a severe blow to rugby in Sri Lanka.

“My brothers were instrumental in popularizing the sport. It was because of their efforts that the youth in rural areas got to know about rugby. This is a severe blow to the sport,” Rajapaksa said. The crux of his statement was that the law enforcement bodies must let go of Rajapaksa on the grounds that he rendered a great service to rugby!

The most interesting remark, however, came from the former President himself. Taking cue from a popular Sinhala song, the former President asked obata sathutuyida dang (are you happy now?) and it was clear that his question was directed at the government. The former President said no motions would be filed against his son’s arrest and his camp would proceed with the court case.

The one who responded to former President Rajapaksa’s tongue in cheek remark was deputy minister Ajith P. Perera, who addressed a press conference in Colombo, this week.

‘Of course we are happy because it clearly shows that the law of the country prevails and that the law takes its course,” the Deputy Minister said, explaining the government’s position on the UPFA Parlimanetarian’s arrest. He added there was prima facie evidence against Rajapaksa on three counts - the misappropriation of funds, money laundering and cheating.

‘Some say a party involved in the deal did not lodge a complaint with Sri Lankan law enforcement authorities with regard to the matter. We know it was not the Krrish Group who made the complaint with regard to its payment of Rs. 70 million to Namal. The person who lodged the complaint was the head of the JVP-affiliated Voice Against Corruption President Wasantha Samarasinghe. It is the right thing to do in the public interest where any citizen has a right to complain to the law enforcement authorities against any kind of crime committed by anybody, irrespective of his or her position,” Perera said.

He said, although there was no complaint by the Krrish Group, the Indian real estate company fully cooperated with the FCID inquiry and five witnesses, including former associates of Rajapaksa had given evidence against him. “Therefore,” the Deputy Minister said, “there was no legal impediment to proceed with the arrest.”

VAT

While the so-called ‘Joint Opposition’ group was busy with Namal Rajapaksa’s arrest, the government had to deal with an unexpected development with the Supreme Court issuing an interim order suspending the operation of the Finance Minister’s decision to impose Value Added Tax (VAT) and Nation Building Tax (NBT) from May 2.

The three Judge Bench comprising Chief Justice K. Sripavan, Justice Buwaneka Aluvihare and Justice Prasanna Jayawardena observed that the Interim Order would be effective until the final determination of the petition or suitable amendments pertaining to the tax impositions are passed in Parliament in due course.

The development came after the Supreme Court, on June 22, granted leave to proceed with five Fundamental Rights petitions filed impugning the Finance Minister Ravi Karunanayake’s decision to impose VAT and NBT taxes to increase government revenue amidst tough economic circumstances.

The leave to proceed, the Supreme Court said, was granted under Article 12(1) of the constitution for the alleged violation of Fundamental Rights of the petitioners.

The five petitions were filed by National Freedom Front leader Wimal Weerawansa, Ven. Madulu Oye Dammeeshwara Thera, Ven. Bengamuwe Nalaka Thera, S. Shiva Kumar and Nimal Karunasiri.

UPFA Parliamentarian Wimal Weerawansa’s petition cited Finance Minister Ravi Karunanayake, Treasury Secretary R.H.S. Samarathunga, Inland Revenue Commissioner General Kalyani Dahanayake and the Attorney General as respondents.

The Parliamentarian, filing the petition, sought an interim order restraining the Finance Minister and the other respondents from directing the public to pay VAT and NBT.

Fiscal powers

He further sought an interim order suspending the operation and implementation of the notice bearing the title ‘Notice to the Tax Payers-Value Added Tax (VAT) and (NBT)’ issued on the instruction of the Finance Minister and published by the Commissioner General of Inland Revenue.

The petitioner also stated that there are no amending laws pertaining to VAT or NBT that have the effect of the changes pertaining to imposition of taxes. He further observed that notice and the administrative decision taken to collect such taxes on the changed rates amounts to abrogation of the fiscal powers of Parliament. The petitioner said there was no law in force authorising the Finance Minister or any other officer to arbitrarily and capriciously impose such additional taxes and liabilities on the public.

The petitioner, therefore, stated that his Fundamental Rights and Fundamental Rights of the public protected by Article 12(1). 13(1) and 14(g) of the constitution have been violated by the respondents by imposing VAT and NBT taxes from May 2, 2016 without having the statutory authority or without amending the respective principal laws.

While issuing the interim order, the Supreme Court said it was not in a position to set aside the Constitutional provisions that needed to be followed.

The Supreme Court observed that in accordance with Article 148 of the constitution, the tax or levy shall not be imposed without Parliamentary approval. The Supreme Court further observed that the Good Governance policy of the government should be practiced in accordance with the relevant legal procedures, in collaboration with the three pillars of the government.

Media statements given by certain petitioners within the Court premises indicated that they wanted to interpret the interim order as a political victory of sorts. This necessitated Prime Minister Ranil Wickremesinghe to issue an official statement, explaining the government’s stance on the matter.

The Prime Minister, in his statement issued a few hours after the interim order, said, the Supreme Court’s decision would not make any adverse impact on the revenue collection of the government.

“On July 11 the Supreme Court of the Democratic Socialist Republic of Sri Lanka has issued an interim order preventing the implementation of the recent revisions made to the Value Added Tax (VAT) and the Nation Building Tax (NBT) until the relevant legislation is passed by the Parliament.

“This interim order is not expected to have any adverse impact on the government’s revenue collection. The VAT (Amendment) Bill has already been presented to the Parliament for the first reading on 08 July 2016, and the second reading is expected on 23 July 2016.

“The Unity government, which has a clear majority in the Parliament, expects the legislative process to be completed before the end of the month of July 2016. Thereafter, the revised rates will be applicable with effect from 02 May 2016,” the Prime Minister said.

SLFP cashing-in

In the wake of the interim order, the SLFP, one of the two main stakeholders of the national unity government said it needed to propose changes to the VAT Bill. State Finance Minister Lakshman Yapa Abeywardena told media that an SLFP committee will propose changes to the Bill, after discussing the matter with the President today. From a political perspective, it was clear that the SLFP was trying to cash in on the situation, using the current power-structure of the national unity government.

As a result of such interventions, it can be assumed at this point that the VAT Bill will not be presented to the House on July 20, as expected.

“A better and sound Bill can be prepared after consulting many sectors during this period” he said. The State Minister added that VAT is not applicable for each and every commodity. The items which are subjected to VAT and those exempt will be announced in the future,” Minister Abeywardena said, addressing a Sri Lanka Freedom Party press conference, in Colombo. As a result, the exact timeline of the VAT Bill remains unclear while the government is fighting hard to deal with the political consequences of the matter.