The Supreme Court this week reserved judgment in the fundamental rights petition filed by politician and presidential advisor Vasudeva Nanayakkara against the April 2003 privatisation of the Sri Lanka Insurance Corporation (SLIC).

Last week Chief Justice Sarath N. Silva raised the question of whether money laundering or some illegal means were resorted to in the transaction where a Gibraltar-registered company, Greenfield Pacific along with Milford Holdings, set up by businessman Harry Jayawardena to buy SLIC.

Mr. Nanayakkara is seeking to annul the privatization on the grounds that the public had been defrauded and state assets had been plundered. Nihal Sri Ameresekere, former PERC Chairman and a respondent in the case, in oral submissions and notes submitted to court this week raised many issues of conflict of interest. He said Ernst & Young, auditors of SLIC when it was fully owned by the government, had continued to be auditors of the company even after the sale of 90% shares of SLIC to the purchasers.

He said Dr P.B. Jayasundera, the 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.

Ernst & Young had compromised the 7th Respondent, a senior public servant, by engaging him as Senior Policy Advisor, whilst they had received lucrative ‘consultancy assignments’ from PERC of which the 7th Respondent was the Chairman / the Secretary to the Treasury. He also had to deal with Ernst & Young in his official capacity, as a Senior Public Servant i.e. Chairman PERC / Secretary to the Treasury, on issues pertaining to such assignments, the notes to court said.

“It is indeed quite a diametrical ‘turn-around’ by Milford Holdings (Pvt) Ltd, the 28th Respondent (part of Harry Jayawardena’s group) who was demanding Rs. 2.1 billion back from the government, even sending a Letter of Demand and who, amongst other parties of the consortium, had ‘prevented’ Ernst & Young from computing the ‘Net Working Capital Computation’ for the ‘purchase price adjustment’, now in the face of disclosures made before Your Lordships’ Court’, is pleading not to cancel and annul the transaction, and that they would pay more money to the government,” the notes said.