Moving towards a 'hollow' state
In a typically piquant analysis on the "Private Slaughter of Public Service", the radically left leaning magazine, 'Red Pepper' last year focussed on how the Labour government in the United Kingdom is rapidly continuing its free market goal of turning the state into little more than a contracting organisation.

Its point was that, in the past, the money of British tax payers had been used to fund publicly owned services which in theory at least, they could call to account. With the unbridled extension of marketisation and privatisation into public services however, fifty per cent of tax revenue - and growing - has begun going to profit making companies.

'Red Pepper's critical examination of the manner in which the fractured parts of this private takeover is disguised by talk of 'partnership', underscoring the reality of a hollow state that is becoming increasingly out of democratic control strikes common chord with Sri Lanka in many respects. In the United Kingdom, this expansion has not been limited to the public transport, energy, utilities and communications infrastructure but extended to hospitals, schools, social service and extraordinarily, to the criminal justice system. The impact of this expansion has meant the sacrificing of the least heard voices, such as the poor and the elderly. The state meanwhile, is increasingly washing its hands of its welfare responsibilities and adopting the role of a mere financier or purchaser of services with the management and delivery performed by the private sector.

The picture thus painted of a state with a hole in it, is a bleak one. In Sri Lanka, we have already seen the privatisation of gas with telecom and the national airlines part privatised. Now, it appears that the gloves are off and we are making no bones about moving towards a hollow state and rapidly at that. While some media reports talk about the state transport sector being handed over to the British, others downscale the news by talking of a 'partnership' with a British bus company. Meanwhile, the rail services and water are also on the list as are, apparently, the universities.

The Petroleum Corporation, the Ceylon Electricity Board and the Insurance Corporation have also been specifically identified for privatisation. And amidst the resultant hosannas of those fervent believers in free enterprise, gloomy predictions of the human cost involved if such a massive wave of privatisation were allowed to sweep unchecked and unfettered across this country, may appear to be inappropriate but nevertheless ought to be made.

This argument is, of course, wholly based on the concept of public power that is ideally held in trust by the State for the people. This means specifically that the utilising of such public power should be strictly monitored and its infringement be amenable to judicial review and particularly to the rights protection afforded by the Constitution to aggrieved citizens. We have already seen what has happened to the country's once-upon-a-time national carrier with accounts of stupendous financial pilfering and mismanagement dominating headlines. While this was allowed to go unchecked with only intermittent public interest demonstrated, losing public control of the national airlines was further accelerated by the 2001 Supreme Court ruling that the Emirates cum Sri Lankan airlines partnership had effectively taken the airlines out of the ambit of the fundamental rights chapter in the Constitution. Actions by the management could henceforth not be reviewed for substantial breach of rights obligations.

It is well to recall at this point of time that the Court, in giving its decision in this case, leant heavily on the fact that the approved business plan for an initial period of ten years gave the day to day running of the company to be in Emirates. Accordingly, the fact that the agreement provided specifically that, in matters over which Emirates exercises such power, control and authority, it shall not be required to refer such matters or seek the approval at a general meeting of the company or the Board of Directors ( in which the Government had the majority) was held to take away the "deep and pervasive power" enjoyed previously by the government over the national carrier. The contrary argument that it was the Board which delegated authority for management and consequently had the right to revoke that power and that overall, the Board had the right of control over the company was dismissed as was the fact that the Government had kept to itself its majority percentage in its shareholdings.

This ruling remains pertinent for more reasons than one with privatisation of essential services poised to expand in the near future. Is this the precedent that we would like to adopt for services such as transport and rail, to mention two particularly crucial areas of interest for the Sri Lankan consumer if similar contracts of management or 'partnership' are entered into between the Sri Lankan government and foreign partners? Would we not be reducing the whole concept of constitutional monitoring of public power to be a farce and a not so amusing farce at that?

In previous and far less complicated times, it had been unequivocally laid down that the government (by resorting to the device of the corporate entity), cannot be permitted to liberate itself from its constitutional obligations in respect of fundamental rights which it and its organs are enjoined to respect, secure and advance. It was primarily on this basis that, in 1987, the Supreme Court held that actions of the management of AirLanka could be reviewed by the Court for fundamental rights adherence as they amounted to executive and administrative action under Article 126 of the Constitution.

This thinking prevailed through the years despite scattered decisions that put the actions of the Insurance Corporation, the National Paper Corporation and the People's Bank beyond the reach of the Court. These decisions took the view primarily that where the State's only significant involvement is through financial support or limited regulation, it may be well to inquire whether the State has so thoroughly "insinuated" itself into the operations of that particular body. Previously, the actions of the University Grants Commission had been held to come within judicial supervision as the Act assigned to the Commission certain vital government functions pertaining to university education.

However, the view that the juristic veil of corporate personality donned by a company for certain purposes cannot debar constitutional protection survived the first wave of privatisation, consequent to 1994. Thus, in 1999, actions against Sri Lanka Telecom were held entitled to claim constitutional protection on the basis that the government still retained beneficial ownership in the majority of the shares, thus subjecting the management to judicial scrutiny.

All this legal quibbling on corporate personality or otherwise, may, of course, come to nought, if the government decides to push ahead with unrestrained privatisation without even the fiction of its presence. It is well that, as correctly befitting the great unwashed public, we decide exactly what we want at this moment in time. The choices appear to be deceptively simple; regulated privatisation (if privatisation we must have) or private slaughter of public rights? Allowing the government (any government) to make this choice for us would be too risky for words.


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