24th March 1996

Political power is nothing but a sacred trust

Some of the Government speakers yesterday tried to make out that the United National Party is now moving this debate against Lakshman Kadirgarmar - another member of a minority community. Yes! We did move the no confidence motion against the Minister of Ports as Minister of Ports, not because of his community. We did not ask for a debate on Lakshman Kadirgarmar. This adjournment debate was one decided on by the Government not by the Opposition. We asked for a motion of no confidence (interruption). We asked for a motion of no confidence against the Government, not against the Minister. The Government has given us this debate and we have got to take it. We did not ask for it.

The Government decided instead of putting themselves at peril to put the Minister of Foreign Affairs at peril. Do not blame us for that, and do not try to give it communal implications. We listened to the Government members some of whom I must say held a brief for the Government. But none of them so far has held a brief for Lakshman Kadirgarmar.

First and foremost the brief that has been supplied for you contradicts the opinion that Lakshman Kadirgarmar gave the Cabinet.

Then, looking at this whole transaction - some members are trying to say that they have saved Rs. 900 million, that the Government has saved what would have been lost because of the UNP. But let me make it quite clear by just quoting from your own document, that is the Cabinet Memorandum which the President as Minister of Finance put before Cabinet in March. It makes it very clear that all payments had been made by the Puttalam Cement Company before the PA Government came into power. Paragraph 12 says -

"Consequently Tawakkal Group, Pakistan had taken over the management of the Company having paid the Secretary Treasury US $22.5 mn., and the balance US$ 18.6 mn., in SL Rupees 900 mn. amounting to a total of Rs. 2028.3 million".

So, the moneys had been paid (Interruption).

Once the money had been paid, then the only question that comes up is the legal status of the leverage buy-out. All that is being questioned here & now, during the time of the PA Government, is the leverage buy-out money has been paid and the management was taken over by Thawakkal. It is not only what I am saying but also listen to what G. L. Peiris said in Parliament day before yesterday. You are dealing with a completed transaction, a fully executed contract. That means, the Thawakkals had paid and taken over the management. Then the problem that arises is not only about the leverage buy-out, but about the listing on the Share Market. The listing again was not because the national asset needed funding as is given in this briefing paper. It is not so. Puttalam Cement Co. had been running for the last year or two without any capital injection. Mr. Thawakkal's group sold part of the shares to Hong Kong foreign fund managers, on the condition that within one year the company should be listed on the share market. Why? Because the Hong Kong Group wanted to trade in the shares. They thought the value will go up and that they would make a profit. So, after a year or two, those who wanted to do so could take their money and go away. The listing was for this purpose - not to raise money for a so called national asset such as the Puttalam Cement Factory as it is now called over Rupavahini. They had enough capital, they were managing it in whatever way they could but for the purpose of trading. It is for that reason that the whole matter came up before cabinet, because the Securities and Exchange Commission refused to list it saying that they had contravened Section 55.

Sir, looking at all these developments then, it is at this point that the Cabinet took the decision of the 23rd of March, (on the advice of the Foreign Minister) that this transaction was void and therefore, that the Thawakkal Group should pay the 900 million, pay - not loan. I think, the Hon. Minister you said it should be paid. It was not a loan. It should be paid. Now, after I have listened to all what these Hon. Ministers of the Government have said and after looking at the (Government's) briefing note, even more questions have been raised than those that have been answered.

First and foremost, I want to know why was the Cabinet decision of 23rd March not implemented? It was very clear. Either Thawakkal pay Rs. 900 million or you take other steps. What were the other steps that could be taken? The land had not yet been leased by the Government for the Puttalam Cement Company.

There were certain assets which had to be given to the Puttalam Cement Company which was still in the name of the Cement Corporation. Ten percent of the shares were held by the Government on behalf of the workers. Therefore, they had the right to go to Court. Then there was the question of the violation of Section 55 itself. The Government was not without weapons in its armory to deal with it if they wanted to. But the decision given on March 23rd was not implemented. Then, you find a new Cabinet Memorandum coming in on May 18th. A copy of the Cabinet Memorandum of May 18th is given in the brief to all of you as Annexure XI. We become aware of this only now. This memorandum of course, has been submitted by the Ministry of Finance, Policy Planning, Ethnic Affairs and National Integration and again they still talk of negotiating. They say -

"Considering the issues arising from the privatization of the Puttalam Cement Works of the Sri Lanka Cement Corporation, the Public Enterprises Reform Commission recommends that action as detailed below be initiated to regularize the takeover by the Thawakkal Group.

Request the Thawakkal Group to pay Puttalam Cement Company the sum of Rs. 900 million to rectify the illegality"

I do not think the illegality can be rectified. I think the Minister found another way out contravening Section 55 of the Companies Act.

"If Thawakkal Group refuses to pay Rs. 900 million to the Puttalam Cement Co., the Secretary to the Treasury should seek legal redress.

Why did you not implement the Cabinet Decision of 23rd? You have another Cabinet Memorandum dated May 18th which again goes into the affair. The first question - which you all have not answered - is about the decision of March 23rd and about your Memorandum again on May - which repeats it. I think you could have gone into it by then if you wanted to. Then regarding the second question, which all the Members of the Cabinet must tell this House, why did the Cabinet change its decision of March 23rd which was 'virtually saying', "Thawakkals pay Rs. 900 million or go out", into the Cabinet decision of June 21st where Thawakkal should give a loan to the Puttalam Cement Company, accepting the fact that Rs. 120 million had already been paid off and converting the remainder into equity? Why did the Government take this decision? It is a 180 degree turn. From one end you say "Look, all this is fraudulent and this should not have been done". Why did you do it? Then on June 21st you turn around and say - All right we have discussed this matter with the two Thawakkal Directors, with the PERC and with Vanik and we have all decided that we are to accept this new formula". That decision has not been explained by a single Member of the Cabinet who spoke. I do not think the Members of the back bench can explain it. But Members of the Cabinet have to explain to this House and, no one has given us a satisfactory explanation on that matter neither to this House nor to this country.

If you could bring the High Court of Commercial Affairs bill, why could you not have brought another Bill to amend the Companies Act or why did you not implement the third remedy that was given in the Cabinet Memorandum of 18th May. The Treasury and Smith Newcourt, since they were the majority, could seek to oust the Thawakkal Directors. So, you had two options. Either amend Section 55 and bring the Companies Act up to date or take the 60 percent that you have and go and oust the Thawakkal Directors. Having both these choices you took a third decision. The Government and the Cabinet must explain that decision to this House, to people on both sides, and through this House to the country. That, you have not explained and this is why especially when you look at this Cabinet Memorandum - no Cabinet Memorandum is ever secret in Sri Lanka from the time it is prepared to the time it gets to the Cabinet. Also, it gets out to all interested parties and to newspapers - it is obvious that the Thawakkals would have got to know of this. And the Thawakkals would have tried to find some way, by fair means or foul, of stopping it.

Then, in that background, you can understand this reference by Jawaid Thawakkal who was the Managing Director, when he said in that taped conversation.

"because these (..) having vested interested, they are defeated now... I do not think they will try to overcome me and Thawakkal, but ..unfortunately it defeated them.. they were thinking that we are foreigners and they will threaten us.."

He looked at it in that light. This statement of Jawaid Thawakkal has far more significance than just a discussion between two rivals. What was he telling his colleague, Mr. Martinotti, on the other side? "Look someone is trying to push us out and threaten us. But, we have the influence. We are not allowing that to happen". When you read it in that light, they are saying, "Let us all get together and sort this problem out". When you had this option why did you not use it? Why did you use the other option? That is what the Government has to explain and when you look at it from that point of view, when you look at it along with these documents, there is much validity in the transcript of the conversation.

The Government has tried to evade this by getting the Minister of Foreign Affairs to make a statement aimed to diminish the effect of the letter. I would like to tell the Minister that in time to come you will regret this statement. It has destroyed the public esteem that was there for you, and at the same time it has not won you any friends in this Cabinet. That has been the outcome of this statement as far as you are concerned. If you are telling us today in this Parliament that you did not mean what you wrote in your letter of January or what you said in interview that you gave to the "Sunday Times", then I am sorry to say it but it seems that Lord Acton's dictum is being proved correct again. What the Minister wrote was not based on gossip. I do not think any Minister in this Cabinet or in a previous Cabinet would put pen to paper just to send some gossip to the Head of the Government, to the President.

Now Mr. Wickramanayake has sent some other letter, and you also wanted to vindicate the position of Mr. Kadurugamuwa. So you wrote a second letter.

The Minister has given this explanation earlier. When a newspaper, when the "Sunday Times" of March 3rd interviewed him, he said this. "I sent the transcript of the tape as filed in court to the President. When this matter was brought to my attention I felt it was sufficiently serious to inform the President".

When this matter was brought to my attention, I felt it was sufficiently serious to inform the President. Of course, it may eventually turn out to be mere airy talk, but if true, it is serious. Those of us citizens who wish to see clean government would also wish to see such allegations investigated and substantiated if possible'.

How are we to judge you? People can judge you only by the standards you have. We were sent out by the people. We accept their verdict. That is why we are seated here in the Opposition. And we are now performing our duty as an Opposition in raising this matter. It is not to bring down the Government, nor to throw mud at you. But these were issues raised within the Government, papers which were released by the Members of the Government. We in the Opposition did not have access to all these things. I got hold of the last Cabinet paper only after I received the copy of the briefing papers which was given to the Ministers. We had access to the full set only as of yesterday.

But it came out earlier, and the country wanted to know. We wanted to know and we raised this up. We are judging you by the standard that you have set. One of the sacred principles of public morality is that political power is neither a right nor an entitlement but a trust. If you are going by that standard then when this letter went what should have happened? Then, there could have been only one answer and that is the answer the Hon. Kadirgarmar gave the "Sunday Times" on March 3rd.

That is what you have to do. That is why we find your conduct unsatisfactory. You set this high standard up. Now you are shouting at the UNP, shouting at these Members saying that you did this and you did that. That is no answer to this question. The country wants to know and the country wants to have an answer to this question. What you have said about us we will reply you later. You need not cloud this debate with those matters. We wanted to stay on course but you wanted us to go off course. So I would like to remind the Hon. Minister and Members of the Government that the people of this country gave a mandate to you, to uphold this standard that 'political power is neither a right nor an entitlement but a trust'.

Power is a trust bestowed by the people on their representatives. It is to be wielded with wisdom, with care, with skill and with modesty. It is not to be deployed against the very people who bestowed it, through abuse, scorn and arrogance. These have been the characteristics of the PA governance which you have also seen today. It has abused its powers by undermining the intelligence of the nation. It has scorned the questions posed by the people of this country. It has arrogantly refused to answer to the people.

The Government, the President and all of you may subscribe to the theory that, "attack is the best form of defense". We are sure that it would provide you all with a certain degree of personal enjoyment. However, we do recognize its strategy for what it is. It is just a ruse to evade the grave doubts raised about this matter by falsely accusing the Opposition. Thank You.