Some circles close to Doctor Punchi Banda Jayasundera note that Doctor Punchi Banda got his first job at a Government Office thanks to Susantha Chaminda Ratnayake and thus Jayasundera who had hold the Secretary designate at Finance Ministry for several years under different Presidents ever since then had always been favourable to John Keells in Sri Lanka’s Economic Planning and Finance Policy Making.
Recently Dr. Punchi Banda had highlighted that there were Treasury nominees in many state entities at a media conference he held to publicize about his role in intervening on a deal relating a National Savings bank (NSB) buying a stake of The Finance Company (TFC).
In late 2008 Former CJ Sarath Nanda Silva led Supreme Court of Sri Lanka order against Treasury Secretary Dr. P.B. Jayasundera to pay Rs. 500,000, the highest ever compensation in a fundamental rights case, actually paved the way for another dimension in fight against corruption in Sri Lanka according to reports.
In late September 2008 then a Powerful Finance Ministry and Treasury Secretary Dr. Punchi Banda Jayasundera stepped down from all public offices including the post of Chairman- SriLankan Airlines bidding farewell to senior Finance Ministry officials at a gala reception held at the BMICH.
That time the Supreme Court (SC) petition was filed by then Presidential Advisor public interest activist Vasudeva Nanayakkara in January 2008 as a private citizen against the highly controversial deal surrounding the Lanka Marine Services Ltd (LMSL) privatization. The case dates back to 2002 following a privatization deal that led to the sale of Lanka Marine Service (Pvt) Limited (LMS) by state-owned Ceylon Petroleum Corporation (CPC) to Sri Lankan conglomerate John Keells Holdings PLC (JKH), a then ‘Controversial Deal’ articulated, masterminded and pioneered by Kandiah (Ken) Balendra then Chairman of Sri Lanka’s premier blue chip John Keells Holdings PLC (JKH); Kandiah is also the father of present Chairman of CSE Krishan Balendra who pioneered, masterminded and articulated the most overpriced IPO’s in Sri Lanka’s history namely Expolanka and Softlogic being a director of John Keells Capital an investment bank.
That time The SC ruled that as then Public Enterprises Reform Commission (PERC) Chairman, Dr. Punchi Banda Jayasundera and Executive Director of JKH Susantha Ratnayake had acted with dishonest intent in the sale of LMSL shares. The Supreme Court ordered Treasury Secretary Dr. Jayasundera to pay Rs. 500,000, the highest ever compensation in a fundamental rights case. The Supreme Court also ordered that Lanka Marine Services (LMS) which is under John Keells Holdings (JKH), which was privatized in 2002, be handed over to the government and ordered that the occupiers of the 8.5-acre plot of land should vacate it within one month. Later on JKH informed Colombo Bourse LMS has handed over the land to the SLPA on 10th September 2008 and has taken all possible steps to remove stocks of oil and lubricants by 12th September 2008 in terms of the orders of Court.
However in the ruling it was noted that The Supreme Court rule state that Dr. Jayasundera has made certain significant deviations from that stated at the Pre bid Conference that favored JKH. “In particular after the bid was accepted Jayasundera agreed to the inclusion of a clause in the CUF Agreement on the basis of which LMSL owned by JKH attempted to stave off competition in the supply of bunkers by others who subsequently obtained licenses from the Minister. The clause agreed to by Jayasundera was struck down by the Court of Appeal as being illegal.”
That time in the Supreme Court ruling, it has revealed that JKH had made a false representation of collaboration with Fuel and Marine Market (FAMM) for the purpose of securing the 70 marks to be short listed. This falsity is established by a contemporaneous application made by JKH to the Board of Investment (BOI) for investment relief in which no reference is made to any foreign collaborator.
The tax relief granted to JKH was not permissible under the existing regulations and JKH got an amendment tailor-made for its purpose and secured the tax exemption. This resulted in LMSL which was a tax paying company when owned by the CPC becoming a tax free company when sold to JKH.
Those days in another development followed by SC ruling, it was reported that the Bribery Commission was looking into the possibility of filing action against Dr. Jayasundera, then UNP Ministers Milinda Moragoda (PERC was under him) and Karu Jayasuriya (CPC was under him) on the charge of abusing public property in connection with ‘Controversial LMS Deal’.
Later as requested by the courts, Dr. Jayasundera had also pledged that he would not accept any public sector position in the future through an affidavit submitted to Supreme Court on October 16, 2008. However on August 2009, Jayasudera filed a motion seeking to relieve him from the affidavit dated October 16, 2008 given to the Court stating that he would not accept any office in the Government in future. That time Jayasundera had also stated in his motion that the President had requested him that his service as Secretary to the Treasury and Secretary to the Finance and Planning Ministry was required in the national interest.
Allowing his application to precede, the Supreme Court then led by CJ Asoka De Silva on 24 September 2009 gave relief to Dr. Jayasundera to resume service in the public sector. A bench consisting seven judges of the Supreme Court by majority vote, ruled in favor of the petitioner.
Doctor Punchi Banda Jayasundera
Dr. Punchi Banda Jayasundera has been in the civil service for the last 33 over years. Prior to his appointment as the Secretary to the Treasury, he was Deputy Secretary to the Treasury from 1997-1999, Director General, Department of Fiscal Policy and Economic Affairs in 1995, and Economic Advisor in 1990. He held several senior positions in the Central Bank of Sri Lanka before joining the Ministry of Finance and Planning.In addition to the office at the Ministry of Finance & Planning, Dr. Jayasundera has also held office as Chairman, Public Enterprises Reform Commission, Senior Policy Advisor, Ernst & Young, and as consultant to the IMF and the World Bank on country assignments.
Dr. Jayasundera holds a Master’s and a Doctorate degree in Economics (1984) from Boston University, USA, a Master’s degree in Development Economics (1979 – 1980) from Williams College, USA; and a bachelor’s degree in Economics (1973) and Phil Economics (1974) from the University of Colombo, Sri Lanka.
Background of Lanka Marine Services
The bunkering business was a government monopoly carried out by a government owned company- Lanka Marine Services. Then the government had decided to privatize it but not before liberalizing the bunkering business which was to be done in one year. The Cabinet had decided to recommend the issue of 3 licenses to carry on the business. But then Chairman of PERC Dr. Punch Banda Jayasundera had decided to privatize it before such liberalization. That time the Chairman Dr P.B Jayasundera had said that the Supreme Court in its judgment “instead devised and carried out without any authority of the Cabinet a process for the sale of the Lanka Marine Services while the monopoly was still intact.” According to the findings of the Supreme Court then Chairman BOI had manipulated the tender procedure to allow only the favored bidder (which was JKH) and he had also secured a valuation from a party other than the Chief Valuer.
Para 14 in that agreement said that JKH had an assurance that it would succeed in securing a sale of shares in its favor even before the bid contained a misrepresentation referred above was accepted, since it made an application to the BOI well before the bidding process, on a false basis that the application is in respect of a new investment whereas the particulars in the application are reference to the business of LMS. The tax relief granted to JKH was not permissible under the existing Regulations and JKH got an amendment tailor made for its purpose and secured the tax exemption. This resulted in the LMS which was a tax paying company when owned by the (Ceylon Petroleum Corporation) CPC becoming a tax free Company when sold to JKH.”
The Supreme Court held that the PERC Chairman Jayasundera’s action was biased in favor of JKH. It also held that the company (JKH) has secured advantages and benefits through the illegal process and in specific instances by misrepresentations that have been made.”It went on to state that “the allegation of the Petitioner that he (Dr PBJ) worked in collusion with Susantha Chaminda Ratnayake of John Keells to secure illegal advantages to the latter , adverse to the public interest is established.”
But the Chairman of JKH continues despite these findings against him. There are statutory authorities like the Securities Exchange Commission supervising the listed companies in addition to the Colombo Stock Exchange. Why are they still silent? Will the other authorities like the Bribery & Corruption Commission take action on the findings of the Supreme Court regarding the John Keels Holdings and Susantha Chaminda Ratnayake’s conduct of affairs?
The transport sector took a major write-off when JKH was compelled to hand over its bunkering business back to the Government on the basis of a Supreme Court ruling. While many aspects of the ruling could be questioned, the loss of this investment would potentially wipe-out close to $ 100 million in market capitalization and $ 7 million per annum in recurrent profits.
Noteworthy observations connected with this debacle and Susantha Chaminda Ratnayake are: Susantha Chaminda Ratnayake Chairman JKH was fined by the Supreme Court for engaging in an illegal transaction. Then Ratnayake duly paid the fine to Court.
Susantha Chaminda Ratnayke then JKH Chairman was able to influence the Board and major shareholders to continue holding his position.
The key issue connected with LMS was that JKH was perceived to have acted “arrogantly” by litigating against another party who attempted to make use of the “common user” bunkering facility and introduced several favorable clauses into the privatization agreement that were not in the original bid document.
JKH was not transparent in that the Company ignored requests by several shareholders to post documents submitted by the JKH in its defence to the Supreme Court on the Web prior to the judgment being delivered. This was not done by JKH, thereby fuelling speculation of lack of transparency. As a result, most shareholders do not know the full picture and are of the opinion that the current Chairman Susantha Chaminda Ratnayake does not have the moral authority to continue in his position.