The tragedy and the farce of legal flirtations with the ‘bond scam’

Applying Marx’s scathing denunciation of historic personages to commonplace financial scandals in Sri Lanka, our exploits seem destined to repeat themselves ‘first as tragedy, second as farce.’ One hideous caricature of our flirtations with the law follows the other, with little respite.

In the interests of sanity

Close upon Arjun Aloysius, principal shareholder and director of Perpetual Treasuries (Pvt) Ltd, in the eye of the Central Bank bond scandal, being declared a ‘non-compellable witness’ by the Commission of Inquiry inquiring into the matter, his father-in-law, former Governor of the Central Bank of Sri Lanka (CBSL) Arjuna Mahendran made other news.

This was when he attempted, through his counsel, to hold out that his appearance on summons before the Commission and testifying therein was a gracious concession. Under Section 7 (c) of the 1948 Commissions of Inquiry Act, the Commission has the power to summon ‘any person residing in Sri Lanka’. Based on this, it was argued that because Mahendran was resident in Singapore, he was not subjected to the Commission’s jurisdiction. However, he was anyway presenting himself and deserved to be treated courteously by his interrogators.

In the interests of sanity and basic common sense, it is good to see the Commission declaring Mahendran as a ‘compellable witness’, particularly as the issues pertained to his appointment as CBSL Governor. its previous reasoning as to why Mahendran’s son-in-law, Aloysius was allowed to claim the privilege against self-incrimination was reiterated, the Commission referring to this as ‘the golden rule of the law.’

Anticipating legal challenges

Going by these further articulations, it appears that the members may have been troubled by the possible eventuality that, had Aloysius been compelled to give evidence, this may have resulted in an application for judicial review in the superior courts. As was remarked, this ‘would have in turn resulted in much delay in concluding the proceedings.’ But Mahendran was determined not to be in ‘the same position as he does not say he is likely to be an accused and does not say he is likely to incriminate himself if he is compelled to give evidence.’

Anticipating a legal challenge by Aloysius may be a justifiable apprehension. As was examined last week in these column spaces, a relevant factor was the 2008 amendment to the 1948 Act, allowing the Attorney General to indict on the findings of Commissions of Inquiry. That amendment was clumsy, ad hoc and unnecessary. The potential complications that may arise were raised by this columnist and others when the amendment was mooted. These concerns were disregarded.

The consequences of the change brought about by the 2008 amendment surfaces when one examines key precedents of the Sri Lankan courts. In pre-2008 legal challenges to Commissions of Inquiry findings, the judicial view had inclined (albeit by a whisker), towards deciding that they are merely recommendatory in nature, not having the effect of affecting any party’s rights, or interests and therefore not subject to judicial review. For example, the authoritative opinion in Silva & Others v Sidique & Others (1978-79-80) was that reports and inquiries conducted by a Commission of Inquiry could not be quashed by writ.

‘A step in a statutory process’

It was opined that writ will lie only if an ‘order or decision is of binding effect.’ It must either ‘impose an obligation or involves civil consequences to a person or alter his legal position to his disadvantage.’ Importantly such order or decision must be a step in a statutory process which would have that effect. It must be handed down by a body which had legal authority to determine questions affecting rights.

The Court decided that a Commission of Inquiry does not have the legal authority to make binding decisions. Any penalty or consequence that follows a Report of such a Commission is by the action of some other authority or body, although it may be based on the findings contained in the Report.

On this assessment, the recommendations of a fact-finding Commission do not take effect proprio vigore (by its own force or vigor). Accordingly, the conclusion was that the writ of certiorari will not issue. In this decision, contrary precedents earlier stating that judicial review would lie where the reputation of a person whose conduct was being inquired into by a Commission of Inquiry was affected, (Mendis Fowzie & Others v Goonawardene (1978-79) were departed from.

Testing these issues in court

Post 2008, the potential of a different outcome may arguably be higher. One tipping factor in the scales is the specific power of the Attorney General to indict based on the conclusions of a Commission of Inquiry. This can be fairly assessed (in the words of the Court in the Siddique case) as ‘a step in a statutory process’ which ‘alters his legal position to his disadvantage.’

That said, these are issues of law which must be legally tested at some point. Rightly the privilege against self-incrimination generally applies in a court proceeding where it may be pleaded to shut out testimony, not at an earlier stage. Regardless of the risks of potential legal challenges, fact-finding Commissions of Inquiry may well take a tougher position in regard to witnesses who appear before them. There is a great deal of latitude given to these bodies which are wholly different from courts of law enjoined to abide by strict rules of evidence.

This is precisely why Section 7 (d) of the 1948 Act allows the Commission to admit ‘any evidence, whether written or oral which might be inadmissible in civil or criminal proceedings,’ notwithstanding the Evidence Ordinance. And this is also why Section 14 affords "special immunity for witnesses." Indeed, this was a section that the Commission, in this case, declared itself ‘mindful of ’, despite its order that Aloysius is not a ‘compellable witness.’

Stopping spectacular abuse of public funds

Members of the Commission seem to view a possible allegation of being ‘over-zealous’ with the same startled annoyance with which a king cobra would view a mongoose. But that really need not be the case. Perhaps now it is time and more that citizens and judges are ‘temperedly’ zealous, given the spectacular corruption and abuse of public funds that is now common on the part of all the Governments that we had the misfortune to put up with. That has to be stopped.

And corruptors should not be allowed the benefit of high flown legal arguments put forward by well retained counsel, tragic or farcical as these may be. Public opinion will no doubt stoutly support well deserved raps over the knuckles in such instances.