By C. A. Chandraprema Courtesy The Island

August 14, 2016, 9:26 pm

“The election laws have not been cited in any of the B Reports filed by the FCID against Basil Rajapaksa.”

Former minister Basil Rajapaksa (BR), who had been remanded over allegations of fraud and corruption, was released on bail last Tuesday (09). People are vaguely aware that BR’s latest stint in remand was over a case involving the distribution of GI pipes to Pradeshiya Sabhas. On Tuesday night, the present Minister of Social Empowerment and Welfare S. B. Dissanayake told Hiru TV that he had no idea how Basil Rajapaksa had been arrested over the matter since the correct tender procedures had been adhered to in purchasing the GI pipes and all the Pradeshiya Sabhas (PSs)had acknowledged the receipt of the goods.

By now BR has been arrested four times by the Financial Crimes Investigation Division (FCID) and remanded twice over what people think are allegations of corruption and abuse of state property. The FCID has eight ongoing investigations against him. Five of them relate to the Divineguma Department and three to properties allegedly belonging to him. Since his latest release from remand was over one of the Divineguma cases let that be dealt with first.

All the Divineguma cases have been filed in the Kaduwela Magistrate’s Court. The first case filed under B Report No: 9556/15 was about the distribution of Rs. 2,500 to Divineguma recipients to make improvements to their houses under the Isurumath Nivahanak programme. The second case (B Report No: 9557/15) relates to the payment of compensation and gratuity to voluntarily retiring employees of the Divineguma Department. The third is over the printing of ‘lith’ (almanacs) for distribution among Divineguma families. The fourth relates to the distribution of GI pipes to PSs (B Report No: 44/15 filed on 24 Feb., 2016.) The final case in this group relates to expenditure on the Divineguma National Convention in November 2014 (B Report No: 9578/15 filed on 16 March 2015).

The first arrest of BR in April 2015 was over the first three cases mentioned above. The Isurumath Niwahanak programme started on 24 Oct. 2014, sought to provide Rs. 10,000 to each Divineguma family to make improvements to their houses and the first installment of Rs. 2,500 was paid out of the Divineguma Prajamula Bank Fund on 17 and 18 November 2014. The FCID informed court that the Isurumath Niwahanak programme had been started without allocations being made by the Treasury and that the funds in the Divineguma Prajamula Banks consisted of the savings of members and that it was illegal to use that money for a purpose like this.

The FCID stated in its B Report that according to article 44 (b) of the Divineguma Act, the money in the Divineguma Prajamula Banks was state property and, therefore, it came under Article 5(1) of the Offences Against Public Property Act No: 12 of 1982 and further that Sections 100, 113, 386 and 389 of the Penal Code and Section 03 of the Money Laundering Act No: 5 of 2006 were applicable to this case. Former Minister of Economic Development BR, former Secretary to the Ministry of Economic Development Dr Nihal Jayatilleke and former Director General of the Divineguma Department R. A. A. K. Ranawaka were arrested in this connection and remanded by the Kaduwela Magistrate. Though the FCID claims, in its B Report, that according to Article 44 (b) of the Divineguma Act, the money in the Divineguma Prajamula Banks is state property Article 44(b) refers only to the ‘movable and immovable property’ of the Samurdhi Authority and other bodies abolished to form the Divineguma Department and not to the deposits of members in the Samurdhi Banks which had been converted into Divineguma Prajamula Banks.

Handunnetthi’s question & SB’s answer

It would appear that the provision that applies to the Divineguma Prajamula Banks is not article 44(b) as stated by the FCID but Articles 44(g) and 45 of the Divineguma Act. By Article 44(g), all Samurdhi Banking Societies and Samurdhi Banking Federations became Divineguma Prajamula Banks and Divineguma Prajamula Banking Societies respectively. Article 45 of the Divineguma Act stipulates that the trusts and funds established by the Samurdhi Development Authority shall be managed by the Divineguma Department ‘without any change in the beneficiaries or its objectives’. Hence, the funds in the Divineguma Prajamula Banks do not belong to the State but to the Divineguma beneficiaries and the money disbursed to the Divineguma recipients to make improvements to their houses was their own money and not money belonging to the state.

According to Article 28(d) of the Divineguma Act, one of the functions of the Divineguma Prajamula Banks was to ensure ‘the welfare of the depositors and members of their families’ and providing a grant to make improvements to the houses of Divineguma beneficiaries was well within the scope of the Prajamula Banks. If Article 5(1) of the Offences Against Public Property Act No: 12 of 1982 was to apply to this case, the property concerned had to belong to the state and be ‘dishonestly misappropriated’ and converted for the use of the suspects in this case. However, the money in the Divineguma Prajamula Banks does not belong to the state and the B Reports do not say that this money has been misappropriated for the use of the suspects either.

The FCID has also charged BR et al. under Sections 100, 113, 386 and 389 of the Penal Code as well. Sections 100 and 113 of the Penal Code relate to aiding and abetting, instigation, conspiracy, facilitation or concealing the commission of a crime. Section 386 of the Penal Code pertains to ‘dishonestly misappropriating or converting to one’s own use’ any movable property. The numerous illustrations given in the Penal Code to elucidate the application of this Section makes it abundantly clear that if Section 386 is to apply, it is mandatory that the movable property concerned has to be converted to the use of the person committing the offence. The B Reports do not indicate that the Rs. 2,500 paid out has found its way into the pockets of the three suspects arrested in this case.

Section 389 of the Penal Code relates to the criminal breach of trust which too cannot really apply in this case because the money has been utilised for a purpose that comes well within the functions of the Divineguma Prajamula Banks as pointed out earlier. The FCID has also charged BR and the three officials under Section 03 of the Money Laundering Act No: 5 of 2006, which however, applies only to transactions relating to property derived from unlawful activities whereas all the money that was distributed to Divineguma recipients, was their own money as per section 44(g) of the Divineguma Act.

On 03 Nov. 2015, JVP parliamentarian Sunil Handunnetthi addressed a question to the Minister of Social Empowerment and Welfare S. B. Dissanayake (SB) in Parliament wanting to know whether a sum of Rs. 3 billion belonging to the Divineguma Fund had been misused to fund the Isurumath Nivahanak programme, which was launched on the eve of the last presidential election. Handunneththi said that when a minister in charge of a subject ‘destroys’ funds belonging to the state without any sanction from cabinet, that sets a bad precedent. In reply to this question, SB stated that no money belonging to the Divineguma Fund had been misused and the Divineguma Fund had not lost Rs. 3 billion.

The JVP was taken aback by this answer and JVP leader Anura Kumara Dissanayake told Parliament that the question was actually not about the ‘Divineguma Fund’ but the ‘Divineguma Prajamula Bank Fund’ and that they would address another question in this regard later. However the JVP did not bring up the issue again. A day or two before he answered that question in Parliament, the Divaina had reported SB as having explicitly said at a Divineguma gathering in Galle that none of the funds he created when he was the Samurdhi Minister had been misused by BR.

Gratuity and compensation for voluntary retirement

The other case over which BR and three other officials of his ministry were arrested was over the payment of Gratuity and Compensation to employees voluntarily retiring from the Divineguma Department. With the Divineguma Development Department becoming operational on 03 Jan. 2014,the Samurdhi Authority, the Southern Development Authority, the Up-Country Development Authority, the Samurdhi Commissioner General’s Department and the Department of Up-Country Peasantry Rehabilitation were dissolved and merged with the Divineguma Department. Of the 25,101 employees in the bodies that were abolished, 23,581 were absorbed into the Divineguma Department under various arrangements while 1,520 decided to go on voluntary retirement. The problem arose regarding the Rs. 1,177 million spent to pay compensation and gratuity to the first batch of 1,059 employees who had gone on voluntary retirement.

Due to the Treasury’s delay in releasing the money despite requests made, this money had been paid out of the funds of the Divineguma Prajamula Banks as a temporary measure. The FCID informed court that it was illegal for money belonging to the Divineguma Prajamula Banks to be used to pay compensation and gratuity to employees without the express sanction of the Treasury. Once again the FCID had charged BR et al. under Article 5(1) of the Offences Against Public Property Act No: 12 of 1982 as well as Sections 100, 113, 386 and 389 of the Penal Code and Section 03 of the Money Laundering Act No: 5 of 2006.

However, according to Section 44(e)(i) of the Divineguma Act, it was the Minister who had the authority to determine the terms of a voluntary retrenchment scheme for employees of the bodies that were dissolved.

In this case, BR formulated the retrenchment package and obtained approval for it from Cabinet as well. And Cabinet directed that it be paid. Furthermore, even if the money in the Divineguma Prajamula Banks was used to temporarily pay the retiring employees, the Offences Against Public Property Act No: 12 of 1982 does not apply because the money in the Divineguma Banks is not the property of the State but the property of the Divineguma beneficiaries. Likewise, Section 386 of the Penal Code cannot apply because none of this money was taken for the personal use of the suspects. This writer learns that there has been a large allocation in the Samurdhi Authority which accumulated during the Rajapaksa era without being utilised. In the early years, the profits of the Samurdhi Banks were calculated without taking into account the salaries paid to the employees of the Samurdhi Authority who were administering the Samurdhi Banks. Later, on World Bank advice a part of the profits was laid aside for the salaries of Samurdhi bank officials, but the actual salaries were paid by the government. Over years, this allocation for salaries accumulated to over Rs. 11 billion. Then there was a general welfare fund which also had well over Rs. 1 billion.

The treasury was aware that the Samurdhi Banks had a lot of money. The B Reports of the Isurumath Nivahanak case stated that the Treasury had requested the Divineguma Department to see whether the funds for the Isurumath Nivahanak programme could be raised from the funds available to the Divineguma Department – which is a reference to these accumulated funds. The employees going on voluntary retirement were apparently paid out of that unutilised allocation until it was reimbursed by the Treasury. The government changed by early January which did not leave any time for the Treasury to reimburse this money. We learn that the money has since been reimbursed.

The third case over which BR and his officials were remanded was over the printing of Lith (almanacs) to be distributed to Divineguma households. (The writer is not in possession of the B Reports pertaining to this case as yet. Indictments have however been served in the High Court against BR and his officials in relation to this case.) On 04 May 2016 JVP parliamentarian Sunil Handunnetthi asked the Minister of Social Empowerment and Welfare SB in Parliament whether the latter was aware that a sum of Rs 29.4 million had been misused by the Divineguma Department to print five million almanacs (lith) with photographs of the former president for the Presidential election 2015 and why five million almanacs had been printed to be distributed among just 1.8 million beneficiaries for the year 2015?

SB replied that at the end of 2014, a ‘lith’ had been published with details of auspicious times for agriculture and other such information and that all the procurement guidelines had been followed in awarding the printing contract. Dissanayake further stated that no money from the Divineguma Fund had been utilised for this purpose and that allocations of the Economic Development Ministry for the year 2014 had been utilised for the purpose. Asking further questions Handunneththi and Bimal Ratnayake wanted to know why five million almanacs had been printed when there were only 1.8 million Divineguma families. SB explained that these lith were supposed to be distributed to all households – not just Divineguma beneficiaries as had happened in previous years, and that plants, seeds and fertiliser had also been distributed in that manner to Divineguma recipients as well as the general public.

The most recent arrest of BR took place in relation to the purchase of GI pipes to be distributed to PSs. According to the B Reports of this case, a total amount of Rs. 35.5 million was used from the capital expenditure allocation of the Divineguma Department to purchase 32,976 GI pipes distributed to 58 Pradeshiya Sabhas. The FCID reported to courts that there had been no pre-arranged programme of the Divineguma Department to supply GI pipes to PSs or a request from the PSs for GI pipes and there had been neither criteria by which the 58 Pradeshiya Sabhas were selected to receive GI pipes nor any guidelines by which the number of pipes that would be given to each Pradeshiya Sabha would be decided. The FCID stated in their B Report that the Divineguma Department belonged to the Economic Development Ministry and the Pradeshiya Sabhas belonged to the Local Government Ministry and, therefore, by the supply of those GI pipes to a different ministry, there had been criminal misappropriation of Rs. 35.5 million and breach of trust.

As in the earlier cases, the FCID informed court that Article 5(1) of the Offences Against State property Act of 1982, and Sections 100, 113, 286, 389 of the Penal Code and Section 03 of the Money Laundering Act No: 5 of 2006 had been committed in this regard. There is no doubt that it was state property because the money used for this purpose belonged to the Divineguma Department. However there is a question mark over the applicability of Article 5(1) of the Offences Against Public Property Act No: 12 of 1982 to this case because this movable property had not been converted to the personal use of the suspects. Sections 100 and 113 of the Penal Code relate to aiding and abetting, instigation, conspiracy facilitation or concealing the commission of a crime. For section 386 of the Penal Code to apply, the said property has to be dishonestly misappropriated or converted to the personal use of the suspects which has obviously not happened in this case.

Section 389 of the Penal Code relates to the criminal breach of trust which too does not apply in this case because the money has been utilised for a purpose that comes within the functions of the Divineguma Department. According to Sections 5(e)(i), 5(m), and Section 6 of the Divineguma Act, the Divineguma Department has the right to utilise their money ‘to secure the co-operation of local authorities, and to purchase equipment, for the purpose of promoting the activities of Divineguma beneficiaries and to facilitate the providing of services to Divineguma beneficiaries by any local government institution’. Though the FCID had mentioned Section 03 of the Money Laundering Act No: 5 of 2006 in relation to the purchase of these GI pipes, that law cannot apply in this case because the property transacted was not acquired by the Divineguma Department through unlawful means.

The contention of the FCID that the offence of ‘criminal misappropriation’ has been committed by the Divineguma Department in supplying these GI pipes to bodies that belonged to a different ministry, is absurd to say the least. This is why minister SB said publicly that he was at a loss to understand how BR had been arrested over this GI pipe case. The final case in this category over which BR arrested yet relates to expenditure on the Divineguma National Convention held in November 2014 – which we can discuss when it is taken up.

SB: Unintended victim of FCID folly

The key point to remember in relation to the four Divineguma Department cases over which BR was remanded is that there is not the slightest hint even in the FCID’s B Reports that BR or anyone else made money out of the transactions involved even though the whole country mistakenly believes these cases are related to fraud and corruption. All these Divineguma offences, the Isurumath Nivahanak programme, the voluntary retirement programme, the printing of lith, the GI pipes case and even the still un-discussed Divineguma Convention are supposed to have been decided around October or Nov. 2014, when it was widely speculated that a snap presidential election would be held.

Yet, the election laws have not been cited in any of the B Reports filed by the FCID against BR. One reason for this is that the decisions relating to these matters were made before it was legally possible to declare a presidential election. Another reason is that the Elections Commissioner and the political party secretaries have an ongoing informal agreement arrived at outside the law, to disregard provisions in the election law relating to canvassing, the distribution of handbills and propaganda material and the display of symbols etc after nominations have been handed in. It would not be possible to claim that BR had violated certain election laws while other aspects of the same elections law were being openly flouted by the elections authorities and the police themselves.