Abuse of duty free car permits by MPs is daylight robbery
People’s Attorney Nagananda Kodituwakku (Daily FT)
Attorney-at-law and rights activist Nagananda Kodituwakku, who fights against Ministers and MPs abusing the duty free vehicle permits causing loss of revenue in billions, urges President Maithripala Sirisena to introduce a tough system to review the tax structure and also the perks and privileges given to top Government officials, including MPs.
The former Head of the Customs Revenue Task Force, Kodituwakku, who fled the country in 2001 due to death threats after his inquiry related to illegal transfer of duty free vehicles, said at a time the country’s economy needs a huge boost to uplift the living standards of the people, the Government cannot afford to suffer losses due to corruption.
“From a duty free vehicle, a Hummer (Chassis No- 5GRGN23U55H112651), imported for a Parliamentarian, a total revenue of Rs 44.7 million was waived off and he paid only Rs. 1,750 charged by Customs as data entry fee,” Kodituwakku, a public interest litigation activist, said, reading out the names of the MP and Cabinet Ministers in the list of those who have imported luxury vehicles.
Following are the excerpts of the interview:
By Shanika Sriyananda
Q: Do you have credible evidence to claim that free tax vehicles imported for Ministers and MPs are now owned by other people?
A: I can name them all. I have submitted the Customs entries with details of vehicles imported so far with the name of the MPs (some are elected and some defeated but from the National List) and the vehicle information to the Commissioner General of Department of Motor Traffic. The registration information reveals the names of the MPs as registered owners of the vehicles with names of new owners (most are companies not entitled to enjoy this tax free privilege) in whose names these vehicles have been transferred on the same day they were registered with Department of Motor Traffic (DMT).
For example, a Toyota Land Cruiser imported on permit issued to a State Minister has transferred to another person on the same day, in which it was registered with the DMT. In this deal alone, the Government has incurred a loss of tax revenue of Rs. 33.4 million. This is a daylight robbery of Government’s tax revenue. You can see most of the Sunday papers carry advertisements of duty-free permit cars imported on MP permits.
Q: What is the total revenue loss to the Government?
A: The total loss to the Government will be over Rs. 7 billion, yet this cannot be confirmed until the total number of vehicles imported by third parties on MP permits is ascertained. At the moment I have a list of 77 vehicles imported on MPs’ tax free permits. For example, for a Toyota Land Cruiser, which is imported on these permits, a total of Rs. 33.4 million tax revenue was waived off by Customs. From a duty free vehicle, a Hummer (Chassis No- 5GRGN23U55H112651), which was imported for a TNA Parliamentarian, a total of Rs 44.7 million revenue was waived off and he paid only Rs. 1,750 charged by Customs as data entry fee.
Q: But the Government has proposed to abolish duty free permits granted to all State officials, including the MPs, by the previous Government?
A: Yes, in November 2015, Finance Minister Ravi Karunanayake during his Budget speech, making a special reference regarding the heavy losses incurred by the Government, said in Parliament that the vehicle permit schemes had been politicised and misused and had resulted in Rs. 40 billion revenue loss to the Government annually. He proposed to abolish vehicle permit schemes, including permits to MPs.
But this same Minister Karunanayake issued a gazette notification in May 2016 (under Section 3C of Excise (Special Provisions) Act No. 13 of 1989 granting tax exemption for MPs to import expensive luxury vehicles up to the value of $ 62,500 with no engine capacity specified absolutely free from any levies.
Q: Can the Government adopt a dubious fiscal management policy?
A: No, not at all. Here I want to highlight an important point. Under the Fiscal Management (Responsibility) Act No.3 of 2003 the Government cannot afford to take any decision, which will affect the national economy or the national interest of the country and the future generation.
Under the Constitution, the Public Finance is solely vested in the Parliament and not with the Executive. The Section 148 of the Constitution says that the Parliament shall have the full control of the public finance. The Executive has no authority to spend money or impose taxes unless authorised by law enacted by the Parliament. Therefore, as law provides (Section 3C (3) of Excise (Provisions) Act, any person who gets tax exemption on any goods and intends to sell or dispose of such goods should get prior approval and pay all levies prior to the disposal of goods, which can be a vehicle or any other item.
Therefore, disposal of these vehicles against law by any person holding any public office for unjust enrichment commits a criminal offence (corruption) under Section 70 of the Bribery Act. The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) is empowered to investigate any complaint made on the abuse of these permit schemes that cause tremendous revenue loss to the Government.
However, when I made a formal complaint on this abuse to Dilrukshi Dias Wickramasinghe, the Director General of CIABOC in December 2014, she replied stating: “The conditions in the tax free permits were decided as policy of the Government, therefore any loss caused to the Government due to the implementation of such Government policy will not fall within the Scope of Section 70 of the Bribery Act and the Commission will not take any further actions.”
Is that the Government policy? There is no law authorising Ministers and MPs to rob public funds. This decision of the CIABOC not to initiate action against dishonest MPs has led to more corruption, giving green light to corrupt MPs to abuse the public office as they pleased, violating the public trust doctrine that requires them to use the public office only for public good and not for private benefit.
Q: Did you complain to CIABOC again about the selling duty free permits by the MPs recently and what was the response?
A: Yes, I made a complaint backed by irrefutable evidence made available to Dilrukshi Wickramasinghe. The decision to resume issuance of tax free permits to MPs by the Yahapalanaya Government clearly contradicts its own fiscal policy which was made known by President Maithripala Sirisena in his speech at the Anti-Corruption Summit held in London. Prime Minister Ranil Wickremesinghe too made similar statements through the print and electronic media that his Government would not tolerate any form of corruption.
I must reiterate this. Our politicians are great Machiavellians, who talk morality in public and practice the complete opposite in their private life. This is the accepted norm of our politicians from the day they entered into politics because they know that people are utterly ignorant of their rights and that they are the masters and the MPs are only the servants.
With my complaint, I expected the Director General to initiate swift action at least to buy some vehicles freely available in the market to prove the abuse and to buy such permits sold through brokers by the MPs available for Rs. 25 million each and catch some dishonest MPs red-handed.
The Fiscal Management (Responsibility) Act that I mentioned enacted for a purpose i.e. to ensure that the financial strategy of the Government would be based on the principals of responsible financial management to facilitate public scrutiny of public finance and the performance of the Government, Section 3 of this law says that the Government needs to ensure that the policy decisions of the Government should have regard for the financial impact of such policies on future generations.
What is the impact of the future generation on the decision of granting tax free permits to rob Government tax revenue of over Rs. 7 billion? There is a huge responsibility in civil society, when the Government itself is corrupt. However in this country, the so-called civil society seems to enjoy a long spell in hibernation.
The whole process adopted by the Government to issue MP tax-free permits is manifestly flawed. These permits were issued with no legal authority. The relevant gazette notification was issued some months after the permits were issued to MPs. Why the Government took it so easy is because it knows that all law enforcement agencies are under its firm grip.
The former DG of the CIABOC is a very good prosecutor but an utter failure as a law enforcement officer. As mentioned before, she could have easily purchased duty free vehicles available in leading car sale showrooms to prove this fraud. These vehicles are advertised for sale in the media and Toyota Land Cruiser jeeps with chassis numbers are openly displaced in islandwide car sales. No one involved in this fraud has any fear as there is no rule of law in this country or authority to bring them to book.
Q: According to your investigation, how many MPs have sold their vehicles up to now?
A: There are so many. So far around 80 vehicles have been imported and many more have been shipped and are on the way to Ports of Colombo and Hambantota. I have documents to show that some ministers and MPs have also imported their duty free luxury vehicles in October. However, after this fraud is exposed by print and electronic media, the buyers are now reluctant to transfer their vehicles in their names and they have been advised to use these vehicles in the name of the permit holder MPs.
Q: Do you have information on JVP and TNA Parliamentarians who are involved in this fraud?
A: I have not found any JVPer yet, but there are many TNA MPs. I recall TNA MP Sumanthiran telling me that he considers that it is not just illegal but the selling of the tax free permit is an immoral act which amounts to betrayal of the trust placed in the MPs by the people.
Q: Is there any action that the Department of Motor Traffic can take to stop this abuse?
A: Yes, of course. This issue was discussed with a DSG who advices the DMT to enforce the law against third party keepers of these vehicles without transferring these vehicles in their name, because the law prohibits keeping a vehicle without effecting the transfer in the name of the user.
Some Parliamentarians, knowing the risk, have advised those who bought their permits to inform the users of these vehicles not to transfer the vehicles in the name of the buyer, but to use them in the names of the MPs, which again amounts to violation of the Motor Traffic Act, which says the person who possesses the vehicle has to have the papers under his name. The Police can seize such vehicles and keep them in their custody until the registration papers are produced in the name of the user.
The Toyota Land Cruiser imported on a permit issued to another MP of the Opposition is registered in his name (CAT 9797) but possessed by another and in the absence of rule of law, the man who possesses the MP’s vehicle runs it without any problem.
Q: How effective was Right to Information for you to obtain all relevant documents from Sri Lanka Customs and the DMT?
A: Not just this law, there is a similar provision in the 19th Amendment to the Constitution as well (Article 14A), which provides any citizen to have access to any public record maintained at any public office. I believe a huge responsibility lies with the media to expose all forms of corruption which has become the order of the day in Sri Lankan politics. That is why some MPs openly say that MPs sold their permits since JRJ’s era, a clear testimony of total absence of rule of law. Therefore, the media has a huge responsibility here without turning a blind eye to lawlessness that will only help Sri Lanka go down the drain.
Q: You accuse former President J.R. Jayawardena for introducing changes into the political system. Why?
A: He is the one who opened the floodgates for all forms of corruption. People like Dudley Senanayake, N.M. Perera and many others entered politics to contribute to the betterment of the country and the people and not to rob the nation’s wealth. Today within year or two MPs easily account for some hundreds of millions of rupees whereas those people when they died had only a few hundred rupees left in their bank accounts. J.R. Jayewardene effectively ruined the road map of Sri Lankan politics and today only utterly self-centred people who can afford to spend a few millions get nominations; their character, integrity and credibility are absolutely irrelevant.
Q: Why did you flee the country?
A: I fled the country in September 2001 due to death threats. I headed the Customs Revenue Task Force and handled a case in which four duty free vehicle permits given to a private hotel to promote tourism had been sold unlawfully to two famous cricketers and two leading businessmen in the country.
As the inquiring officer, I applied the law fairly and treated everybody equally at four different inquiries held into the matter and each person involved was imposed with a forfeiture of Rs. 4.5 million. When I commenced the fourth inquiry into the famous cricketer, who captained the Sri Lanka team, the then administration directly interfered into the case and had given directives to abandon the inquiry.
Meanwhile, this cricketer, who is also from my school – Ananda College – phoned me directly and requested me to abandon the case but I explained him that it was not proper for him to call the inquiring officer. His father was a Cabinet Minister at that time but yet I decided to proceed with the case. When the inquiry was in progress, the then DG Customs ordered me to suspend the inquiry immediately. As the law prohibits carrying out unlawful directions, I had to disobey his directives. I proceeded with the inquiry to the end and imposed a fine of Rs. 4.5 million.
It is sad to say that my boss let me down and informed the Government I conducted the inquiry without heeding their orders. This made the then administration angry. Then my family with young children and I received many unidentified threatening phone calls.
The Parliamentary Hansard on 9 October 2009 carried the full story about this incident mentioning the names of those who were involved. Unfortunately, the cricketer’s father informed the House that I fled the country because I faced prosecution for demanding Rs. 2.5 million from his children to close the case. Finally, after I left the country, on the orders of the highest authority, the case record was called for and the forfeiture imposed was mitigated to Rs. 1 million. This is how politicians behave in this country.
Q: Why do you blame the Rajapaksa regime for the breakdown of rule of law?
A: Rajapaksa should be credited for the goods things he has done. But he cannot be pardoned for the serious wrongdoings he committed to destroy the rule of law and to make the Judiciary subservient to him at all times. The Chief Justice was dumped for not complying with his orders and a stooge was installed in the office. Lawyers practicing in the Superior Court complex will never forget the day when their car boots were searched for Chief Justice Shirani Bandaranayake by Special Forces to ensure smooth transfer of power to Mohan Peiris. The most serious crime he committed against the nation was the changes made to Constitution to serve the desire of only one individual to remain in power.
Q: But you were silent during that era?
A: No, I was not. I fought fearlessly against President Rajapaksa. I had the courage and will to challenge any person in authority including President Rajapaksa, who abused the law for his private benefit. I was the only lawyer who challenged Rajapaksa’s nominations for a third term with action filed in Court on 16 December 2014. Mohan Peiris was the Chief Justice and I had asked the Court to suspend the presidential election until the action filed in Court was heard and determined. The case record suddenly went missing from the registry, as Rajapaksa was confident of winning the election. But when he realised that he was facing a formidable challenge the record suddenly resurfaced and on 2 January 2015 the Court was ready to take it up, apparently to grant me interim relief that I had sought to suspend the election.
By then public opinion on President Rajapaksa has been evidently eroded. I felt that the Attorney General who then performed office under Rajapaksa would have been instructed to concede the interim relief prayed for in the petition to suspend the holding of the presidential election scheduled for 8 January 2015 until the final determination of the case, effectively throwing a lifeline to President Rajapaksa to remain in power for a considerable period against the will of the people.
In this background I felt that the action that I filed in the national interest could be defeated if proceeded with and therefore withdrew it, with due respect to the will of the people and their sovereignty that finally determined their choice through the exercise of their franchise at the presidential election. If that action was not taken, as President Maithripala repeatedly claims, he would have been six feet under.
Q: Are you influenced by any political party to be a voice for them?
A: I am not a voice for any political party but I am a people’s lawyer who would fight for their rights against any organ of the Government. I am a people’s counsel.