"Derivatives/Hedging" Deals
By Citibank U.S.A Standard Charter Bank U.K Deutsche Bank Germany
by
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Ceylon Petroleum Corporation having been a customer of Standard Chartered Bank, Citibank, Deutsche Bank, Commercial Bank and People’s Bank, these Banks ought to have known such statutory limitations imposed by the Parliament of Sri Lanka, exercising the legislative power of the people. Even otherwise, prior to engaging in any transactions, whatsoever, with the Ceylon Petroleum Corporation, these Banks had a professional duty and responsibility, to have carried out a proper due diligence, to have ascertained the statutory powers of the Ceylon Petroleum Corporation, a State corporation established by an Act of Parliament.
The foregoing legal position had been lucidly upheld by the Court of Appeal in its Judgment dated 1st August 2005 in Writ Application No. 829/2005 filed by Lanka Marine Services Ltd., a subsidiary of John Keells Holdings Ltd., in respect of an Agreement entered into by the Government of Sri Lanka, and its Agencies, Sri Lanka Ports Authority and Ceylon Petroleum Corporation, as had been approved by the Hon. Attorney General and the Cabinet of Ministers, which Court of Appeal Judgment was affirmed by the Judgment dated 21st July 2008 of the Supreme Court of Sri Lanka in SC (FR) Application No. 209/2007. ('IMF, World Bank & ADB Agenda on Privatisation - Colombo Port Bunkering Privatisation Vol. 3 - Annulled as Illegal & Fraudulent by Supreme Court' - by same Author) ,
The Court of Appeal Judgment dated 1st August 2005 had pronounced thus, and Ceylon Petroleum Corporation having been a party to such Writ Application, ought to have been aware of the same:
“The powers of 6th Respondent (i.e. Minister of Power & Energy) , as contained the said Act (i.e. Petroleum Product (Special Provisions) Act No. 33 of 2002) cannot be taken away by the CUF Agreement …... In other words, the rights of parties in the CUF Agreement cannot override the statutory powers of the 6th Respondent (i.e. Minister of Power & Energy) contained in the Act No. 33 of 2002….. Having regard to the established principles, the statute being superior, reflects the will of the legislature and takes priority over the CUF Agreement. It is an authentic expression of the legislative will and the function of the Court is to interpret the statute according to the intent of Parliament. The responsibility of this Court is to construe and enforce the laws of the land as they are and not to legislate social or government policy on the basis of the CUF Agreement …... Notice is therefore refused." (Emphasis added) ,
The Gaming Ordinance No. 17 of 1889 enacted during the time Sri Lanka was a British Colony, and which Gaming Ordinance is still in existence, without any amendment/s made thereto, defines the ‘act of betting’, as 'unlawful gaming', which is an offence attracting prosecution in the Criminal Courts of Sri Lanka, as well and truly disclosed by the following of media, reports. Such transactions being illegal, the contracts are not enforceable in law: viz -. ,
In Carlill Vs Carbolic Smoke Ball Co., , (1892) 2 QB 484 @ 490 – 91 Hawkins J gave the following definition of 'wagering contract' (which is an 'illegal contract'), , which was affirmed by the Court of Appeal in UK in Ellesmere Vs Wallace , (1929) 2 Ch 1 @ 24, 36, 48 – 49
“A wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependant upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties …….. In construing a contract with a view to determining whether it is a wagering one or not, the Court will receive evidence in order to arrive at the substance of it, and will not confine its attention to the mere words in which it is expressed, for a wagering contract may be sometimes concealed under the guise of language which, on the face of it, if words were only to be considered, might constitute a legally enforceable contract”
In R Vs Weisz, (1951) 2 KV 611, (1951) 2 All ER 408
“It was held that an attempt to deceive the Court by disguising the true nature of the claim and putting forward a feigned issue was a contempt of Court and could be punished as such.”
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“Derivatives / Hedging” Deals by Citibank, Standard Chartered Bank and Deutsche Bank, with Sri Lanka Government’s Petroleum Corporation, analytically and interestingly raises ethical, moral and legal issues, as to whether deals perpetrated by Banks, with their own customer, whose poor financials were known to them, were dubious and ,i>illegal; with Banks also having compromised public officers, with foreign trips to educate them on derivatives / hedging.
The Author analytically exposes the true nature of such transactions, and how they work, though sophisticatedly described to camouflage and confuse, to achieve the objective of raping customers to make unconscionable profits; disclosing how gullible elected and selected public officers are, and how they are manipulated, through sophisticated and devious means; demonstrating that whilst countries courageously stand up to international or regional political associations, intriguingly lack the ability to stand up to Banks, conducting operations upon licenses granted by monetary authorities of such country.
The Author also exposes the reality of how professionals conduct themselves, within and outside Courts of law, demonstrating classic instances of ‘unequal treatment before the law’, making a mockery of the tenet – ‘all are equal before the law, no one being above it’, sacrosanctly pontificated and propounded on podia. The Author raises in discerning minds, issues of contempt of Court and judicial bias, citing Opinions in the House of Lords, United Kingdom in re – Pinochet, former Chilean President; shockingly also exposing, how the media manipulatively operates driven by hidden agendas.
This book is very interesting and absorbing to read, and imparts incisive knowledge on a variety of subjects, dealt with in an objective, analytical and rational manner, exposing socio-political realities. It is an invaluable book to those concerned with sophisticated financial instruments and scams, which have scandalized financial sectors, warranting stimulus packages from Governments, and to legal/financial academics and professionals.