A victory for free speech

In a judgment of great economy, Justice Boodoosingh examined the nuances of a complex issue.

On the one hand, it is well established as “a hallowed principle of company law” that an incorporated entity has a legal personality and can take action to defend itself from harm.

On the other hand, the common law makes it plain that government institutions should not be able to launch defamation lawsuits due to the imbalance of power: it’s too hard to prove allegations against billion-dollar State enterprises; issues need to be ventilated in the public interest; and public bodies do not enjoy the same rights as private citizens.

The judge came down on the correct side. He properly balanced both competing interests and erred on the side in favour of freedom.

“The rationale for establishing a limited liability company could not have been for the purpose of avoiding scrutiny and obligations that would have applied if the programme remained strictly under State management and control,” Boodoosingh ruled.

Of CEPEP, the judge noted, “This is a government programme.

The funds used are State funds.

The objectives of the programme are national goal objectives such as community development, employment creation and business development.

There is therefore a strong public interest element on there being accountability and oversight of its operations. This need is magnified by the increase in State spending on the programme over time.” While a court has to be slow to fetter a company’s ability to defend itself, the nature of CEPEP is such that it is truly legal sophistry to argue that it could suffer harm to its business by being criticised given the fact that no evidence was put before the court to suggest that CEPEP earns income from sources other than the Government.

The ruling leaves open the door to other actions. Individuals employed in the company may still bring claims. And the company may defend itself in the media.

Opposition MP Dr Roodal Moonilal has called for the CEPEP board to resign in light of this ruling.

However, that is uncalled for.

While CEPEP should have been aware of legal precedent suggesting it could not counter-sue Moonilal (who alleges defamation by CEPEP in court), the decision to go ahead with this legal submission has brought about the welcome side-effect of making the law clear.

Sadly, however, taxpayers will have to pay for this clarity, assuming the matter is not subject to appeal. If it is appealed, we may have to pay more for the same result.

The deeper issue of this case is the troubling use of special purpose State enterprises. The lesson of the Uff Commission of Inquiry was that the attempt to evade public service accountability via incorporated entities was simply a manoeuvre too much. It concentrates considerable power into quasi-private puppets that must dance to the beat of a Cabinet drum, effectively, if not in law.

The CEPEP case goes beyond that single entity and serves as a warning to all State entities. Too often such entities, when facing questions from the media, lawyer up and issue threatening letters feigning indignation and hurt. In some cases, considerable sums of State money are used to silence inquiries in companies that already have no clear line of accountability, though they have a pipeline straight to the Treasury.

This ruling should inform the present Government’s review of State enterprises. It should also encourage faster reform of the regime of defamation laws. For now, we are heartened by this victory for free speech.