A test for Yahapalanaya

he leaders of the former regime, their relatives, associates, cronies and their cronies’ cronies are currently being paraded before the presidential commissions and courts. They are arrested, remanded, duly released on bail, and re-arrested on some other charges. Public are now well acquainted with this rather predictable process, they would rather bet on this, instead of horses. The usual suspects and their representatives of the joint opposition claim this is a sham, a witch-hunt and that they have been singled out. The government insists that it really means business and is delivering on an election pledge to root out corruption.   
Now there is this extraordinary case that is testing the government’s resolve to fight corruption. The bond trader Perpetual Treasuries linked to former Central Bank Governor Arjun Mahendran’s son-in-law has made an astonishing after-tax profit of Rs.5.2 billion in the year ending March 31, 2016, the period corresponding to Mr Mahendran’s reign at the Central Bank. That phenomenal growth, up from Rs.959 million in the previous year ending March 31, 2015 has taken place while all other traders in the market have seen their profits slashed or have reported losses. The next highest competitor, Capital Alliance’s profit was just Rs.57 million, according to the Sunday Times.   

"However, if the anti-corruption probes are confined to the members of the former regime, they would end up being a farce and drain the hard earned credibility of the judiciary"

According to the Sunday Times of October 2, 2016, the post- tax profit of Perpetual Treasuries, which got its license in 2013 was higher than much larger banks; DFCC (financial year 2015 post-tax profit of Rs.4.3 billion), Seylan (Rs.3.8 billion), NDB (Rs.3.5 billion), NTB (Rs.2.6 billion), PABC (Rs.1 billion) and Union Bank (Rs.192.6 million). How that is possible is simply mind-boggling, unless of course one considers a fair bit of nepotism and insider dealing, the latter unfortunately is not a crime yet in Sri Lanka. (Though Sri Lankan-born former hedge fund billionaire Raj Rajaratnam is now serving a lengthy prison sentence in the USA for the same offence)   
Financial markets are high-stake affairs where a specialized few run the show; average folks are bamboozled by the high flown jargon and are made to believe that whatever kleptocratic rip offs that take place there were in fact meant to serve the overall well-being of the markets. Allegations of the members of the ex-president’s inner circles getting 10 per cent kickbacks off the government projects sound more comprehensible for the average public than observations of a COPE interim report in 2015, which stated: “…participation details of the Perpetual Treasuries Ltd., in CBSL Treasury Bonds as a primary dealer, shows extraordinary performances after 27th February 2015. The maximum amount of the bid offered by them before that is Rs.250 million. And only Rs.27 million from the bid offered to the value of Rs.150 million had been accepted during the period of 26.02.2014 to 30.12.2014. Further from 10th March 2015 onward, they have offered bids ranging from Rs.300 million to Rs.3000 million and received bids in range of Rs.50 million to Rs.3000 million.”   

Mr. Mahendran’s tenure as Central Bank Governor was overshadowed by a controversial bond deal allegedly linked to his son-in-law’s company at the expense of public money. He rejected those charges, Prime Minister Ranil Wickremesinghe stood by him, nonetheless, President Maithirpala Sirisena decided enough was enough and refused to extend Mr. Mahendran’s tenure. If the allegations then were only allegations, the latest financial records of his son-in-law’s company suggest there is something more than just that. Now, there is a prima facie case that needs to be investigated.   
This government promised to combat corruption. One would expect that it was not just corruption blamed on the former regime. The Finance Minister Ravi Karunanayake in his first budget introduced a supper-gains tax on the companies, which had allegedly benefited from the largess of the former regime and had their profits soaring due to undue market advantages accorded through political patronage.  

"This government promised to combat corruption. One would expect that it was not just corruption blamed on the former regime"

 
Now there is a classic case that has taken place right under the nose of the incumbent administration; the magnitude of which would put the previous allegations of nepotism and corruption to shame. But, except self-interested criticism from the joint opposition, there is no serious effort either to investigate or to explain the whole affair.   
Meanwhile, a long list of members, relatives and acolytes of the former regime are hauled before Court. Chanuka Ratwatta, the son of the former minister Anuruddha Ratwatte was remanded for alleged financial crimes, which smacks in resemblance to the latest affair. He and four others had been arrested in connection with an alleged misappropriation of Rs.4.2 billion in government funds through the primary dealer, Entrust Securities PLC. Gotabaya Rajapaksa, the former defence secretary was indicted in the Avant Garde case and released on bail. Rajapaksa scions, Yoshitha and Namal are making regular court appearance, so is Basil Rajapaksa.   
However, if the anti-corruption probes are confined to the members of the former regime, they would end up being a farce and drain the hard earned credibility of the judiciary. Therefore, one would ponder as to why a host of corruption-busting government agencies are keeping mum over the latest fishy deal. However, such a silence was all too familiar in the not so distant past. 

"Mr. Mahendran’s tenure as Central Bank Governor was overshadowed by a dodgy bond deal that allegedly favoured his son-in-law’s company at the expense of public money"

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