Filing the first ‘B’ report in Court on its investigation into the CB bond scam, the CID on Friday cited former Central Bank Governor Arjuna Mahendran, Perpetual Treasuries Ltd., (PTL) owner Arjun Aloysius, PTL Chief Executive Officer Kasun Palisena and PTL as suspects in the main magisterial inquiry.
Appearing for the CID, Senior Additional Solicitor General Yasantha Kodagoda PC told Court that the facts presented in the report were based on the prima facie appearance of the material investigated so far by the CID.
SASG Kodagoda said once the prosecution found suspects liable, in connection with the allegations, beyond reasonable doubt, the CID was legally obliged to arrest and produce the suspects in Court in due course.
CID in its report stated that Arjuna Mahendran was liable in connection with an estimated Rs.688 million financial loss caused to the Government at bond auction on February 27, 2015.
It levelled criminal charges against Arjuna Mahendran on two counts, ‘Criminal Breach of Trust’ and ‘Criminal Misappropriation’ by way of deliberate violation of the due process at the Central Bank and causing a huge financial loss to the Government.
Above allegations were levelled under the Section 5(1) of the Public Property Act, and Section 386/389/391 of the Penal Code.
PTL's de facto owner Arjun Aloysius was also made liable for ‘Conspiring’ to commit the two offences of Criminal Breach of Trust and Criminal Misappropriation with Arjuna Mahendran at the bond auction on February 27, 2015 under Section 113(a), 386, 389 and 391 of the Penal Code and the Section 5(1) of the Public Property Act.
The CID also made Arjun Aloysius and PTL CEO Kasun Palisena liable in the bond issue under the offence of ‘Abetment’ (Section 102 of the Penal Code).
‘Perpetual Treasuries Ltd’ (Arjun Aloysius and Kasun Palisena) were also made liable by the CID for engaging in illegal ‘insider dealing’ by obtaining price sensitive inside information, which is deemed to be a punishable and prohibited conduct under Section 56 (1) of the Registered Stocks and Securities Ordinance and the Code of Conduct for Primary Dealers by the CBSL. (Liable to five years of imprisonment).
In the 'B' report, the CID alleged that Arjuna Mahendran had also helped PTL to get insider information and therefore made him also liable under the offence of ‘Abetment’ for ‘insider dealing’.
On behalf of the CID, SASG Kodagoda PC also sought nine Court orders pertaining to the further magisterial inquiry of the CID under the Section 124 of the Criminal Procedure Code.
Acceding to all requests, Colombo Fort Magistrate Lanka Jayaratne imposed a foreign travel ban on Arjun Aloysius and directed the Immigration Department to inform the CID no sooner Arjuna Mahendran arrives in Sri Lanka. It was revealed that Mr. Mahendran, who is a Singapore citizen was currently residing in there.
SASG Kodagoda sought a court order to direct the Monetary Board not to lift its suspension order on two RTGS accounts in which PTL as a primary dealer transacted in the Primary and Secondary Markets in Government securities. Those two RTGS accounts has a balance of Rs.9.1 billion belonging to PTL.
The Fort Magistrate also ordered two PTL officials -- W. Jesudasan and Finance Manager N. Nadeeka Dilhani to hand over the initial documents pertaining to the bond transactions to the CID with no further delay.
The Magistrate also made a special order suspending PTL from the transfer, the sale, gifting, investing or transacting using its assets or funds with any party. The Magistrate made this order based on the prosecution’s observation that there is a possibility of moving the PTL’s assets to third parties to forestall any potential future legal confiscation.
Acceding to the CID’ s request to question Arjuna Mahendran over the allegations, the Fort Magistrate ordered Mahendran to report to the CID before February 15, 2018 and directed that the court order be sent via Singapore International Police to Mr. Mahendran's residence.
Court also directed PTL officials -- W. Jesudasan and Finance Manager N. Nadeeka Dilhani to provide the relevant detailed documents pertaining to every primary and secondary market bond transaction of PTL to the CID with immediate effect.
SASG Kodagoda also sought court orders to obtain a detailed list of PTL’s acquisition of assets using the profits gained in bond transactions in the recent past.
SASG Kodagoda told court, “People were involved in colluding not due to their generosity towards PTL, but as they had been bribed to do so.”
The Fort Magistrate also directed the secretary of the Presidential Commission of Inquiry, to provide all collected materials (phones and computers) it had obtained during its inquiry and investigation to the CID for further magisterial inquiry.
A Court order was also issued to the CBSL Governor, Non Banking Financial Institutions Supervision Director and the Director of the CBSL Financial Intelligence Unit to prepare a comprehensive forensic report on the bond transactions since February 27, 2015 to date and hand it over to the CID without delay.
Senior Additional Solicitor General Yasantha Kodagoda, Deputy Solicitor General Haripriya Jayasundara, Senior State Counsel Lakmini Girihagama, Director of the CID Shani Abeysekara, Deputy Director SP Ampavila and SI Jayaweera appeared for the prosecution.
‘Court Orders given by the Fort Magistrate Lanka Jayaratne’
- Foreign travel ban on Arjun Aloysius
- Directs Immigration Department to inform the CID about Arjuna Mahendran upon his arrival in Sri Lanka
- Monetary Board directed not to lift its suspension order on two RTGS accounts in which PTL as a primary dealer transacted in Primary Market and the Secondary Market in Government securities
- Officials of PTL ordered to hand over the initial documents pertaining to Bond transactions to the CID with no deliberate further delay
- Special order suspending PTL from transfer, sale, gift, investment or transacting its assets or funds with any party
- Mahendran ordered to appear before the CID before February 15, 2018 and the notice about the court order to be sent via Singapore International Police to the residence of Mahendran
- Officials of PTL directed to provide the relevant detailed documents pertaining to every primary and secondary market bond transaction of PTL to the CID with immediate effect
-Order to obtain a detailed list of PTL’s acquisition of assets using the profits gained in bond transactions during February 2015 to March 2016
- Secretary of the Presidential Commission of Bond Inquiry, directed to provide all collected material (phones and computers) at the Commission’s inquiry to the CID for further magisterial inquiry
- CBSL ordered to prepare a comprehensive forensic report on the bond transactions since February 27, 2015 to date and hand it over to the CID without delay
(Shehan Chamika Silva)