First anniversary of presentation of Bond Commission report
Then: “Why only my father?” - Onella K
Now: “…my son was made to look like a criminal” - Charlie M
country was driven back to pre-2015 days
Rajapaksa and Wickremesinghe knew little about the scandal
PCoI report recommends legal action against Ravi
Long way to go for justice to take place
What is at stake is the honesty of the person who was the guardian of public finances of this country
The daughter of Minister Ravi Karunanayake, 15 months ago rushed to defend her father in an impassioned post: she said it was unfair for people to blame her father alone for the CB bond fiasco. “My father is a victim of character assassination,” Onella Wiranthi Karunanayake in a lengthy Facebook post lashed out at media reports on her father, saying they were “paid” by those who wanted to bring her father into disrepute.
What she conveniently forgot was to clear the air on how they resided in a ‘luxury penthouse’ allegedly funded by Aloysius, but continued, “Does everyone really believe for the last couple of years everything in the government is just one man?”
We all knew it was not Onella’s father alone who was involved in it. But a whole lot wanted to sacrifice her father. So it is up to him, better late than never, to spill the beans that he was only a cog in the wheel. Yes, others are not saints, but that doesn’t prevent anyone else from doing wrong. Everyone involved must be brought to justice. What is at stake is the honesty of the person who was the guardian of public finances of this country.
Ravi K’s denial of knowing who and how his rent was paid is inexcusable.
CHARLIE SPEAKS UP FOR HIS SON
Quoting Cassandra, ‘The Bourne Identity,’ Cato the Elder, Lucretius, Dhammapada and Buddha; UN Special Rapporteur; Arjuna Mahendran’s father in a letter given wide publicity in social media says;
“I have watched with bemusement the drama that has unfolded in the past four years around my son, Arjuna Mahendran… certain political operatives and their media backers have spent the past four years using Arjuna Mahendran as the mantra to impose a shroud of corruption on one, deflecting attention from the misdeeds of the other,” he continues, “Not a shred of actual objective evidence was produced to prove Arjuna passed information. It makes no sense for Arjuna to have engaged in conduct that would jeopardize an unblemished and highly-remunerative career,” it further says, “It is not surprising that international legal experts have expressed concern over the politicised nature of the legal process in Sri Lanka.” Let’s reflect on excerpts from the PCoI report: Mr. Mahendran has repeatedly assured the Prime Minister that Mr. Aloysius “would not under any circumstance play any role in the business activities of Perpetual Treasuries Ltd. It appears that the Prime Minister has relied on those assurances given by Mr. Mahendran. Although there may have been good reasons requiring an urgent adjustment to the interest rates paid on overnight standing deposit facility, Mr. Mahendran acted improperly and in excess of his authority when he, unilaterally and without prior approval of the Monetary Board, issued a direction on February 27, 2015 to withdraw or remove the two-tier interest rate structure of the overnight standing deposit facility and to direct that only the single interest rate of 6.5% per annum be applied. The forum which Mr. Mahendran chose to issue that directive – i.e. the meeting of the Market Operations Committee – was a forum which had nothing to do with the determination of the interest rates applicable to the overnight standing deposit facility/standing lending facility. As a result of Mr. Mahendran’s directive, overnight interest rates in the market increased significantly for a period of time. This increase in the overnight interest rates would have influenced the short-end of the yield curve of the Treasury bond market to move upwards. This consequence becomes especially significant in the light of the subsequent events which took place on February 27, 2015 and the issue of 30-year Treasury bonds to the value of Rs.10.058 billion at a weighted average yield rate of 11.7270% which moved the long-end of the yield curve of the Treasury bond market upwards, too.
Corruption has become part of the political culture of all developing nations and Rajapaksas perfected it in Sri Lanka in their decade-long rule, but no one thought Ranil Wickremesinghe would stoop to that level. Public debt increased, rupee depreciated, inflation higher, tightened monetary policy and growth retarded; country driven back to pre-2015 days
Readers may refer to the following sections in the report which is now in public domain
Sec. 19.2.4 – The meeting of the Market Operations Committee on 27 February 2015-19.2.5 – The Treasury Bond Auction held on 27 February 2015 and Arjuna Mahendran’s intervention in that Auction --19.2.6 – The decision to stop direct placements -19.2.8 – The Prime Minister’s Statement in Parliament on 17 March 2015
19.2.15 – Did the Treasury Bond Auction held on 27 February 2015 cause a loss to the Government? If so, how much was it?
19.5.6 – The Treasury Bond Auction held on 29 March 2016
Chapter 20 – Perpetual Treasuries in the Secondary Market
Chapter 21 – The Employees Provident Fund in the Primary Market and Secondary Market in Treasury bonds Arjun Aloysius and CEO Kasun Palisena released the primary dealer, Perpetual Treasuries Ltd. (PTL) owner Arjun Aloysius and CEO Kasun Palisena, who were arrested by the CID in February last year over the Central Bank bond scam have been ordered to be released on exceptional bail by the Colombo Chief Magistrate after being in remand custody for more than ten months. Requesting bail on humanitarian grounds, the lawyers defending Aloysius and Palisena had told court that the wives and children of their clients were not well. PTL, according to the report, had made an excessive profit of Rs.11 billion in the secondary market. In this, EPF and other State institutions have lost more than Rs 8.5 billion. They made a profit of over Rs.688 million on the first day itself.
The PCoI report covering the period 2015 and 2016, comprising 1,257 pages recommended that action should be taken against former Finance Minister Ravi Karunanayake under the Bribery and Corruption Act, as they found he was responsible for the allegation regarding the payment of rent for an apartment belonging to the Aloysius family and their company, Walt and Rowe. It also recommended further legal action against Karunanayake for giving false evidence at the commission.
The release of Aloysius and Palisena coincided with the first anniversary of the presentation of the Bond Commission report that inquired into the issuance of Treasury bonds to the President on December 30, 2017. The Chief Magistrate granting them bail stated that the main suspect, former Central Bank Governor, Singaporean, Arjuna Mahendran hadn’t been taken into custody and when the case would be concluded was doubtful. Being in remand for more than a year makes no sense, as charges have not being filed. Will this case end up dead? No doubt it is another victory for democracy and independence of judiciary; but will Arjun Aloysius soon follow his father-in-law’s footsteps to an unknown territory?
The commission was authorised to inquire into the bond issuance from February 1, 2015 to March 31, 2016 to find out actual facts and to make recommendations on the steps to be employed in the future. Commission recommended that the CBSL should conduct on priority a forensic audit with regard to the fraud and corrupt acts from 2008 and legal steps be taken against those responsible, based on such findings, through the Criminal Investigations Department and the Bribery or Corruption Commission. The President submitted the report to the Attorney General exactly an year ago. The report states that PTL made profits through unlawful means with the participation of Governor Arjuna Mahendran, senior bank officials and some outside individuals. The commission recommended that legislation could be passed for the speedy recovery of monies manner, instead of filing civil action.
HOW IT ALL STARTED - PRIMARY DEALERS AND CB BONDS
There were no Treasury bonds prior to 1997 and the State relied on Treasury bills (TBs) to secure loans from public and corporate bodies. Attractive interests were offered. Anyone could buy TBs through a nominated commercial bank and it was a popular investment for them.
Unlike TBs, bonds could be bought only by a selected few called primary dealers (PDs) who offered billions of rupees to CB. It was revealed in investigations into the bond scam that PDs did not possess funds but borrowed from government banks to offer loans back to the CB. Unlike an ordinary citizen who is unable to get a loan of Rs.50,000 from a State bank, they received loans running into billions overnight -- these dealers were in a position to do so by offering ‘santhosams’ to officials as revealed in the investigation. The PD, Aloysius, Governor Mahendran’s son-in-law was the highest single profit earner from the two transactions.
Some senior officials of the bank, according to the report, were inactive before the Governor, Mahendran, who interfered with bond auctions through unconventional methods. The commission has made him responsible for leaking information to outsiders. One such party has used them to obtain undue profits.
IS THERE A WAY TO GET OUT OF THE MUDDLE?
The UNP leader has been accused of providing political patronage for the multimillion dollar bank heist by an equally-corrupt group of his opponents. However, the report says the PM’s responsibility in the appointment of Arjuna Mahendran was proper, they are of the opinion that the PM made a statement in Parliament regarding the appointment trusting the facts presented by Mahendran and Samarasiri, especially the promise by Mahendran that conflict of interest would be sorted out. They think the PM should not have done that. Thieves who robbed workers’ savings in the EPF go scot-free; while corrupt politicians of both the divide are the winners. It has been revealed that politicians in all parties who received contributions to varying degrees out of this scandal are being honoured with Cabinet portfolios, deputies, non-Cabinet ministers and appointed as party general secretaries, enjoying their lives to the maximum with ill-gotten wealth until the day all fun will come to an end.
The cost of the presidential campaign ran into a few billions. The international community invested heavily to cause a regime change, but the organisers fell short of the target. Party chairmen and leaders who handled the funds begged and borrowed to keep the campaign buoyant. At the end, there were unpaid bills. Back in power, they could not dishonour obligations, Finance Minister Ravi Karunanayake, Kabir Hashim, the then Highways Minister, Treasury Secretary, UNP Chairman, Malik Samarawickrama met Mahendran, CB Governor, on February 26, 2015 and decided the government needed urgent funding of Rs.15 billion for the resumption of highways and road building tasks, while CBSL announced interest rates would remain unchanged for the month. The dishonest son-in-law of Mahendran, Arjun Aloysius, a friend of Rajapaksa, off springs was asked to bid. Ravi Karunanayake played a role in restricting the involvement of State banks in bidding. Arjun Aloysius earned a little over Rs.12 billion and campaign debts of Yahapalanaya were settled and some leftovers sent to enhance Sirikotha funds for general elections. The masterminds filled their pockets too before ‘santhosams’ were paid to government ‘foot-note’ types and opposition’s vociferous young Turks.
Accordingly, on February 27, the 30-year auction for Rs.1 billion was opened with Rs.20 billion worth of offers received from 36 offers enabling the Governor to accept Rs.10 billion. Pre-auction advice has been the usual practice; CB officials gave an indicative rate of interest of 9.5 per cent.
PM BEFORE COMMISSION
The PM was given a list of questions in advance so as to facilitate him to present answers by way of an affidavit. He was at the commission for an hour to ‘clarify’ matters arising from his answers to the questionnaire; just a few questions were put to him unlike in the case of others like Ravi Karunanayake who was examined by Yasantha Kodagoda and Dappula de Livera, ADG and Senior ADG. Instead, the AG himself led evidence though he was not involved in the inquiry up to that point. In his affidavit, the PM says, “…Upon the formation of the new government in January 2015, there was a general consensus within the government that Mr. Mahendran should be appointed to the post of CBSL Governor.”
The ‘general consensus’ that he mentioned was not investigated?
WAY TO GO FOR JUSTICE
Long way to go for justice to take place. Did the President conceal the COPE report prepared by D.E.W. Gunasekara by dissolving Parliament a day before it was scheduled to be presented in August 2015 to help UNP’s election campaign? In a connected feat, Sujeewa Senasinghe, Deputy Justice Minister moved court to prevent Mr. Gunasekera from releasing his report to the media. Later realising the folly that the respondent would table the report in court, which would automatically get exposed, he withdrew the motion. The President removed Central Bank and the Securities and Exchange Commission from the PM’s purview only on March 28, 2018 -- three years after the first bond scam and 700 days after the second. Why did he wait for so long to act? He owes an explanation too.
True, those responsible have been named and shamed, but where is action? It was the same AG’s Department that filed indictment against RK for money laundering with a technical hitch to prevent the judge from continuing with the case, but the HC ordered the AG to file a fresh indictment. They have so far failed to carry out the order. People celebrated the dawn of New Year with good news in January 2018, thinking the culprits are trapped and also bringing to light the other rogues of the Rajapaksa regime. Will we ever see the light clearing at the end of the tunnel? Rogues will never be thrown to jail. The UNP/SLFP leaders came to power, swearing to take action against the corrupt Rajapaksa men and eliminate corruption. True, some action is being taken against them, but their cronies involved in corrupt deals have been above the law. The writer suggests that a presidential commission, with adequate powers and a mandate covering years 2000 to date be appointed to probe allegations of corruption as regards all big projects including those under construction.
Both Rajapaksa and Wickremesinghe probably knew every little detail about the scandal. Corruption has become part of the political culture of all developing nations and Rajapaksas perfected it in Sri Lanka in their decade-long rule, but no one thought Ranil Wickremesinghe would stoop to that level. Public debt increased, rupee depreciated, inflation higher, tightened monetary policy and growth retarded; country driven back to pre-2015 days. The assets are being sold off cheap to reimburse cost of luxury lifestyles of dishonest politicians of the UNP, SLFP, JO, JVP and their political allies, families and cronies. The State coffers are being emptied by thieves who take turns in governing. Criminals are allowed to loot and plunder national assets. Shame on the brainless supporters of all political parties!