Jan 22, 2018

Bond scam report obviously politically bias

The CBSL Bond scam report opened up a can of worms, more than help clean up the mess. The Presidential Commission of Investigation (PCoI) or at times called the "Chitrasiri Commission" is applauded for its work in unravelling much of the fraud that had taken place in the Central Bank under Governor Arjuna Mahendran. The support staff that includes a team of officials from the AGs Department and the CID has done tremendous work using even the most sophisticated technology in unearthing evidence that this society never thought was possible. For all that and for their commitment, the Commission members and their whole team at every level need to be appreciated and thanked.

kusal img 1The output of this PCoI now in public domain is their complete Report consisting of 34 Chapters and 04 of the 05 Annexes mentioned in the Report, all in English language only. The Report in short, finds former Minister of Finance Ravi Karunanayake, former Governor Arjun Mahendran, Perpetual Treasuries Ltd Director Arjun Aloysius, its CEO Kasun Palihena, Employees of Perpetual Treasuries Ltd. Nuwan Salgado and Sachith Devathanthri and relevant officials of the CBSL and the EPF and also former Chairman of Pan Asia Bank Nimal Perera as complicit and or involved in misappropriation of public funds, bribery, passing inside information/price sensitive information, offences under the Stock and Securities Ordinance, suppressing of information and false evidence. The Commission proposes Attorney General, the Bribery Commission or other relevant State authority take appropriate action in indicting them under the Penal Code and the Bribery Commission Act after further investigations, but not under the Public Property Act.

Though with reservations, aren't those who were instrumental in having Arjuna Mahendran as Governor CBSL, not responsible for the Bond scam in any way?

The Commission also recommends recovering twice the value of gains and benefits of Perpetual Treasuries, and also to hold or place "under lien", assets including all bank accounts of Perpetual Treasuries Ltd and of Arjun Aloysius Kasun Palihena and Geoffrey Aloysius pending institution of legal action.

Was all this what the people wanted and expected from this Bond commission probe? This certainly falls short of what society expected in holding all who are politically responsible to all the fraud that had gone with the Treasury bond auctions beginning 27 February 2015. The PCoI certainly has avoided investigating into the governance part of the Bond scam which today is more important than even investigating into officials and private entities involved in corruption and fraud.

The auction of Treasury Bonds that today is proven a mega scam, is rooted in politics. Despite promising a wholly new political culture different to that of Rajapaksa era, PM Wickramasinghe who stood firm on Arjuna Mahendran being appointed as Governor CBSL, had broken all rules and traditions in having the CBSL under his authority as a subject of the Ministry of National Policies and Economic Affairs, instead of it being with the Ministry of Finance. Breaking of law and tradition is given importance in the Report with mention on page 851. The result was, PM as the Minister in charge of the CBSL could not recommend Arjuna Mahendran to the President to be appointed as Governor CBSL. According to law that is the responsibility of the Finance Minister. Thus as the Report notes on page 852, the PM concurred with then Minister of Finance who recommended Arjuna Mahendran to the post of Governor for President Sirisena to appoint him. That despite reports on disagreement President Sirisena had and now prefers to highlight.Though with reservations, aren't those who were instrumental in having Arjuna Mahendran as Governor CBSL, not responsible for the Bond scam in any way?

The Commission notes that there is no legal issue in appointing Mahendran a non Citizen of Sri Lanka. "Instead", it says, "it was a 'value judgement' which had to be made by those who considered the wisdom of appointing Mr. Mahendran, who was not a citizen of Sri Lanka as the Governor of the CBSL". (page 851) Does that not hold PM Wickramasinghe responsible for his accepted responsibility in bringing in Mahendran?

Questioned by the Commission, PM Wickramasinghe takes responsibility for the appointment saying Mahendran's academic and professional qualifications and his experience in banking stand above his predecessor and above question. He also defends himself when asked if he was not aware of the fact Mahendran's son in law was the CEO/Director of Perpetual Treasuries Ltd., by saying "When Mr. Mahendran was offered the post of Governor CBSL, I insisted he should ensure that Mr. Aloysius would resign as a Director of Perpetual Treasuries Ltd., and not involve himself in the business activities of that company in anyway. I also strongly recommended the best course of action would be for Mr. Aloysius to divest himself of his shares in the company" (page 851).

Was the PM so naïve and his "value judgement" so crooked to expect a person who ventured into big time business and was proving himself a success to give up his future life expectations in order to allow PM Wickramasinghe his choice as Governor CBSL?

Perpetual Treasuries Ltd. was established in early 2014. On page 873 the Report says, "…during the remaining few months of the financial year ended 31 March 2014, Perpetual Treasuries Ltd. made a Net Loss of Rs.3.7 million. During the next financial year from 01 April 2014 to 31 March 2015, Perpetual Treasuries Ltd. made a Net Profit of Rs.959.9 million". Was the PM so naïve and his "value judgement" so crooked to expect a person who ventured into big time business and was proving himself a success to give up his future life expectations in order to allow PM Wickramasinghe his choice as Governor CBSL? Or was that drawn up as his 'escape route' when questioned by the PCoI ?

There's much information in this Bond scam Report to prove that PM Wickramasinghe is politically responsible for the Bond scam and had acted not only in suppressing actual information but also in instituting a real investigation by competent men and therefore should have been held along with all the names the Commission concludes as complicit and have committed offences as regards Treasury bonds auctions and EPF investments that were investigated by the PCoI.

The Report notes the PM on 17 March 2015 making a statement to parliament, "…states inter alia, that Mr. Mahendran had not interfered in the Treasury Bond Auction of 27 February 2015". Sadly the Commission rushes to absolve the PM of that sin by saying"….evidence establishes that Mr. Mahendran and Deputy Governor Samarasiri deliberately and mala fide misled the Hon.PM and suppressed material facts and misrepresented the factual position…." (page 854)

The Commission has strained and stretched itself too long to establish that PM Wickramasinghe acted the way he acted on allegations against Mahendran and on the Bond scam, on wrong information provided to him and having trusted his friend Mahendran, Governor CBSL. The Commission thus says in its Report, "…..the Hon. PM has relied on the assurances given by Mr. Mahendran that he will ensure Mr. Aloysius plays no part whatsoever in the operations of Perpetual Treasuries Ltd." (page 852) One year and 10 months later on 20 November 2017 when the Commission asked the PM "whether he was aware that Mr. Aloysius continued to be a Shareholder and Director of Perpetual Capital Holdings (Pvt) Ltd and Perpetual Capital (Pvt) Ltd. which are the ultimate owning companies of Perpetual Treasuries Ltd., the Hon PM said he was not aware of this fact" (ibid)

This query from PM by the PCoI was one year after the COPE Report on this same Bond scam was presented in parliament by MP Handunnetti with plenty footnotes left by UNP members of parliament. IF even by then the PM was not aware of what had taken place in the CBSL, under his ministry, one of the two things or both should be assumed as right. One, he is totally incompetent as a manager. Two, he can be deceived easily and for long periods. There could be a third in that he goes quite far in safeguarding his long time friends.

And then, when asked whether he "subsequently inquired from Mr. Mahendran with respect to a potential conflict of interest", the PM who previously said he wasn't aware that Mr. Aloysius continued to be a Shareholder and Director of the ultimate owning companies of Perpetual Treasuries Ltd., contradicts himself by responding "I did on several occasions convey to Mr. Mahendran my concerns about a possible conflict of interest arising from his son in law Mr. Aloysius having a connection with a Primary Dealer" (page 852) How did the PM become concerned of "possible conflict of interest" if he was not aware of Aloysius controlling Perpetual Treasuries Ltd.?

Interestingly, though Mr. Mahendran failed on his word given to PM, the Report notes he in fact "had to be aware of the role Mr. Aloysius continued to play in Perpetual Treasuries Ltd. It would be artificial to contend otherwise, especially since Mr. Aloysius and Mr. Mahendran lived in the same house." (page 843) It is rather doubtful the PM was unaware of Mr. Mahendran's household as a very close friend who knew Mahendran was a frequent visitor to Sri Lanka to see his parents though not a Sri Lankan citizen and said so to the Commission. Despite his ignorance about Aloysius holding the strains at Perpetual Treasuries Ltd, the PM admitted knowing of a possible "conflict of interest".

Does it mean, PM Wickramasinghe is a very mediocre leader who cannot independently handle institutions under his ministry?

Yet, soft handling the PM the Commission says, "We consider that, the confidence the Hon. PM states he placed in the assurances given to him by Mr. Mahendran was misplaced" (page 853). Then perhaps on hindsight adds, "We are of the view that, the more prudent course of action would have been for the Hon.PM to have independently verified whether Mr. Mahendran was, in fact honouring the assurances he gave the Hon.PM. We regret that, the Hon.PM did not take that course of action". (ibid) Does it mean, PM Wickramasinghe is a very mediocre leader who cannot independently handle institutions under his ministry?

PM's first efforts to cover up this Bond scam as publicly discussed was the appointment of a three member legal committee. This committee known as the "Pitipana Committee" was not accepted as one that could investigate irregularities and misappropriation if any in a Treasury bonds auction and also as one without credibility and integrity. It was said they were lawyers who worked closely with the UNP leadership. The Commission too agrees they had no expertise to investigate this Bond scam. "We are of the view that, the members of the 'Pitipana Committee'[comprising of three senior and reputed Attorneys as Law] did not possess technical knowledge or practical knowledge in the considerably complex arena of Government Securities and Public Debt". (ibid)

What does this imply if not say? Was the PM unaware of the competencies of the three member committee of lawyers he appointed to investigate the Bond scam? If he was not aware of their competencies, why appoint them in the first place? Or, was it he did not want competency, but only political loyalty and thus prove allegations raised against these lawyers as UNP loyalists, right?

All these information in the Report, the contradictions they lay bare, certainly allows one to infer the PM is either wholly incapable of being in charge of a Ministry that he has taken over for him including the CBSL, or, has been manipulating a total cover up of the Bond scam. What in fact was not accounted for by the PM was the political pressure President Sirisena would have to give in to that could eventually expose everyone. That did happen and then in answer the PM developed his own backfoot defense that nevertheless leave enough space to be bowl him through, despite efforts by the Commission to absolve him as "misled" and "innocent". If as the Commission believes he could be misled to the extent the Commission says he was misled, he certainly is no leader to head a "Yahapalanaya" government.