President vows to recover the plundered Rs. 11.5 billion and punish the offenders
regarding the appointment of Mr Mahendran believing in the facts presented by Mr. Mahendran and Mr.Samarasiri, especially the promises made by Mr Mahendran. The Report also says that the Prime Minister should not have done that.
“The Commission stated that moreover these facts were before the COPE committee and the Prime Minister had not stated that because of that he had not taken the proper action against Mr. Mahendern……”
On Monday, a senior official at the Prime Minister’s office showed documents to the Sunday Times. One dated November 11, 2016 sent by the Prime Minister’s Secretary Saman Ekanayake, refers to the following reports: The Report of the Committee on Public Enterprises (COPE) Parliament Series No. 109 tabled in Parliament on October 28, 2016. The Special Report on Bonds issued by the Central Bank between the period of February 2015 and May 2016 which was forwarded to the Committee on Public Enterprises. Ekanayake said he had been advised by the Prime Minister, as Minister of National Policies, to seek the AG’s opinion on the legality/validity of the bonds issued by the CBSL since 2008 and; (a) If the procedure which had been followed is lacking in authority then the measures to be taken to rectify such defect, and (b) Your views on the observations given in the Auditor General’s Report pertaining to Public Auction and Private Placements. In a three-page letter, Deputy Solicitor General Milinda Gunatilleke (on behalf of the AG) in a reply on November 7, among other matters declared that “in order to pursue recovery” in terms of the Registered Stocks and Securities law, “it would be necessary to provide a precise quantification of the loss suffered by the Government…” He has said it was prudent that “the quantification should be carried out by the Auditor General’s Department with the assistance of an independent expert whose evidence can be relied upon in a court of law.” The letter said “this Department is considering whether an offence under this provision or any other law has been committed…”
The UNP also issued a statement on Thursday. Contrary to Minister Amaraweera’s claims that discussions with “other parties” would have led to the President’s message being amended, the UNP was conciliatory and supportive in its tone. Perhaps a detailed response was prevented by the non-availability of the report to the UNP. A few highlights of the UNP statement issued this week:
“The President has now forwarded the report of the Presidential Commission of Inquiry into the Bond Issue to the Attorney General (AG). We would like to thank the Bond Commission for its services rendered through its 10-month long inquiry.
“The investigative report into the bond issue compiled by the Committee on Public Enterprises (COPE) under the Chairmanship of Mr Sunil Handunnetti was forwarded to the AG on the instructions of the Prime Minister in December, 2016. In December, 2016, the PM requested the AG to forward recommendations on legal action that should be taken against officers responsible for the disputed bond issue, and on regulating the bond issuance process.
“Accordingly, the responsibility of taking suitable legal action regarding the bond issue was conveyed to the AG’s Department by the PM in December, 2016 and by the President in January, 2018.”
These assertions no doubt place on the Attorney General the responsibility of explaining why no action has been forthcoming since the Premier’s request. Of course one has to bear in mind that such cases take considerable time.
The Sunday Times has learnt that the Commission of Inquiry has also raised issue on the placement of the Central Bank of Sri Lanka (CBSL) under the Prime Minister on grounds of the legality of that exercise. The Commission is of the view that in terms of the law, the subject should have remained with the Ministry of Finance. There was a political rationale then for the move. Ravi Karunanayake, who was the Finance Minister, had faced court action over the remittance of funds from Raj Rajaratnam, a stockbroker of Sri Lankan origin in New York and now in jail in the US for insider trading. The investigations had been initiated by the Exchange Control Department that came under the CBSL. Hence, it had then been considered prudent to bring the CBSL under the Prime Minister.
Sirisena said in his address that “The Commission report refers to the allegation against former Finance Minister Mr Ravi Karunanayake regarding the payment of rent for the penthouse apartment that belongs to the Aloysius Family and their Walt and Rowe Company and stated that Mr Karunanayake was responsible for that and recommended that the Government should take necessary action against Mr. Ravi Karunanayake under the section of bribery and corruption and further legal action under the penal codes for giving false evidence at the Commission.”
The Commission to Investigate Allegations of Bribery or Corruption is set to probe the former Finance Minister and later Foreign Minister. Whilst this is being described as time consuming, action under the Penal Code is to come first, according to legal sources. Whilst those testifying before a Commission of Inquiry are entitled to immunity, those giving false evidence in a judicial proceeding face a sentence of up to seven years in jail and a fine under the Penal Code. The Attorney General’s Department has opined that since two Judges of the Supreme Court, who were members of the Commission, had held that Karunanayake had given false evidence, there was already a strong case. However, Karunanayake has remained defiant. He told the Daily Mirror that he had been 25 years in politics and this was the first time his ‘integrity’ was being challenged.
Appearing in a box story on this page are edited excerpts of President Sirisena’s address to the nation.
Since his Wednesday address to the nation, paradoxical
Here are highlights of the edited excerpts of President Maithripala Sirisena’s address to the nation delivered on Wednesday on the findings of the Commission of Inquiry that probed the Central Bank bond scandal.
The Commission was headed by Justice Kankanithanthri T. Chitrasiri, Supreme Court Judge, Justice Prasanna Sujeewa Jayawardena, Supreme Court Judge and Vellupillai Kandasamy, retired Deputy Auditor General.
“The Commission has submitted a full report covering the period 2015 and 2016, comprising 1257 pages and it is not an interim report. The Commission has taken 10 months for this task. I have already submitted this report to the Attorney General and the Commission recommends that the criminal and civil court action must be taken through the Criminal Investigations Department and the Bribery or Corruption Commission. “The Commission has clearly stated the structure of the Central Bank, the Public Debt Department, direct issuance of bonds and the pros and cons of the system of bond issues and bond auctions. The report stated that the Perpetual Treasuries Limited has made profits through illegal means with the involvement of Mr Arjuna Mahendran, Bank officials and some outside individuals.
In the auction held on 27th February 2015 alone the Perpetual Treasuries Limited has made a minimum benefit of over Rs 688 million. The Commission is of the opinion that further investigations could reveal that this amount could even be more than that. As revealed during the investigations, Perpetual Treasuries Limited has made an undue profit of Rs 11,145 million in the secondary market. In this Employees Provident Fund and other government institutions had lost more than Rs 8,524 million or Rs 8.5 billion.
“It is stated that senior officials of the Central Bank were inactive before the former Governor of Central Bank, Arjuna Mahendran. It is believed that because they had not questioned about these and had become inactive, such incorrect decisions were made. Mr Mahendran has made interference into bond auctions through a system of incorrect and unconventional methods and he was responsible for providing internal information to outsiders. One party has used such information to obtain undue monetary profits.
The Commission report said that the honourable Prime Minister’s responsibility in the appointment of Mr. Arjuna Mahendren as the governor to the Central Bank was proper. The Commission is of the opinion that the Prime Minister made his statement in Parliament regarding the appointment of Mr Mahendran believing in the facts presented by Mr. Mahendran and Mr. Samarasiri, especially the promises made by Mr Mahendran. The Report also says that the Prime Minister should not have done that.
The Commission stated that moreover these facts were before the COPE committee and the Prime Minister had not stated that because of that he had not taken the proper action against Mr. Mahendern.
The Commission report refers to the allegation against former Finance Minister Mr Ravi Karunanayake regarding the payment of rent for the penthouse apartment belonging to the Aloysius Family enough, President Sirisena chaired a meeting of SLFP and UNP ministers. It was held to discuss ways and means of avoiding criticism being levelled against each other during the ongoing polls campaign. Among others taking part: SLFP – Nimal Siripala de Silva, Anura Priyadarshana Yapa, Duminda Dissanayake and Thilanga Sumathipala. UNP – Premier Ranil Wickremesinghe, Malik Samarawickrema, Kabir Hashim and Mangala Samaraweera. Both sides refrained from making references to the report of the Commission of Inquiry. Worse enough, the UNP which has been at the receiving end of Sirisena’s address did not even raise a mild protest that it would hit the party’s campaign. Here is one area where the UNP’s communication machinery has faltered and it has been unable to come up with periodic responses to developments linked to the bond scam.
Today, UNP leader Wickremesinghe is expected to publicly outline his party’s response at the annual sessions of the party at Campbell Park in Borella. The UNP turns 70 this year. It is expected to be a reiteration of the position taken up in its statements. It is noteworthy that there is a distinct difference in the positions taken up by the SLFP and the UNP.
For the Sri Lanka Podujana Peramuna (SLPP), the main constituent in the ‘Joint Opposition,’ its first major session was held last Wednesday at the Sugathadasa Indoor Stadium. It was addressed by party leaders including their leader Mahinda Rajapaksa. There was, however, no reference by them to the bond issue. However, the SLPP’s main strategist Basil Rajapaksa told the Sunday Times, “Our position is that the entire Government including the Prime Minister should resign. They just cannot blame it on their former Finance Minister and remain silent.” The ‘JO’ parties discussed having maroon – or kurakkan (the colour of Mahinda Rajapaksa’s and Basil Rajapaksa’s shawl or satakaya) as their colour.
The SLFP’s focus, articulated by none other than President Sirisena, is on the “allegations of corrupt practicand their Walt and Rowe Company and stated that Mr Karunanayake was responsible for that and recommended that the government should to take necessary action against him. Further legal action under the Penal Code for giving false evidence at the Commission has also been recommended.
The Commission referred to the misuse of funds of the Employees Provident Fund and stated that it should be investigated under a forensic audit examination to find out the losses. The report has recognized that, the dishonesty of a particular party had led to this kind of malpractice on EPF funds. The people responsible for these frauds have been identified and the Commission recommends legal action against them.
The report recommends that legal action against relevant persons and officials who are responsible for the fraud including Perpetual Treasuries Limited, Arjun Aloysius (son-in-law of former CBSL Governor Mahendran) and Kasun Palihena should be taken. Accordingly, the government is in consultation with legal authorities.
Recommendations
Members of the Monetary Board and the Central Bank Governor must be appointed by the Constitutional Council in concurrence with the members. The regulations must be amended accordingly.
There should be the highest levels of supervision over the Public Debt Department. As auditing at the Central Bank has not been conducted in a proper manner, the Commission recommends that the Audit Department must be reorganised completely. A Legal Department must be established in the Central Bank and ensure that the Legal Department functions efficiently.
The Commission recommends that the dealings with the Pan Asia Bank and the conduct of the Chairman must be investigated into. It also recommends that activities of the EPF must be looked into, and in order to bring the EPF into a proper order, steps must be taken to restructure the EPF. A code of conduct for the officials of the Central Bank must be introduced. The code of conduct for Primary Dealers must be revised and updated.
I would like to specifically state here that I would not hesitate to take steps to recover the loss of Rs 11,145 million to the government and take legal action against the offenders and punish them.
The sum of Rs 8529million of the total losses of Rs 11,145 million was the funds of the Employees Provident Fund, Mahapola Scholarship Fund, National Savings Bank and Sri Lanka Insurance Corporation. The balance was from private institutions. Hence the loss to the public sector - EPF, Mahapola, NSB and SLIC was over Rs 8.5 billion. The Perpetual Treasuries Limited has made this profit of Rs 11,145 million within a short period of 5 months.
Finally, especially I would like to mention that this final report must be presented to Parliament and through this initiative the report must be open to the public. In the future, necessary as well as legal steps in this regard will be taken expeditiously according to the advice from the Attorney General. I kindly request to consider the openness of the facts of this Commission Report and I assure that any hesitation would not occur in filing cases against the offenders. es and misdeeds during the period 2015 and 2016.” He said that the Commission was mandated to inquire into the period from February 1, 2015 to March 31, 2016 “to find out the actual facts and to make recommendations with regard to the steps to be implemented in the future.”
However, Sirisena noted that the Commission of Inquiry did not have the mandate to inquire into Treasury bond issues from 2008 to 2015. He said the Commission has recommended that there should be an investigation into that period too and added that “Employees Provident Fund (EPF) money was lost mostly during that period.” He pointed out that the EPF and other Government institutions had lost more than Rs 8.5 billion.
In contrast, Premier Wickremesinghe is focused on the bond issues from 2008 until 2016. The period from 2008 to 2015 was under the previous Mahinda Rajapaksa administration where similar abuses have allegedly occurred. In other words, it was to highlight that not only UNP members but also those in the SLFP who had resorted to abusing the bond auctions. The fact that Maithripala Sirisena was General Secretary of the SLFP during that period is no secret. Wickremesinghe met the Central Bank Monetary Board members on Friday to emphasise that they should probe the earlier period too. The same request was also made from the CBSL Governor Indrajit Coomaraswamy.
If the Commission of Inquiry was given a mandate lasting three months and was renewed periodically till ten long months, to come up with its findings and recommendations, it would take more than that time to bring the culprits to book.
Yet, the issue is now before the court of public opinion. How they will give their verdict will be known within weeks or after February 10. Until then, the two major coalition partners, the SLFP and the UNP, are fighting it out over many omissions and commissions. This is notwithstanding pious pronouncements that one should not criticise the other. What follows in their on-off relationship will be the most critical question this year.