Bond Commission recommendations:Ex-CBSL chief finds gaping holes in bond probe report

Cabraal addressing the media while Godahewa looks on

By Shamindra Ferdinando-January 25, 2018

Former Governor of the Central Bank of Sri Lanka (CBSL) Ajith Nivard Cabraal and former Chairman Colombo Stock Exchange (CSE) Dr. Nalaka Godahewa yesterday alleged that there were glaring omissions and gaping holes in the recommendations made by the presidential bond probe commission in its report. Asserting that the recommendations didn’t reflect what had actually transpired during the commission proceedings, the duo said the omissions amounted to a grave lapse on the part of the probe commission.

Cabraal and Godahewa said so in response to a query by The Island at a media briefing at Ramada in Colombo.

The bond commission consisted of Supreme Court Justices K.T. Chitrasiri and Prasanna Jayawardena and former Deputy Auditor General Kandasamy Velupillai. Sumathipala Udugamsuriya functioned as its Secretary.

Stressing that he respected the commissioners, Cabraal said some obstacles may have caused the flaws in the report. Dr. Godahewa endorsed Cabraal’s view.

Godahewa said those who closely followed media reports on the treasury bond scam commission proceedings since March 2015 had seen that though there were important recommendations some critical information revealed before the commission had not been taken into consideration.

The former CSE Chairman faulted the fact-finding commission for not making specific recommendation in respect of the Bank of Ceylon (BoC) financing the Perpetual Treasuries (PTL) Limited to the tune of Rs. 10 bn to carry out the operation. Declaring that the BoC had never granted such a huge facility to any other primary dealer through its Intra-day

Liquidity Fund (ILF), Godahewa said who had made it possible was the mastermind of the first bond scam.

A comprehensive investigation into the circumstances under which BoC had made available required funds would expose the mastermind, he said.

Cabraal and Godahewa said that in addition to the Rs. 10 bn that had been made available in Feb 2015, a further Rs. 40 billion had been provided by the BoC in March 2016 to the PTL under mysterious circumstances.

The former SEC Chief flayed the government for giving preferential treatment to those suspected and accused of bond scams. "For three years, there have been many statements made, both in and outside parliament in defence of bond thieves," Godahewa said, pointing out that almost four weeks had lapsed since the handing over of the report to President Maithripala Sirisena without there being any action taken against any of the wrongdoers.

Godahewa said that Deputy Governor and Chairman of the Treasury tender board P. Samarasiri, named in the report had been allowed to serve his full term until his retirement in August 2017. When a print media journalist pointed out that Samarasiri had been elevated to the post of Deputy Governor during Cabraal’s tenure (July 2006-January 2015), the former Governor claimed Samarasiri was given critical responsibilities after the change of government in January 2015. Cabraal alleged Samarasiri had received authority from his (Cabraal’s) successor Singaporean Arjuna Mahendran.

Cabraal and Godahewa said President Maithripala Sirisena’s recent appeal to Prime Minister Ranil Wickremesinghe to back his efforts to clean up the administration was a ruse aimed at saving the government. Cabraal asked how President Sirisena could ask Wickremesinghe for help as the latter was yet to clear his name. "The primary allegation is the decision to do away with time-tested, transparent and well-thought out auction cum direct placement system that had been introduced by former CB Governor Amarananda Somasiri Jayawardena in 1997," Cabraal said.

Cabraal said the UNP leader certainly owed an explanation to the country as to why he had instructed Mahendran to change the system just before the first treasury bond scam in Feb 2015. Following a far bigger scam in March 2016, the old system had been re-introduced in July 2017, Cabraal said, emphasising that President Sirisena couldn’t absolve himself of the responsibility for the second scam as well as the dissolution of parliament in mid 2015 to thwart exposure of the UNP over the first bond scam.

"What is happening now is nothing but an elaborate face-saving operation ahead of Feb. 10 local government polls. The electorate is unlikely to be deceived by the yahapalana show," Cabraal said, adding that the administration was in an extremely embarrassing and tricky situation. He explained the culpability of the top UNP leadership as well as President Sirisena beginning with the appointment of a foreigner as the Governor of the Central Bank. Cabraal pointed out that Arjuna Mahendran had already fled the country, though none of those accused of corruption by yahapalana administration had left the country.

"Here, I’m, ready to face any probe," Cabraal said, challenging the government to prove unsubstantiated allegations against him.

Following the conclusion of the briefing, Cabraal told The Island that the Attorney General’s team who assisted the commission would be the best suited to decide whether the recommendations reflected the proceedings and vital information made available to the three member commission. "We understand that the AG’s team wasn’t consulted in the preparation of the report," Cabraal said.