Central Bank time bomb to explode

2016-06-29

When Sir John Kotelawala was the Prime Minister of Sri Lanka, he arranged a banquet for the British Bank Governor at the Temple Trees for which the Central Bank Governor at that time N.U. Jayawardena was also invited. While the dinner was in progress, Sir John suddenly flew into a rage at N.U. Jayawardena, and said, "I say, I am informed that you are earning a lot from the Central Bank monies". This made NU's face to turn red. "You'd better understand I can probe your foreign assets under the Foreign Exchange Act," NU yelled at Sir John.

It was on that day Sir John decided to appoint a Commission to investigate into NU's corruption and frauds. After the Commission was appointed, and NU was found guilty, J. R. Jayewardene went to meet Sir John and had discussions on behalf of NU. JR advised Sir John, as NU's caste representation was most essential to the government and the party, to re consider the decision. JR and NU were intimate friends. Sir John chased JR away. It was based on the Commission's decision NU was dismissed.
Journalists went to meet NU after his dismissal from the post. While the journalists were expressing their sorrow over the incident, NU made an intriguing statement, "my friends, you must be telling like this about me now, but just wait and see. I shall stage a come-back soon. When that happens you must splash it in the newspapers as headlines".

NU was a friend of United Nations Permanent Representative R.S.S. Gunawardena. The latter was the best man at the wedding of Bandaranaike. NU through him ingratiated himself into the company of Bandaranaike.
After his dismissal from the post of Governor, Central Bank, NU did not idle away his time. He actively campaigned to defeat Sir John at the 1956 elections, while also spending heavily in that direction. He even mustered the support of those representing his caste and campaigned for Bandaranaike.

Sir John Kotelawala
When Bandaranaike won the elections, he freed NU of the charges mounted against him by the Commission appointed by Sir John. That was on his appeal.
That was how the bomb of the first Governor of Sri Lanka's Central Bank ripped apart Sir John's Government. This old incident comes to memory when analyzing the storm of controversy that has been triggered now owing to Arjuna Mahendran the Central Bank Governor. In any event the Central Bank is a place where disputes originate. The dispute between Sir John and NU started from the Central Bank, and JR was also in a corner of it.

Prior to that, during the period of Dudley's Government the Central Bank bomb exploded in JR's hand. That was when JR the then Finance Minister went to prepare the budget on the advice of American national John Exter, the first Central Bank Governor of Sri Lanka. Following the demise of D.S. Senanayake, it was Exter the Central Bank Governor who advised Dudley Senanayake after his appointment as the Prime Minister to go for a snap election. This is how it is mentioned in the Biography of Late J. R Jayewardene.
Dudley, some days after becoming PM dissolved Parliament on 4 April 1952. There were several reasons that prompted Dudley to go for a snap election. Let us state first, this necessity arose because Exter the Central Bank Governor advised to go for elections before the country's economic predicament aggravated.

As John Exter prophesied, Dudley by going for general elections won convincingly. It is thereafter Exter began advising JR cut relief to resuscitate the economy. In accordance with Exter's advice, JR as Finance Minister made cut backs on the rice ration which precipitated the 1953 hartal. Owing to a shooting incident, Dudley had to resign. Dudley resigned in anger against JR. The pro-Dudley groups instilled poison into Dudley's mind that JR conspired with Exter to drive Dudley into a quagmire. In the biography of late JR this is how it is related.

While the country's economy was booming and there was a revival in 1954, Dudley regretted that his decision to resign (1953 July) taken too hastily owing to the hartal and the unsavoury budget was a shortsighted step. He thought JR must have got rattled because of Exter's pressures and debates for and against. Erosion of Dudley's implicit faith in JR's political acumen was a long lasting outcome of the hartal, yet he did not approve of the criticism levelled against JR by Dudley's relative Neela – sister of R.G. Senanayake, that JR's rice ration cut backs was a deception practised on Dudley.

In the end, Exter had to go home. Now Ranil the nephew of JR has to face issues because of the Central Bank Governor he appointed.
The issue of the Central Bank Governor is a time bomb planted within the government. It is the masses who appointed the government into power who are waiting to see how Ranil is going to defuse the bomb.