UNP dismisses JVP, JO allegations on final COPE report

By Chathuri Dissanayake- Monday, 31 October 2016

The ruling United National Party yesterday dismissed allegations by the JVP and Joint Opposition that its MPs attempted to dilute a COPE report about controversial Central Bank treasury bond auctions and claimed the report could have been tougher if the committee had incorporated the party’s recommendations to criminally prosecute the company linked to the dubious transaction.

Addressing a press briefing at party headquarters Sirikotha yesterday, Deputy Foreign Minister and UNP member of the Committee on Public Enterprises (COPE) Dr. Harsha De Silva said that despite the criticism that had been levelled against the ruling party, UNP MPs in the committee had endorsed all seven recommendations included in the report that had been widely hailed.

However the Deputy Minister of Foreign Affairs highlighted the final report could have been much stronger if the observations made by the committee to investigate the transactions of Perpetual Treasuries and its director board, when COPE Chairman Sunil Handunnetti temporarily stepped down from the post, been included.

Dr. De Silva pointed out that COPE had not included Deputy Minister and UNP COPE member Ajith P. Perera’s recommendation to launch a criminal investigation into Perpetual Treasuries, the primary dealer connected to the son-in-law of former Central Bank Governor Arjuna Mahendran.

The Deputy Minister claimed that the recommendations of the final report could have been much stronger had the recommendation to investigate the company ‘Perpetual treasuries’ and its Director Board has been included in the report. The recommendation was put forward by the committee when its chairman JVP Parliamentarian Sunil Handunetti had walked out from the committee meeting in protest last Monday.

“In that recommendation regarding the two transactions that occurred on February and March 2016, we state, ‘it is clear that Perpetual Treasuries have gained ‘unfair profits’ and the criminal investigation regarding this should be conducted as soon as possible. As per evidence given by the Marketing Manager of the said company, Chairman, Sri Lanka Police CID should initiate an investigation on the director board members including Arjun Aloysius,” he said.

“The difference is that the members state that there is an “unfair” profit and that an investigation should be conducted to determine if any fraud has taken place. But such recommendation to investigate is not there in the final report.”

JVP and Joint Opposition Members of the parliamentary oversight committee COPE however claimed the criminal investigation recommendation was an attempt by the UNP to deflect blame from the former Governor.

The Deputy Minister also said that the Committee accepted all 14 recommendations submitted by Auditor General in its report following 18 months of investigation.

The COPE report tabled in Parliament last Friday (28), demanded legal action against ex-Governor Mahendran who was held directly responsible for the dubious transaction by the oversight committee. The explosive report also recommended that losses be recovered from officials and companies implicated in the alleged bond scam.

Insisting that the much debated ‘footnotes’ endorsed by the UNP members of COPE do not have an impact on the seven recommendations presented in the report, De Silva said the notes were only pointing out difference in method of bond issuance.

De Silva told reporters that there was an important difference in what happened last week, compared to the state of affairs under the previous Government.

“The difference is like night and day. We have held the Governor of the Central Bank responsible,” he highlighted.

The Deputy Minister said that when the UNP was in Opposition it took him three years to gain a meeting with Public Accounts Committee (PAC) when attempting to probe into irregularities in transactions concerning Employee Provident Fund (EPF) during the previous regime.

“This is not the first time such irregularities have happened, I have spoken against the parent companies of Perpetual Treasuries Ltd, Perpetual Asset Management, Perpetual Capital and other companies such as Grain Elevators which have been manipulating the bond market. When I raised issues concerning the secondary bond market and investments of EPF earlier it took us three years to even get a meeting with the PAC,” he claimed.

Further De Silva emphasised that the footnote given by some members is not on the recommendations given by the report, but regarding the method of the bond issue that should have been employed by the Central Bank.

“There is a debate whether the Central Bank should have gone through an auction sale or a direct sale, since 2008. There are a few arguments, and that is what is recorded in the footnotes. But whatever the principle, whether it was a direct sale or auctioned a fraud is a fraud,” he insisted.

 The Deputy Minister also said to avoid irregularities taking place in the secondary bond market in future the Government plans to establish a transparent system for dealing.

He said that he has been highlighting similar scams happening regarding investments by the Employees Provident Fund (EPF) since 2010, but has not been successful in curbing the issue. He highlighted that measures need to be taken to ensure bond market is not manipulated as it has happened in the past.

According to him, certain measures to make the sales process more transparent has already been put in place.

“We will make it more transparent in future, the transactions will be publicised ten minutes after it occurs,” he said.