final testimony at Bond Commission – Reality Check

Whether PM Ranil Wickremesinghe was ‘summoned’, ‘requested’ or he ‘volunteered’ to present himself before the PCoI is immaterial

The bottom line is that he must be applauded for being a model of probity by other world leaders to come before the PCoI

This article will dwell mainly on the ‘conflict of interest’ since this is at the CENTRE of the alleged bond scam

Bond Commission and AG didn’t force the issue on:   
i) Why the PM handpicked Mahendran – a foreign national as Central Bank Governor

2017-11-24

Whether PM Ranil Wickremesinghe was ‘summoned’, ‘requested’ or he ‘volunteered’ to present himself before the PCoI (Presidential Commission of Inquiry) investigating the alleged Treasury Bond Scams is immaterial. The bottom line is that he must be applauded for being a model of probity worthy of emulation by other world leaders to come before the PCoI (with a large retinue of ministers and parliamentarians) in circumstances where seemingly the PCoI considered his evidence to be only of marginal significance. This position has been amply borne out by (i) PM being given questions in ADVANCE so as to enable him to provide answers by way of affidavit (ii) PM being at the PCoI reportedly for less than an hour to clarify matters arising from his affidavit (iii) limited questions posed to him unlike in the case of other witnesses including former Finance Minister Ravi Karunanayake who were GRILLED by Messrs. Dappula de Livera and Yasantha Kodagoda - Senior Additional Solicitor General and Additional Solicitor General respectively (iv) PCoI decision to invite the AG himself who wasn’t involved in the investigation up to that point to personally lead evidence for the FIRST TIME.   

It’s heartening to note that some UNP parliamentarians are fostering Sri Lanka’s age-old cultural traditions by keeping in touch with the grown-up grandchildren of their parents’ friends!

The PCoI also in its wisdom for the most part didn’t question the PM on the damning evidence elicited over the past 8 months from witnesses linked to the alleged Treasury Bond scams at the centre of which was PTL (Perpetual Treasuries Limited) owned/controlled by Arjun Aloysius who is the son-in-law of Arjuna Mahendran a foreign national who was handpicked by the PM to be Central Bank Governor.   

From media reports it is learned that the questions posed to the PM related to (i) Funding requirements (ii) Methodology for the issuance of Treasury Bonds being changed on the advise of the PM from ‘Direct Placement’ to ‘Public Auction ’ (iii) ‘Conflict of Interest’ arising from then Central Bank Governor Arjuna Mahendran’s son-in-law, Arjun Aloysius owning/controlling PTL - a Primary Dealer. 

 Conflict of interest

Although all three issues are associated with controversy, this article will dwell mainly on the ‘conflict of interest’ since this is at the CENTRE of the alleged bond scam. Although the PM CONFIRMED both in his affidavit and while testifying before the Bond Commission that he was AWARE of the ‘conflict of interest’, the Bond Commission and AG going by media reports didn’t force the issue on: 

i) Why the PM handpicked Mahendran – a foreign national as Central Bank Governor being aware of the ‘conflict of interest’?   

 ii) The PM’s affirmation in his affidavit to the Bond Commission: “Upon the formation of the new Government in January 2015 there was a general consensus within the Government that Mr Mahendran should be appointed to the post of Governor of CBSL.”   
Should not the alleged “general consensus” been explored? Did it include HE the President?   

 iii) Why the PM continued to have Mahendran as CBSL Governor although he was aware that Mahendran had RENEGED on his ‘assurance’ to him that his son-in-law (Arjun Aloysius) will sever all links with PTL prior to his appointment as CBSL Governor ?   

iv) The PM’s testimony at the Bond Commission: “Mr. Aloysius did say to me he needs bit of time to dispose his share holding to get good price. (shares of Perpetual Treasuries Ltd or shares he held in other entity in the name of PTL). I met him (Aloysius) at one or two parties, and there he told me that he was pursuing his interests in Mendis distilleries.” 

The four ‘honorable members’ concerned were among the UNP parliamentarians who had introduced the controversial ‘FOOTNOTES’ to the led COPE report  

What is at issue is the INTEGRITY of the Central Bank of Sri Lanka. How can the PM who is also responsible for the CBSL even consider a “bit of time” to resolve a ‘conflict of interest’ concerning the Governor and that too articulated “at one or two parties”?   
v) Why the PM robustly defended and endorsed Mahendran for a second term despite the widespread perception of his role in the alleged bond scam?   

Holding Companies of PTL

At the Bond Commission when asked whether the PM was aware that the “holding companies of PTL were Perpetual Capital Holding Pvt Ltd and Perpetual Capital Pvt Ltd” he pleaded ignorance. However in his affidavit to the PCoI the PM affirmed:
“I became aware that Mr Aloysius had in the month of January itself resigned from the post of Chief Executive Officer and Director of Perpetual Treasuries (Pvt) Ltd. I also became aware that however he remained a Shareholder of that company”   
Since the ‘conflict of interest’ was the CRUX of the alleged Bond scam, in the context of (i) Arjun Aloysius being the son-in-law of then CBSL Governor Mahendran whom the PM handpicked for the position (ii) the PM having removed the Central Bank from the Finance Ministry and placing it under his own ministry (iii) being aware that Mahendran had RENEGED on his ‘assurance’ to him that Arjun Aloysius will SEVER all links with PTL prior to his appointment as CBSL Governor - was it not INCUMBENT on the PM to be AWARE of the holding structure of PTL? Should not the PCoI have pursued this line? 

The PCoI must be congratulated for demonstrating that the law is no respecter of persons and whatever exalted position one holds is immaterial.

 Phone calls and ‘Footnotes’

Since the Prime Minister was satisfied that Arjun Aloysius had divested himself of any tangible association with PTL, is there any justification for detractors to castigate the UNP parliamentarians concerned (some even ministers) who as COPE members had either originated/received several telephone calls/text messages to/from Arjun Aloysius during the period COPE was probing the alleged bond scams primarily involving PTL? After all, what is wrong with friends being in touch with each other? Some even did so for purported literary endeavors.   

It’s heartening to note that some UNP parliamentarians are fostering Sri Lanka’s age-old cultural traditions by keeping in touch with the grown-up grandchildren of their parents’ friends!   

The four ‘honorable members’ concerned were among the UNP parliamentarians who had introduced the controversial ‘FOOTNOTES’ to the Sunil Handunetti led COPE report probing the alleged 27 February 2015 bond scam. It is strongly recommended that those really interested in getting a better understanding of the alleged Bond Scams should peruse the widely read ‘Sunday Times’ exposé of alleged machinations in relation to the Sunil Handunetti led COPE report.   

The ‘Sunday Times’ referred to the ‘Footnotes’ as follows:   
“As is clear, the thrust of these footnotes is to make clear that Mahendran has not been responsible of any impropriety.”   

http://www.sundaytimes.lk/161030/columns/the-dramatic-bond-issue-how-cope-went-beyond-bioscope-215374.html   

Conclusion

The PCoI must be congratulated for demonstrating that the law is no respecter of persons and whatever exalted position one holds is immaterial. To illustrate this principle, the PCoI took it upon itself to invite the AG himself to personally lead the evidence of the PM although in the normal course of events the evidence of a witness which is of marginal significance (as is the case with the PM as presumably opined by the PCoI) would have been led by a Senior State Counsel.   

The Attorney General deserves accolades on his remarkable dexterity and diligence in being able to review all the evidence that transpired during the last 8 months, study the working files of his representatives and study the PM’s response submitted by way of affidavit and marshal all this information in a succinct manner so that the questioning of the PM could have been concluded in under an hour. It must be noted that the AG was made aware of the fact that he had to perform this demanding task only after he received an invitation from the PCoI to personally lead evidence for the FIRST TIME in this investigation.

Just recently the headline in the ‘Daily FT’ of 8 November “Sri Lanka must ‘walk its talk’ to achieve hub status” had the German Ambassador to Sri Lanka, Jorn Rohde while citing the examples of Hong Kong and Singapore “which took off because they put in place the right governance infrastructure”inter alia referring to “zero tolerance of corruption”.