‘Bondgate’ Report – ‘Watergate’ Without Nixon?

By Amrit Muttukumaru –February 1, 2018

The report of the Presidential Commission of Inquiry (PCoI) into the Treasury Bond scam is like the curate’s egg good and bad in parts. It had already laid the ground work at the investigative stage by its glaring partiality to the Prime Minister to give a preview of what was to follow in its report. In this respect the PCoI has been consistent!

The bottom line are its RECOMMENDATIONS. In this respect there is an evident MISMATCH between what transpired at the investigations which the PCoI has by and large covered and its recommendations particularly in regard to the PM where the commissioners have failed to connect the dots which were staring in the face.

It has rightly faulted inter alia, former CBSL Governor – Arjuna Mahendran, PTL virtual owner – Arjun Aloysius, PTL CEO – Kasun Palisena, former Minister of Finance – Ravi Karunanayake and “relevant officers of the CBSL and the EPF”.

 

While faulting former PABC (Pan Asia Bank) Chairman – Nimal Perera, a gaping hole in the report is the ‘pussyfooting’ on the Bank of Ceylon giving Perpetual Treasuries Limited (PTL) access to Billions of Rupees almost instantly which enabled PTL with the aid of “inside information” to make a ‘killing’ in the secondary Bond market at the further expense of state institutions which included the hard earned savings of workers in the EPF. Chairman, Bank of Ceylon – Ronald Perera is a long standing member of the influential UNP Working Committee.

Crucial issues of governance incidental to the alleged bond scam thrown up by witnesses at the Bond Commission which include possible tax evasion, money laundering and PEPs (Politically Exposed Persons) being directors of banks are hardly on the radar.

In the context of what follows below, it is strange there is no recommendation whatsoever in regard to the PM. In fact to the best of my knowledge ‘PM’ or ‘Prime Minister’ have no mention in the ‘recommendations’!

PM’s Involvement & Contradictions

1) ‘CONFLICT OF INTEREST’ is the CRUX of the Bond scam.

 

Arjuna Mahendran – a foreign national was handpicked for the position of Governor, Central Bank of Sri Lanka (CBSL) by the Prime Minister although aware that his son-in-law, Arjun Aloysius – virtuallyowned/controlled PTL (Perpetual Treasuries Limited) – a Primary Dealer.

2) For reasons best known to the PCoI it did not PURSUE the PM’s affirmation in his affidavit “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.”

No less a person than Cabinet Co–Spokesperson and Minister of Health Dr. Rajitha Senaratne has contradicted the claim of “general consensus”:

“Senaratne said he had opposed the appointment of former Central Bank Governor Arjuna Mahendran to the position at the time. “I warned that it would tarnish the government’s image,” the minister said.”

3) The PCoI has mentioned only “In passing” that the Central Bank of Sri Lanka (CBSL) which is the issuing agency for Treasury Bonds which normally falls under the Ministry of Finance was brought under the purview of the PM. The PCoI did not question the PM on the rationale for this change.

4) The PM continued to have Mahendran as CBSL Governor although 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.

The PCoI while stating “We consider that, the confidence which the Hon. Prime Minister states he placed in the assurances given to him by Mr. Mahendran, was misplaced. We are of the view that, the more prudent course of action would have been for the Hon. Prime Minister to have independently verified whether Mr. Mahendran was, in fact, honouring the assurances he gave the Hon. Prime Minister. We regret that, the Hon. Prime Minister did not take that course of action.” has curiously failed to question the PM on the rationale for this “confidence”.

5) At the Bond Commission when the PM was asked whether he was aware that (i) “Holding Companies of Perpetual Treasuries Ltd were Perpetual Capital Holdings (Pvt) Ltd and Perpetual Capital (Pvt) Ltd?”(ii) “Mr. Aloysius continued to be a Director and Shareholder of these two Holding Companies even after January 2015?” he pleaded ignorance.

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