By Rusiripala Tennakoon –
Two important witnesses were summoned before the COI investigating into the Central Bank Bond Scam. They were Minister Malik Samarawickrama and Minister Kabir Hashim. According to the evidence led before the COI, so far, the names of these two Ministers came up in relation to one incident. That is the meeting that was held on the 26th February, 2015 at the CBSL premises with their attendance along with Ravi Karunanayake – Minister of Finance, Arjuna Mahendran and some officials of the High Ways Dept. This meeting has been held to establish the need for urgent additional funds. Their evidence is considered important in the following context.
1. Prime Minister has stated in his statement to Parliament on 17th March, 2015 as follows :
“During the regime of Mahinda Rajapaksa, the Ministry of Highways had entered into contracts exceeding over Rs. 100 Billion without any allocation of funds. Funds were needed urgently to make the related payments. This is one issue. Payments have to be made for the work done. Payments have also to be made for work in progress, in respect of the contracts signed. We decided to make payments for the projects completed later and to pay for the work in progress and for the work to be started. But there were no funds, for this. We cannot pay Rs. 100 Billion at once. Highways Minister, Secretary to MOF, officials including Governor and Deputy Governor of the CBSL met on 26th February, 2015 and discussed this matter. They decided that Rs. 15 Billion was required immediately”.
2. A letter produced to the COI under the signature of the MOF Ravi Karunanayake addressed to no-body states that there was an urgent need of Rs. 75 Billion as decided at that meeting.
3. Ravi Karunanayake in his evidence confirmed that he issued this letter and the fund requirement was 75 Billion.
4. The statement made to Parliament on 17th March, 2015 by the Prime Minister contradicts this position because the amount required urgently was Rs. 15 Billion only.
5. Hence the AG’s Dept has to call the other participants of the 26th meeting to verify the matter.
6. Attendance of Mr. Malik Samarawickrama was quite out of place for this meeting as he did not hold any official position. However, as revealed he attended in his capacity as an adviser to Prime Minister.
7. All these participants were officials of the UNP besides being Ministers and an adviser, Ravi Karunanayake, Deputy leader of UNP, Kabir Hashim General Secretary of UNP, Malik Samarawikrama Chairman UNP represented the leader of the UNP at this meeting.
8. Prime Minister in the same statement he made to Parliament also states as follows :
“The monies that were raised were paid to the Treasury to fund the “Divisional Development Projects”. This is a slightly different position to what he stated earlier that the funds were urgently needed to settle the Contractors for the work done. Therefore this matter should be ascertained from these two witnesses.
a) How much was the urgent need?
b) What was the actual purpose?
c) Who directed them to hold this meeting?
d) Whether Malik Samarawickrama reported the outcome of the meeting to Prime Minister whom he represented at the meeting.
In this background AG’s Dept has to verify these from the Prime Minister. Then it would be a complete corroboration of evidence. Furthermore there is a necessity for the AG’s Dept to enlighten the COI about the role of the Minister in Charge of the CBSL in the context of a number of other relevant issues, such as certain directives he is alleged to have given.
1. Prime Minister stated that he appointed a three man committee to investigate the 30 years bond issue on the 27th itself, and that he did it first of all to satisfy himself. Question that arises is how and what made him to appoint a committee of inquiry on the same date of the disputed Bond issue?
2. The terms of reference given to the 3 man committee were :
a) The reason for announcing a Bond issue to the value of One Billion by the PDD.
b) To examine events related to the issue relevant to all PD’s and relevant statistical data.
c) The details of all Bond Issues of the CBSL since 01.01.2012.
Strangely there was no mention in this TOR to examine or investigate whether there has been any irregularity although the appointment of this 3 man committee was necessitated due to a serious clamour that arose in the market alleging violations of procedures and irregular applications.
3. The members selected for the committee were entirely persons non-related to the subject or of no acceptable standing to warrant the entrusting of an investigation of this sort. Particularly in the context of the complex nature of the matter.
4. The report of this Committee was tabled in Parliament on 19/05/2015 but it was not subject to a debate in the Parliament. It was merely a tabling of a private report. This was in contrast to what the Prime Minister stated in his statement to Parliament. He stated that such an opportunity would be afforded
5. Before the report was tabled a resolution signed by 90 MPs has been handed over to the Speaker demanding the removal of the CBSL Governor. This was listed in the Order Book of the Parliament from 08/05/2015.
6. On 20/05/2015 Speaker announced that the matter will be referred to a Special Sub Committee of the COPE, hence neither the resolution nor the report would be debated in Parliament.
7. The COPE started its proceedings from 23/05/2015 and after 11 (eleven) sittings when its report was to be submitted, Parliament was dissolved (on 26/05/2015)
As the Prime Minister and Minister in Charge of the CBSL an explanation on all the above matters would help to give a clear picture to dispel the doubts about action taken by the Government were not to suppress the matter. Prime Minister in his statement to the Parliament on 17th March, 2015 categorically affirmed that (Quote) – “I insisted on a public auction because private placements have led to corruption and lack of transparency”.
It came up in the evidence given by a number of witnesses, officials of the CBSL, that Arjun Mahendran stated this as a reason for him to take 10 Billion instead of the official recommendation to accept only 2.6 Billion by the PDD in keeping with all other accepted norms.
Why did the Prime Minister attempt to defend the Governor by stating that he had done no wrong in his statement to Parliament while the committee appointed by him to inquire and report on the matter was proceeding with their fact finding mission?
English translation – “Over 20 Billion worth of offers were received. Governor instructed to take up to 10 Billion to the Tender Committee of the PDD. That tender was given. There is nothing to establish that the Governor had played a part in this. It is untrue”.
How can the Prime Minister state that the Governor was not connected when he admits that he gave instructions to accept bids up to 10 Billion?
Does it not amount to an indirect indication of his conclusion on the issue to the committee of inquiry he appointed?
Prime Minister goes on to state further – “I told the committee for a second time to look into this aspect. He gave those instructions in front of 2 Deputy Governors. There is no basis for the allegation that the Governor of the CBSL intervened in the affairs of the Tender Board. I told the committee to re-examine this”.
There are several matters arising out of the statement of the Prime Minister which he only could clarify and explain for the benefit of the COI.
a) Did he discuss matters with the 3 man committee and give instructions while the inquiry was in progress.
b) How did he expect his instructions to do away with direct placements as he insisted to be implemented by the Governor of CBSL? Did the Prime Minister expect the Governor to by-pass the approval and authority of the Monetary Board in changing a practice that was in operation in the Central Bank.?
c) Did he not realize that the alleged instructions to the former Governor Mahendran to abolish the direct placement system of issuing bonds would be against the policy of maintaining the independence of the Central Bank in the country?
d) Did the Prime Minister address the issue adequately by considering all economic factors that he should have paid attention to before giving such instructions?
e) Is he aware, that the Central Bank has subsequently adopted a policy of hybrid bond issue system, disregarding his alleged instructions to the former Governor, due to the fact that the officials and Monetary Board have concluded that those instructions are not worthy of following per-se?
f) Did Prime Minister expect the Governor to raise the urgently identified fund requirement (decided at that unprecedented meeting of party officials) of Rs. 15 Billion from the 27th Bond issue itself despite the fact that the Bank had already announced a bond issue of Rs. One Billion.
g) The Prime Minister’s statement clearly elaborates various alleged malpractices associated with Bond issues existed during the previous government. The question that arises in this regard is who provided such information to him? Why was it necessary to do so prior to the 27th Feb 2015 Bond Issue? Has there been a discussion at some forum with regard to the manner how the 27th Feb Bond should be handled? Or was he acting on some arbitrary recommendation by the Governor whom he appointed with great trust, even disregarding the opposition from several quarters on the grounds that Mahendran was a citizen of another county not fit to be appointed to the most vulnerable high post of the country involving country’s financial control.
h) In his statement Prime Minister has referred to the Primary Dealers in the following manner :
“These PDs who are giving all these information, forget the trick that they have been up to. This may be a fight between rogues”.
Whoever who provided such information to the Prime Minister apparently were well acquainted with the modus operandi with regard to Bond Issues. So the same parties would have had sufficient knowledge as to how the system could be manoeuvred fraudulently for their benefit.
The Prime Minister further stated as follows:
“Subsequent to the bond issue (27th Feb) allegations of insider trading were made. The name of the Governor was mentioned in these allegations and aspersions were cast”.
This goes to prove that Prime Minister was aware as to what was going on in the public domain. In such a context it is strange why he did not include a provision to investigate this or at least to report on this aspect in the TOR, given to the 3 man committee.
By way of a reply to questions that were raised in Parliament regarding the eligibility and the suitability of the 3 man committee Prime Minister said:
“How many of you know about the Bond Market? How many know about “Brooke Bond? How many know about ‘James Bond’? Therefore we are not suitable………………”
Even derogatorily and sarcastically he admitted that the subject was so complex even for the parliamentarians. The best action he would have taken in such a situation would have been to get the matter examined by a panel of independent experts instead of by a committee of lawyers, affiliated to his party.
i) As the Minister in Charge of the CBSL there appears to be some lapse in not taking action to suspend the Governor temporarily, at least, by sending him on compulsory leave until the investigations were over. He was well aware of the commotion in the country over the issue. This is what he informed the Parliament on 17th March, 2015 in this regard.
“From last Monday Mr. Arjun Mahendran has obtained leave and he has informed me that he would refrain from his official duties until the ongoing investigations are completed. I have no authority to suspend because he is not coming told him not to come. By this he has provided the background for a justifiable independent investigation”.
But what transpired was entirely different to this. As the Prime Minister made his statement on 17th March he would have meant 16th of March Monday, as the date of commencement of leave.
But according to Prime Minister he appointed his 3 man committee of inquiry on 27th Feb 2015. So for some period this 3 man committee has been investigating while Mahendran was holding fort! And Mahendran reported back to CBSL from his temporary exile on 24th April. Strangely even before the 3 man committee report was tabled in Parliament by Minister Laxman Kiriella on 19/05/2015.
According to the Prime Minister, even while on leave, arrangements were made for Mahendran to attend to important matters from where he was during his exodus. How these few days of his leave helped to conduct an independent investigation is a matter for conjecture.
The position of the Prime Minister that he cannot suspend the Governor is also something that cannot be accepted as tenable. He had the power to recommend the appointment of the Governor. Why then he could not recommend to the same authority to suspend him remains a question, unless that ultimate authority refused to do so!
j) Another relevant issue is that if during President Mahinda Rajapaksa’s period contracts exceeding the value of Rs. 100 Billion were signed without any provision of funds, how can a subsequent government decide to raise funds to settle those liabilities without going before the Parliament? There appears to be an infringement of the provisions under Section 148 of the country’s constitution in this regard.
However the writer admits that such important issues are beyond the comprehension of laymen and falls strictly within the sanctimonious realms confined to the respected prerogatives of the legal profession as claimed by some!
k) Another relevant reference in the statement of the Prime Minister to Parliament is worth quoting in the interest of the public desires.
English translation – We will not hesitate at all to bring these culprits before the law. Not only the present incident even what has happened in the past will be looked into by us. We will impose some taxation on all those. If necessary we will recover those monies”
Apparently as there is no intimation from the government officially there-after on this great intention, the public calls upon some good hearted independent, free thinking MP in this Parliament to bring forward an individual MP’s private proposal to pass a new law to give effect to the pronouncement of the Prime Minister!
The proclamation by the President in the Gazette notification appointing the COI inter-alia includes the following provision :
“Whereas irregularities committed in respect of the matter referred to in the schedule hereto have been brought to my notice”
And whereas it has become necessary to inquire and investigate into such matter and to identify those persons alleged to have been so involved in such irregularities committed in respect of the matter, in case such irregularities are found to be true”
Under all these circumstances country will appreciate highly if the Prime Minister volunteers to come before the COI and enlighten the commission on information that he may be privy to as the Minister in Charge of the CBSL. After all it is his own government that decided to conduct a full high level investigation of the alleged irregularities taken place in the CBSL bond issue.
This will be a right decision in the right direction in our great march towards a West Minister System freeing ourselves from the bondages of a draconian constitution to which the Prime Minister too contributed in 1978.