3 March, 2024


Bond Scam: Whitewashing Will Boomerang On ‘Yahapalanaya’ & Country

By Amrit Muttukumaru

Amrit Muttukumaru

The alleged Treasury Bond scam is probably the largest financial scam to hit this country in its  post-independence history. For sheer impunity and involvement of a wide spectrum of politicians in collusion with a section of the corporate sector and regulatory authorities it is hard to beat. The muted response of the opposition exemplifies the rot in the governance of this country. It is unforgivable it took place  under a so-called ‘Yahapalanaya’ government which was elected with much hope under trying circumstances to usher in ‘good governance’ after the traumatic Rajapaksa years.

The expectations included holding those concerned under the Rajapaksa regime accountable for alleged (i) egregious corruption (ii) abuse of power (iii) violence to dissenters (iv) undermining democratic governance. Not only has the ‘Yahapalanaya’ government blatantly reneged on these undertakings – but worse is its own contribution to alleged corruption and abuse of power which in terms of sheer speed exceeds the Rajapaksa regime! For example, after being elected in January 2015 the first alleged bond scam took place February 2015.

This has given a shot in the arm for a Mahinda Rajapaksa led comeback. A Deputy Minister in a KEY ministry held by the PM who while in opposition was arguably the most virulent critic of alleged wrongdoing under the Rajapaksa presidency, has suddenly after almost 3 years found merit in Gotabaya Rajapaksa’s “efforts in beautifying the City of Colombo”! Is this a sign of ‘coming colours’?

However, one notable gain under ‘Yahapalanaya’ must be flagged – its relative ‘openness’. This most likely is not due to altruistic reasons but compulsions of ‘Realpolitik’ in the hodgepodge arrangement that passes for governance. If it was genuine, why is their lack of transparency in most things – the alleged bond scam being a prime example?

Popular Imagination

The alleged Bond Scam has caught the popular imagination unlike no other scam in this country – and God knows there have been other egregious scams over the years.  Even those who have not heard of ‘Bonds’ let alone ‘Treasury Bonds’ sense there has been TERRIBLE CORRUPTION involving the Central Bank of Sri Lanka. This is the reality which does not portend well not only for the ‘Yahapalanaya’ government but also for the country at large. As a consequence, if the already PERCEIVED notion of a MEGA ‘COVER-UP’ is CONFIRMED where its ‘KINGPINS’ are shielded and only some who have ‘FACILITATED’ it are exposed, it will create widespread disenchantment like no other and will further undermine the rule of law which already is in a pathetic state. Let us face it, when people get further confirmation that daylight looting of the public purse by high ups in the political, bureaucratic and corporate sectors is tolerated with such brazen impunity, is it reasonable for the masses to have respect for the rule of law? This may well be the tipping point. It is obvious that without the ‘rule of law’ there can never be any meaningful socio-economic development.

It must be flagged that the ‘rule of law’ is also undermined if there is no social stability as witnessed on a regular basis due to our collective inability to ensure social justice and ethnic and religious peace in the context of a multi-ethnic, multi-religious and multi-lingual country. In its absence it exacerbates intolerance as witnessed recently in Gintota and earlier in Aluthgama and the harassment meted out to the already traumatized Rohingya refugees who were in Sri Lanka merely on transit.

‘Core’ of the Alleged Bond Scam

At the CORE of the alleged Bond Scam is:

1) The Central Bank of Sri Lanka (CBSL), the issuing agency for Treasury Bonds which normally falls under the Ministry of Finance was brought under the purview of the Prime Minister.

2) ‘CONFLICT OF INTEREST’ arising from then Central Bank Governor Arjuna Mahendran’s son-in-law, Arjun Aloysius – owning/controlling PTL (Perpetual Treasuries Limited) – a Primary Dealer.

3) Arjuna Mahendran – a foreign national was HANDPICKED for the position of Governor, CBSL by the Prime Minister although he was aware of the ‘Conflict of interest’. The PM himself CONFIRMED this in his affidavit and while testifying before the Bond Commission (PCoI).

4) 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.

5) The PM robustly defended and endorsed Mahendran for a second term despite the widespread perception of Mahendran’s role in the alleged Bond Scam.

6) Sadly, the PM’s affirmation in his affidavit to the PCoI: “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.” was NOT PURSUED by the PCoI.

7) Unlike in the case of the other witnesses, the PM was given questions in ADVANCE by the PCoI to enable him to provide answers by way of affidavit.

8) Unlike in the case of the other witnesses, the PCoI decided to invite the AG himself who wasn’t involved in the investigation up to that point to personally lead evidence for the FIRST TIME. Up to this time, Messrs. Dappula de Livera and Yasantha Kodagoda – Senior Additional Solicitor General and Additional Solicitor General respectively lead evidence.

9) Unlike in the case of the other witnesses which included former Finance Minister Ravi Karunanayake who were GRILLED by Messrs. Dappula de Livera and Yasantha Kodagoda, limited questions were posed to the PM. The PM was at the PCoI reportedly for less than an hour to clarify matters arising from his affidavit

To adapt what Lady Macbeth said: “All the perfumes of Arabia will not sweeten” these immutable FACTS.

Incidental Issues

Crucial issues of governance INCIDENTAL to the alleged bond scam thrown up by witnesses at the Bond Commission and not even on the radar include:

Tax Evasion/Money Laundering?


A Senior Dealer of the Arjun Aloysius owned PTL (Perpetual Treasuries Limited) disclosed at the Bond Commission that “millions” encashed by him were “several times” left on “PTL CEO Kasun Palisena’s chair”.

Nuwan Salgado, Chief Dealer of PTL disclosed to the PCoI that on the “instructions of PTL CEO Kasun Palisena” he maintained a record of payments to “informants” code named as ‘Charlie’, ‘Tango’ and others.


B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake’s family in his testimony to PCoI reportedly disclosed:

“The Rs.145 million used in making the initial payment of Rs.16.5 million and thereafter to pay the monthly loan installment of Rs.11 million” for the purchase of the Monarch Residency Penthouse in Colombo by a company owned by Minister Ravi Karunanayake’s family “has no origin nor has it been accounted for”

The question arises of the rationale to obtain a loan from Seylan Bank in circumstances where cash was readily available?

Sinniah also reportedly told the Bond Commission:

“Chairman ‘Lakshmi Kanthan’ who resides in Britain had arrived at the Company on two occasions in February 2016 and 2017 and dumped cash amounting to Rs.145 million in the Chairman’s safe”

“it had not been supported by any documentation or receipt issued to Mr. Kanthan neither were there any entries in the GTLPL accounts books regarding these two cash inflows”

Should these not concern the Central Bank and the Inland Revenue Department? If not why?

Bank Malpractice?


It was revealed at the PCoI that PABC (Pan Asia Bank) was “an intermediary in secondary market transaction between EPF and PTL”

R. A. Benedict Dias, Deputy General Manager of PABC disclosed to the Bond Commission that “on the instructions of the former chairman of PABC, Nimal Perera, the decision to act as an intermediary was made”

It was also revealed at the PCoI that Saman Kumara, the then dealer for the EPF at the CBSL had allegedly received a personal loan of Rs. 25 million from PABC when Nimal Perera was Chairman. It is relevant to ascertain whether this loan and its settlement (if any) took place in the ordinary course of banking practice or whether any special privileges were afforded.   

Should these not be of interest to the Central Bank’s ‘Bank Supervision Department’? 

PEPs as Bank Directors? 

Politically Exposed Persons (PEPs) are at the centre of the worldwide efforts for the prevention of money laundering,

It was revealed at the Bond Commission that B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake’s family was “appointed to the Board of Directors of the BOC in 2015 by the then Finance Minister Ravi Karunanayake for a period of one year”.

Ravi Karunanayake being a PEP is a no-brainer. B.R. Sinniah too is clearly a PEP consistent with Sri Lanka’s definition of a PEP which conforms to the FATF definition:

Sri Lanka is a member of the ‘Asia/Pacific Group on Money Laundering’ (APG) which is an  Associate Member of ‘The Financial Action Task Force’ (FATF)

In the context of the Central Bank itself postulating that even the mere “Opening of accounts for ‘politically exposed persons’ (PEP) should have authorization of senior management.” how could a PEP be a bank ‘director’?

Under no circumstances is it suggested that B.R. Sinniah is engaged in any criminal activities.  It must be appreciated that not all PEPs are involved in criminal activities.

The point being made is that laws and guidelines are there for a purpose and must be adhered to. There are also other clear instances of PEPs being ‘directors’ of banks in Sri Lanka which is not the focus of this article.

Our Central Bank is evidently turning a blind eye to these transgressions. 


Things are so bad in Sri Lanka that the rule of law was SELECTIVELY applied NOT TO COMPEL Arjun Aloysius – owner of PTL to give evidence before the Bond Commission on the basis it would incriminate him since apparently in his own mind there was a high probability he would be prosecuted. The same rule of law was MUTE in taking the next steps that could have been taken INDEPENDENT of the report of the Bond Commission in the context of the damning evidence produced at the PCoI. It also indicates that the relevant regulatory and law enforcement agencies were on SLEEP MODE until the bond commission was appointed. This tardiness in taking necessary legal action has resulted in a situation where as disclosed by the Prime Minister during his testimony at the Bond Commission, Aloysius was even able to be present “at one or two parties” where he was in a position to converse with the PM himself!

As I see it, the alleged Bond Scam had the MASTERMINDS and the FACILITATORS. I trust those concerned will not miss the wood for the trees! Of course, the ‘facilitators’ too must be held accountable.  What we have still not convincingly seen is the QUANTIFYING of the looted monies which must be RETURNED to the exchequer.

The diplomats and news agencies in Colombo are no doubt taking note of the ground reality in Sri Lanka. Is it any surprise that with the exception of the controversial Chinese investments which are largely driven by geo-political considerations, ethical FDIs are few and far between?

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Latest comments

  • 2

    Mr Muttukumaru,
    The “biggest financial scam in post-independence history”? Really? Isn’t that a bit over the top? You have neither adduced any evidence compared with other scams nor have you shown with calculations, exactly how much was defrauded.
    1. It was the government that took a loan of 10 billion, issuing 30-year bonds.
    2. The interest rate was 2% more than the going rate.
    3. If there was any loss, it was the 2%, which amounts to 200 million a year.
    4. PTL borrowed money from BOC and paid it back with interest. No loss for BOC.
    5 To put things in perspective, 4500 billion was issued in private placements from 2008 to 2014. 10 Billion is peanuts in comparison.

    Only the conflict of interest and abuse of power allegations have any merit, so by all means punish the culprits. There is no point re-hashing sensational headlines broadcast by interested parties.

    • 5

      old codger

      I understand your calculations of the potential loss to this country.

      However the issue is how do you recover these losses if these transactions were carried out with intention of milking the poor state financial system and how do you recover the losses made by the previous government in earlier bond issues ?

      • 0

        What happens if the interest rate goes to 14% next year? Then this becomes a profit of 2% for the CB. Will they recover the profits? Ecomomics is like voodoo.

        • 1


          Did you mean Reagan’s Voodoo economics in other words Reganomics?

    • 1

      Old Codger,
      I was showing these simple mathematics to my friends, but nobody get it or do not interested in these simpler explanations. Countries great leaders like Wimal Weerawanse came up with billion rupee figures and whole country goes with it,.. Whole country stopped working and analyse Bond issue and SAITM issue and preach each other their own theories.
      It is said that PTL get only Rs/ 5billion out of 10.. If it is lent 2.5% above standard rates, then it is Rs/125million a year profit for PTL… It is big but, as you said that amount is over 1 year.
      Average hospital attendant gets (illegally charge) Rs/500 to Rs/1000 from patient’s families to do their job. Assume there are 2000 Attendants in the country. That is minimum of Rs/1.5million misappropriation per day.. It is Rs/45million per month… That is, our 2000 hospital attendant brothers steal 4 times more than PTL company in a year..
      This is the country we live in… So we general public should allow police and law to handle these big issues and should not waste our time …. instead we should focus on our responsibilities as workers and citizens of the country…

      • 0

        Most of our people can read, and all of them can talk, but very few can count.

        • 1


          How many of them can think?
          Have you seen any evidence that Champa, sach, Shenali, bloody nuisance, somass, Hela, NAK, KASmaalam ……………………. have brain and can think?

    • 0


      Thanks for your analysis.

      How come you have left out the banks who were involved in this?

      Should the chairman and board members of the following banks be held responsible as well?

      1 BoC
      2 People’s Bank
      3 NSB
      4 Pan Asia Bank

      These banks were clearly involved and hence should not the Central Bank take action?

      The chairmen at the bond commission clearly mentioned that they bid low because the former Finance Minister asked them to do so !! What do you expect from these chairmen and board members who are all political appointees.

      Even DFCC bank was mentioned in the deliberations.

    • 1

      Old codger: your explanations are good for Sujeewa Senasinghe who did not understand bonds even after he writing a book. Why you are not talking that Ranil wickramsinghe the CLEAN MAN who came to catch and prosecute former govt’s thieves he himself and his gang became thieves. IT says, bonds were advertised for 9.5%. If the had too many offerings they should have barganed and should have got a lesser rate. Instead, they gave a higher rate of 12.5% and Ranil had ordered STATE BANKS TO LOSE MONEY, How about Arjun Mahendran imposting his orders to Public deabt depts and Ranil asking govt banks to lose money. YTOu idiot do not write corrupt comments to clean the thieves.

      • 1

        Nitwit Jimmy,
        Don’t you know how to read? That is exactly what I have been saying– the fraud is in the increase of interest rate and insider dealing. There is only a small loss to the state.
        If you have better figures, show us, or shut up.

  • 0

    Did you write to Colombo Telegraph or any other mass media during the Rajapakse regime?

    • 1


      Any time is good time for us to criticize the rulers.

  • 12

    Does it matter whether it was a private placement or auction as long as it was done honestly ?

    If people say that Cabrall did anything wrong please prove it. It has now taken 3 years.

    We all know that there was bond scam planned and executed by RW/Mahendran/Aloysious. This is proved. The nation will give its judgment at the elections.

    How can anyone claim that what Aloysious did was a public auction ? Other dealers thought it was only one billion. This chap knew it was gong to be 10 Billion(I may be a bit off on exact figures) There was only one real bidder. It was worse than a private placement. This was the use of a system to defraud the nation.

    We have a prime Minister who is dishonest..

  • 2

    Lankans now feel that scams are the rule rather than exception.
    The tragedy is our acceptance of scams as part of everyday life.
    The greater tragedy is the ‘language/religion-divide’ mindset.

  • 0

    Why Sri lanka has two law enforcement ways.. White collar criminals and con-men have a different set up for law enforcement. they are arrested, incarcerated in the Prison hospital and then released. Some are not arrested at all. It is all political. Some Bond Scam thieves, money launderers are still outside and Foreign exchange act was modified to support the new budget will sell what ever left in the country as well as to support those who have been caught money laundering. The interesting thing is ?All the western powers behind sri lanka when the LTTE was annihilated and was looking for accountability. Now, the Western Lackeys of Sri lanka have emptied the banks, where is accountability and openness. Transparency international, civil society, CPA are all silent.

  • 0

    dear amrit
    I am surprised that you did not know that in sri lanka dogs bark but the caravan moves on
    so don’t waste your time writing about these matters

  • 0

    A rare unity have been achieved between the Sinhalese Tamils, and Muslims in the bond scam. If this unity could be extended to other matters Srilanka would be a paradise.

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