14 April, 2024


‘Bondgate’ Mother Of All Lankan Financial Scams?

By Amrit Muttukumaru

Amrit Muttukumaru

The manner in which things are continuing to unravel in the egregious bond scam in terms of its magnitude and reach, it would appear it has all the credentials to be described as the ‘mother of all Lankan financial scams’. It is not merely due to its high value and ramifications but more importantly as increasingly apparent due to its all encompassing reach allegedly involving government and opposition politicians and a varied section of influential persons in civil society. This is probably why there is muted demand even on the issue of getting former CBSL Governor Arjuna Mehendran to Sri Lanka to face due process. 

New developments include Additional Solicitor General Yasantha Kodagoda revealing to court that a cash cheque for Rs. 1 Million from an associate company of the bond scam tainted Perpetual Treasuries Limited (PTL) controlled by Arjun Aloysius was “encashed by a security officer of a Parliamentarian”. 

If not for this revelation after which key opposition parliamentarian Dayasiri Jayasekera identified himself as a person who had received Rs. 1 million from a PTL related company, the public would have never known there was the possibility of a further 118 persons drawn from among politicians, civil society activists and professionals who were the beneficiaries of the largesse doled out by PTL related companies. This in turn led to cabinet minister Field Marshal Sarath Fonseka admitting he had received Rs. 100,000/= from a PTL related company either by cash or cheque.

Hidden Documents

It is preposterous that sections of the bond report which include annexures and also the CID investigation report were not presented to parliament. Things become murkier with the President’s Secretary, Austin Fernando revealing (i) he had sent the entire report to the national archives which generally has a 30 year embargo on making it public (ii) the Attorney General advising him that certain sections of the report cannot be made public as it is ‘sub judice’. Austin Fernando needs to ‘educate’ the public as to why he prematurely archived the bond report and connected documents when the bond scam is very much a ‘live’ issue?  I ask Fernando whether his “Belly” continues to be “White” after this? One wonders what other current documents have been archived! For instance, has the Thajudeen case also been archived?

On the issue of sub judice one gets the impression this is ploy to avoid a public debate. On this basis all a wrongdoer has to do is file a case and then shout from rooftops it is sub judice. There is legal opinion that “Publication may be justified on the grounds of being true and in the public interest   even before the matter reaches open court.” 

The PM & PCoI Report 

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 Prime Minister Ranil Wickremesinghe.

It is inexplicable why the PCoI commissioners did not summon the PM despite being aware:

(1) The Central Bank of Sri Lanka (CBSL) the issuing agency for Treasury Bonds being brought  under the purview of the PM.

(The PCoI commissioners did not question the PM on the rationale for this change)

(2) At the core of the bond scam was the ‘Conflict of Interest’ arising from then CBSL Governor Arjuna Mahendran’s son-in-law, Arjun Aloysius – owning/controlling PTL (Perpetual Treasuries Limited) – a Primary Dealer.

(3) The PM handpicked Arjuna Mahendran a foreign national to be Governor, CBSL. 

(4) In the context of the widespread demand not to give Arjuna Mahendran a second term as Governor due to his perceived role in the alleged bond scam, it was the PM that robustly endorsed him for a second term. 

(5) Being fully confident on the propriety of the issuance of Bonds, the PM robustly defended the same in Parliament despite the evidence that subsequently transpired before the PCoI.

(6) 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.

Glaring omissions of the PCoI report include (i) not quantifying the actual loss to the country (ii) not identifying the mastermind/s of the bond scam

In its recommendations 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.

Unusual Decisions

Despite all the above, did not the PCoI take some unusual decisions in regard to the PM?

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

(2) Unlike in the case of 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.

(3) Unlike in the case of 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. He was at the PCoI reportedly for less than an hour to clarify matters arising from his affidavit.

PM’s Confidants 

(1) R. Paskaralingam – Senior Advisor to the Prime Minister.

It was revealed by the Chairmen and senior officials concerned of the Bank of Ceylon, People’s Bank and National Savings Bank during their testimony at the PCoI that then Finance Minister Ravi Karunanayake had ‘instructed’ them at two meetings convened by him in March 2016 “to make bids at the treasury bond auctions at lower interest (yield) rates” resulting in their respective banks being deprived of ‘substantial profits’. It was alleged during their testimony that these ‘instructions’ were given in the presence of the PM’s Senior Advisor, R. Paskaralingam.

The PM in his affidavit to the PCoI denied any knowledge of such meetings and in his testimony also denied any knowledge of his Senior Advisor attending such meetings. If indeed Paskaralingam attended these meetings, would it not have been solely in his capacity as Senior Advisor to the PM? 

Those who testified included: Chairman, Bank of Ceylon (Ronald Perera), Chairman, People’s Bank (Hemasiri Fernando) and Chairman, National Savings Bank (Aswin de Silva) 

(2) Malik Samarawickrama who did not hold ministerial portfolio at that time and who was Senior Advisor to the PM and then Chairman of the UNP, confirmed attending the initial ‘Breakfast’ meeting in February 2015 (presumably with the concurrence of the PM) on the issuance of Treasury Bonds. The PM is UNP leader. Presently Samarawickrama holds a key cabinet portfolio.

It is disappointing that the AG’s Department had no questions to ask Malik Samarawickrama and Kabir Hashim (now UNP Chairman) when they appeared before the PCoI and did not seek to clarify whether a discussion regarding funding to the tune of Rs. 15 Billion could be concluded over a ‘breakfast’ meeting. One wonders what the funding requirements must be to have a formal meeting! No questions were also asked as to how an ‘advisor’ can request funding.

(3) Dr. Harsha de Silva – Deputy Minister, Ministry of National Policies and Economic Affairs where the Prime Minister is the Minister in charge. 

On his role in the controversial ‘footnotes’ saga in the alleged Treasury Bond scam, The Sunday Times’ of 30 October 2016 reported as follows:

“As is clear, the thrust of these footnotes is to make clear that Mahendran has not been responsible of any impropriety.

The UNP is confident that it can, through the documentation Deputy Minister Harsha de Silva has received, prove its case that its man Arjuna Mahendran is not to blame.”

Response to Journalist on ‘Footnotes’

“Minister do you at any point now regret the footnotes on that COPE report? Going by what is being revealed now, do you regret it or was there a lack of information at that point?”

Watch his response from (21:25:40) – what does it indicate?

Although requested, to date Dr. de Silva has not clarified this position. 

(4) Ms. Rosy Senanayake then Deputy Chief of Staff in the Prime Minister’s ‘Core Team’ at ‘Temple Trees’ and now Colombo Mayor.

It was alleged at the Bond Commission that COPE documents relating to PTL CEO Kasun Palisena’s testimony was given to ‘PTL owner’ Arjun Aloysius by “Rosy’s son” identified as “Kanishka Senanayake”.

This has been denied by Ms. Senanayake on the grounds she was not a COPE member after the August 2015 parliamentary elections. Does not the question arise whether in her capacity as ‘Deputy Chief of Staff’ in the PM’s ‘core team’ she would have access to COPE reports? 

Although requested, to date she has not clarified this position. 

SEC Chairman

At the same time the PCoI to use a cricketing parlance has dropped sitters (straightforward catches) which include for example:

Failure to ask the Chairman, Bank of Ceylon when he was a witness (i) what made the BoC give PTL facilities for Billions of Rupees virtually over the counter just prior to a Bond auction? (ii) why the BoC with a primary dealer license bought Treasury Bonds in the secondary market from PTL? (iii) why the BoC Chairman attended a meeting relating to bidding at the Bond auction said to have been convened by then Finance Minister Ravi Karunanayake when state banks came under the purview of another Minister – Kabir Hashim in circumstances where Karunanayake had no authority over state banks?

Meanwhile Ranel Wijesinha who at the relevant time was a BoC director has now been appointed Chairman, Securities and Exchange Commission (SEC) with the blessings of the PM!

Governor Indrajit 

CBSL Governor Dr. Indrajit Coomaraswamy seems least interested on crucial issues of governance flagged by this writer incidental to the alleged bond scam thrown up by witnesses at the Bond Commission such as possible (i) Tax Evasion (ii) Money Laundering (iii) Bank Malpractice (iv) Politically Exposed Persons (PEPs) being appointed as directors of banks. These must be transparently addressed by regulatory agencies such as the CBSL and Inland Revenue Department in full public glare.


The rot in the body politic of Sri Lanka is such that at best there is only a muted demand that the PM must forthwith initiate credible measures to bring Arjuna Mahendran to Sri Lanka to face due process for his role in the Bond Scam. This writer has written previously that this must  include communicating with Singapore PM Lee Hsien Loong. The PM has a moral obligation to do so since he has consistently defended him no matter what at every turn. Despite this parliament has reposed its fullest confidence in the PM! Sri Lanka is certainly “A Land Like No Other”.

Sri Lanka could possibly be a role model for its apparent excellent facilities for remand prisoners on the basis of media photos of the well fed and sartorial elegance of Messrs. Arjun Aloysius (virtual PTL owner) and Kasun Palisena (CEO of PTL) who have been on remand for at least two months when brought to court. Law enforcement agencies must be congratulated for ensuring such high standard of treatment for those in remand custody.

The country has still not been advised of the mastermind/s responsible for the bond scam. The same applies to the actual value of the scam. What is glaringly absent is credible accountability.

The country is awaiting with bated breath whether presidential secretary Austin Fernando who had a reputation as a good public servant and who made a published claim of his “Belly” being “White” will do the right thing and forthwith make available in the public domain the entirety of the bond report with annexures and also the CID investigation report.

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Latest comments

  • 7

    Move on this is getting too sick.
    Like hinganna ge thuwaley

    • 11

      chamuditha: Why how much your relatives got ?. IS it sickening to your stomach when this is reminded every day ? ARe you a relative of Ranil ?

    • 5

      Mr. Muttukumaru the great whistleblower is at it again.
      He says : ” it would appear it has all the credentials to be described as the ‘mother of all Lankan financial scams”.
      He has not written one word or given any figures to prove it. I wonder what is the purpose behind all this hype?
      As an alleged “accountant”, Mr.M should know that at this bond auction, the govt. BORROWED Rs.10 Billion at 12.5 % for THIRTY years, when the going rate was 9.5 %. So the loss if any is 3%. Which works out to 300 Million per annum.
      This in turn works out to about Rs 14 per citizen p.a.
      The loss from Sri Lankan Airlines is about Rs.636 per citizen.
      The loss from MR’s port deal alone is about Rs.204 per citizen.

      Yes, there was insider dealing and conflict of interest as well as bribery. Ravi K should be in jail. But to call this “The greatest scam in SL history is utter tosh.”
      Mr.M and that other great “whistleblower” Rusiripala should give it a rest.

      • 4

        old codger

        “Mr.M and that other great “whistleblower” Rusiripala should give it a rest.”

        I think since they have started it they are duty bound to give detailed explanation as to how the bond scam was perpetrated describing every step of the way and how much each of the scammers benefited, total amount of exact money loss to the state coffer, and anticipated total paper loss to the people, names of those who were involved in the scam, the names of those who were supposed to have kept an eye on the entire process of bond issue and how they neglected their duty. Isn’t there a watch dog to monitor the whole bond issue and what were they doing while the supposed crooks were at it, caught napping?

        Muttukumaru and Rusiripala have responsibility to educate me for I am bit thick.

        • 4

          “I think since they have started it they are duty bound to give detailed explanation as to how the bond scam was perpetrated describing every step”
          Yes, none of these experts seems to be able to give clear figures.
          I don’t think Mr.M is going to be the first. I think they all operate on the principle “Sirasa says so, therefore there was a scam”.
          On the other hand, the trouble with Ranil is that he knows there was not such a big deal, but thinks that it is too complicated to explain. He thinks everybody except himself is a bit thick.

        • 3

          Mr. Muttukumaru,
          As I have requested before, why do you not produce some figures to prove your claims? Or are we to assume that you can’t?

      • 0

        The New Way: This is the way our younger generation should go. Instead of going for projects that give a large immediate return, go for scams like this which give a steady yield for decades. In other words don’t go and rob those local ‘chutti; banks under the watchful lenses of CCTV cameras. Instead go for things like borrowing huge amounts and not paying back a cent.

        The future is in Bank Scams and not in Bank robberies.

      • 4

        1.8 billion as Santhosams: old codger, how about the 1.8 billion given out as donations? Was it pure altruism that motivated Aloysius? Or is it a Vessantara style open day for anyone to come and take away anything one pleases from the Maligawa?

        • 0

          “Was it pure altruism that motivated Aloysius? “
          Of course not. The ranks of great and not-so-great business magnates at Gota’s viyathmaga were not there to pick up Gota’s wisdom either. They were buttering their bread on both sides.
          You must remember that Aloysius’s PTL made a few billion in 2014 even without a scam.
          BTW, I owe the 14 Rupees per annum to one of your posts. A great way to compare big and small scams.

    • 0

      So still backing Mr.Clean and his bromance A.M.ha! expecting to move on don’t worry nothing will come of it when was the last time Mega embezzler got thrown in the jail in Sri Lanka?
      If they prosecute all the mega embezzlers in the parliament it will be empty mega echo chamber.

  • 2

    There are many things related to the bond scam that did not touch even now. One is Why Ranil running to an Indonesian Economic conference to meet George Zorros, why he offered to private Loans via BElgium and there is lot into that.

  • 0

    I think what happened was Mahinda Rajapakse emptied the Treasury and the EPF funds via PTL by Selling Treasury bills or bonds at 29% Interest ( the highest Interest that a credit card is allowed to charge, higher than that criminal). Ranil’s Srisikotha was bankrupt too and he ran elections with GALLEON RQAVI, DAYA GAMAGE’s money. some how as soon as Ranil was appointed PM soon after the PResidential elelction Ranil needed money to face the generqal election. Some one knew this and Some foreigner gave hima humongous loan. when he found the conditions of the loan he started shivering and a friend said that Mahinda Rajapakse also did it, so you also do it. Ranil was in a hurry did the robbery and paid the loan but he forgot that there moles from the previous govt who knew everything. Maithripala Sirisena also borroed from his brotjher, thilanga sumathipala etc., HE apid those money too. Now everybody is silent wait untile the next govt comes, then everybody is safe as they can not be prosecuted.

  • 4

    Amrit Muttukumaru
    The ‘Bondgate’ is NOT ‘Mother Of All Lankan Financial Scams’. Technically it is an issue which has gotten wide publicity because media freedom has been relaxed a bit.
    You have put in lot of work to prove that it is a scam. We knew all along that it is a scam but there are rumours of other scams which may claim ‘Motherhood’.
    Former cabinet minister Dayasiri Jayasekera identified himself as a person who had received Rs. 1 million and cabinet minister Field Marshal Sarath Fonseka admitting he had received Rs. 100,000/= from a PTL related company.
    Dayasiri claims that a further 118 persons drawn from among politicians, civil society activists and professionals were the beneficiaries of the largesse doled out by PTL related companies.
    Dayasiri pleads “If others can do it why not I?”. This line of argument is used by some who say “Human Rights are violated elsewhere and so why single us out”.
    Dayasiri will get out of this mess.
    We can see the onset of respectifying corruption/nepotism/impunity.

  • 10

    The Presidential Commission was only keen to put the blame on Mahendran( who had by then left the country) and let Ranil off the hook.

    Sri Lankans are not fit to be judges. They are born lackeys with blown up egos. They also have many family problems like how to educate their children in UK, how to have their daughter’s wedding at 5 star hotels.. So they need the help of politicians and rich lawyers.We should have had judges from the Commonwealth or some other source hearing this case.Most of judges are friends and beneficiaries of politicians of this country.( Remember Sarath Silva that sanctimonious humbug?)

    The Prime Minister and the Governor of the Central bank robbed this poor country.That is the truth. .

  • 3

    If Arjuna Mahendran is not brought to Sri Lanka and brought to justice.

    Ranil’s and UNP political future will be DEAD – Even Mangala – Deputy Leader- will not be able to bring it back to life.


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