Ex-Governor of the Central Bank, Arjuna Mahendran has been found guilty by the Committee on Public Enterprises (COPE) in the Treasury Bond Scam.
The Colombo Telegraph has managed to get a copy of the draft report by the Committee Chairman Sunil Handunneththi, which has been endorsed by majority of the members, except for the UNP members in the committee. The report will be presented in Parliament this week.
Arjuna Mahendran
COPE in its final report on the investigations into the Treasury Bond scam has ruled that Mahendran is ‘directly responsible’ for the 2015 and 2016 bond scams.
“Arjuna Mahendran is directly responsible in the 2015 – 2016 bond transactions, and therefore, legal action must be taken against him and the other officials who were involved in the transaction and steps must be taken to recover the loss from him,” the report by COPE Chairman Sunil Handunneththi said.
In his report, Handunneththi has also recommended that a mechanism be put in place to ensure the transparency of such transactions in future, and safeguard the confidence of the Central Bank.
The COPE report has also recommended that a law enforcement agency must carry out an investigation into Perpetual Treasuries Limited and how it received undue advantage as a primary dealer from the Central Bank.
“Investigations must also be conducted as to how Perpetual Treasuries Limited recorded a very high profit in a relatively short period of time,” the report by Handunneththi said.
The COPE report, which was drafted after months of investigations and evidence gathering, has not been signed by the UNP members in COPE, who have announced that they will issue a separate report on the Treasury bond scandal, in their effort to safeguard Mahendran despite his direct role in the scam.
Perpetual Treasuries Limited is linked to Mahendran’s son-in-law, Arjun Aloysius. Perpetual Treasuries recorded a profit of Rs. 5.1 billion for the year ending March 2016, an increase of 430% in profits in comparison to the previous year.
Fedrick / October 24, 2016
Seems like these money goes to pay for the money spent for UNP elections. That is why so much coverups from the UNP top and sometime Mr.Mahendran is recovering money he spent for UNP elections during last few years.
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Patta Pal / October 24, 2016
Sunil Handunetti walks out of the COPE meeting because he cannot have his way! This is the real situation, when confronted with the truth, the JVP cannot retract their stance that was wrong all the time, which has mislead most of the above commentators and the media into thinking this was a planned scam from the beginning.
When you cannot stand your ground anymore, and all you believed has turned into mush, what option have you left. How could a person who took a pay cut, worked as a Banker in Singapore for so many years where there is NO corruption, be suddenly corrupt within days of appointment?
Sri Lankans just cannot see beyond their prejudices, as you judge people by your own standards. To say that Sirisena was wrong all the while is telling as he has been fed the same hogwash by his own advisers who are also not capable of the intellect to understand a simple transaction!
The joint opposition have been harping and barking up the wrong tree for 18 months and counting, and have barked the whole population into a precipice of misinformation.
In short we have all been had and all these Govt. detractors will just have to hide their heads in shame, with NO WHERE TO GO!
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Silva / October 24, 2016
Patta Pal,
This is the banana republic and this is the unmistakable outcome that could unfold. All this time what they did was sling mud at RW using this false allegation. I knew from the beginning this is what the JVP will do. Angilikota could not prove his falsehoods and so he just walked out from the post! No kidding! The bugger just stood up and walked away! What if were him a doctor!? What a shame? What an irresponsible behavior? What a cowardice act? It is this type of pakis booruwo who are trying to take governance of the country!
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Punchiburampi / October 25, 2016
I dont mind his angili (fingers) or penis s been anatomically short/small/ even lost, but what matters is the manner him to have just left and walked away is not the standard way. These men are trully saying no matured to handle the kind of issues. Latter is also comphrehensible.
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Wera / October 25, 2016
The logic of this saga goes something like this. Because Arjun Alosius made a huge bid with little or no capital as collateral and he is the son-in-law of the former governor of the central bank the governor of the central bank is definitely a crook and involved in some kind of scam. Because the the company perpetual treasuries made a huge profit this reinforces the logic. The proof is the relationship and the profit. Nothing will convince these kalakaniyas of the alternative. The prejudiced mind set is typical goday sinhalese mentality. The reputation of the former governor, his previous job experience, his reluctance to accept the post of governor, his current situation of being virtually unemployed due to his decision to accept the post which got him into trouble. Non of this matters. Lets take the son-in-law and his company, his bids went thru the bank of Ceylon who gave him a hefty unsecured loan for reasons know only to the obvious crooks making the decision in the bank, the first inquiry held into this affair which pointed out this glaring error and recommended further investigation of the bank. Non of that matters either to this nincompoops. The close friendship between Alosius and the Rajapkshe brats another issue deemed irrelevant. Nothing matters but the single minded persecution of a banker with an honest reputation based on pure hatred and suspicion due to his friendship with the PM and also the desire to sling mud at the PM himself.
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Upul / October 24, 2016
If the former CB Governor is found guilty then recover the money which his son in law made out of that deal and put all those scoundrels behind bars for ever. It’s a shame to have a premier who talks about “YAHAPALANAYA” and the same time tries to cover up this Billon dollar scam.
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Avithsenna / October 24, 2016
Any hounarable government facing such a situation will resign and look for a new mandate from the people. There is no doubt UNP can win with a new leadership as SLFP has self destructed as it leadership is consumed with hatred towards former boss.
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Silva / October 24, 2016
Avithsenna,
“Any hounarable government facing such a situation will resign and look for a new mandate from the people. There is no doubt UNP can win with a new leadership as SLFP has self destructed as it leadership is consumed with hatred towards former boss.”
How much of Abrakadas did you swallow? Ask for some modaka from Gunathnam or Modaka Wimalaya. Sky will be the limit of your creative talents!
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Eru / October 24, 2016
While the observations seem right the recommendations like giving priority to government funding sources are moronic. He’s basically suggesting that the country goes back from a market economy to stone age. This happens when nationalists take precedence.why not drive the entirety of the private sector away and let everything be done by the government so that the sole and ulmate beneficiary is the government itself.
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Silva / October 24, 2016
Recommendations:
11.1 2nd dot: Give priority to government institutions in fulfilling monetary requirements of the government over other parties.
Observation:
Then how the fucking hell are these pakis donkeys going to conduct bond auctions? In auctions there are no buddies that you cuddle for solace. They will sue you after the fucking auction is over!
Ha.. haa. hhaa. This is JVP’s gon typed recommendations. It is this kind of nonstarters that are being pushed through by their Anthara Ganja Rala in the universities.
By the way why isn’t there a lawsuit to recover the colossal losses caused by JVP by burning the national treasures?
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mahsen / October 24, 2016
Yes UNP must resign honorably from gvt and allow president to run rest of the period. Until 2019. Then hold fresh elections.What happened in the Bond scam and subsequent cover up by UNP is disgraceful to mandate. SF a person who cultivate Hatred is silent. See the difference in people for perks.They preach something and practice something else.
This 10 billion 2015 & 2016 can be allocated to Health and education of under privileged.
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Yasin / October 24, 2016
I feel Ranil should take the entire blame for this debacle and scam.
Is this guy Arjun Mahendran better qualified than many qualified Sri Lankan candidates for the post ?
Why did Ranil go onto choose this guy when we had sufficient talent in the country ?
I think we have the wrong UNP leadership and it is time to change and sooner the better.
It is time for Ranil to say good bye to politics….and RESIGN NOW and give the leadership to Sajith, hoping that he may be a good leader.
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Plato. / October 24, 2016
Yasin.
Hand over the leadership to Sajith?
He lied on the issue of his qualifications!
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Gamarala / October 24, 2016
Did a part of the money Mahendren and his son in law earned go to Ranil’s pocket.
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sarrij / October 24, 2016
Ranil is and has always been a biii…g problem.
Get it.
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words / October 25, 2016
Thank you JO for screaming and shouting about this matter and bringing it to the open. .do you think the TNA would have ever bothered? ???
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dan / October 25, 2016
Came to power saying that thay will fill people’s pocket. Now what happend?
They filled up not only their own pockets but also their Banks as well
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Ajantha / October 25, 2016
This man should be skinned to death. He is still free thanks to Ranil who also shared the robbery. If he did this in Singapore what will be his fate? He did what he could not do in Singapore
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Arjun All-Gorgeous / October 25, 2016
It is not only Ranil that is in Mahendran’s pocket. Ravi Karu is in Arjun Aloysious pocket, just like Namal was in Arjun Aloysious pocket back when MR was in power.
Why dont we wait till the media find out who flew the Rajapaksa money to Dubai and elsewhere. You would be mistaken if you thought it was Rajapaksa or any of their cronies.
It was Arjun Aloysious who used his contacts in finance world in other countries and personally flew with bags of cash, gold and the rest to deposit and hide all this money.
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Patta Pal / October 25, 2016
Oh How ignorant art thou? General Public
The ignorance of the General Public is so massive, that they seem to fail to understand that anything coming out of COPE is merely political, from politicians, bent on reinforcing a political agenda, and therefore CANNOT BE TRUSTED IN THE SRI LANKAN CONTEXT – after all guilt anyway is a matter for the Courts and NOT COPE!
Once the public have already made up their minds on a subject they know nothing about, but which people they appear to trust are pontificating on, it is all the more important that at least the people they trust do actually report the truth. When the media in their blissful ignorance have opined that this was a huge daylight robbery perpetrated against the state, people, and especially educated people who should at least have a brain to understand between the lines on something as simple as a bond trade, chose NOT to and take as fact the opinions of cretins in the Media.
In the Bond Scam issue, it is lies piled up upon lies, so much so that the actual crooks, those gentlemen or people at least pretending to be gentlemen, the lifers who serve for life in the Central Bank of Sri Lanka (CBSL FOR SHORT) get off scot free.
DAMMIT THIS IS AN AUCTION.
IF the auctioneer is the fraud, how can you blame the person who bids, even if he is the only person who bids, and if he bids for more items than that on offer. It is up to the auctioneer to determine if he has some extra stuff hidden which he wants to give at the same price or not.
It is mind boggling to lay the blame on a person who buys at an auction, and then sells the product for twice that on the next day, to say they should be arrested for making a profit. Actually it is the auctioneer who should be arrested.
The politicians have failed to explain this simple concept, and the intellectual snobs have subscribed greatly to this ignorance, as they are livid that someone can make so much money in a few minutes based on buying and selling bonds, that automatically make them green with envy, coming to the conclusion that they somehow indulged in some foul play or MUST HAVE BROKEN THE LAW.
I know in the end this will come to nothing as there NO break in the law, except in technicalities of exceeding borrowing limits etc. for which small fines can be levied, and that too due more in part to the lax behavior of CBSL employees also known as (aka) lazy babies with a grudge.
This is an appeal to the people who have a little bit of common sense left, to ask oneself, how someone can defraud the Central Bank in the purchase of Bonds, as it is the Bank that decides every aspect of the BOND – Namely the Price, the term, the amount, the interest rate, and who to allocate it to!
So WHO IS THE CULPRIT? AUCTIONEER SURELY!
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Sunil / October 25, 2016
This is the type event which makes good people lose their patience and trust and faith in the entire system.Other than the alleged smelly Royal College connection Ranil has not given or indicated any reason for defending Mahendran. As UNPers we have been waiting for him to tell us why he has defended this person against all odds so that we may to stand up for our party and defend it against those who attack the UNP for all the wrong reasons as well.What an opportunity Ranil is squandering defending a man who we all wonder should be defended.It must now be left to Mahendran to defend himself and offer the explanation that he acted regularly and properly.When the country is in such a sorry mess I am not sure why people like these are employed to mess it up even further.After all the sacrifices people made to rid themselves of absolute corruption and abuse of power it a tragedy that the PM is seen to be defending his friend in preference to the entire nation.What is it about Mahendran that is so precious to Ranil?Could he kindly explain to the people or at least could the other UNP leaders explain before people run out of patience and throw them out lock stock and barrel.This is shameless stuff;utterly shameless and embarrassing.
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Kangaroos / October 25, 2016
THE THIEVING BASTARD
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crazyoldmansl / October 26, 2016
The guidelines of the Public debt department of the central bank that state that “the front office has to make arrangements to meet financial needs as much as possible through auctions. The balance fund requirements of the government as indicated in the approved borrowing program may be arranged through private placements with PDs.”
This means that the auction is allowed to set the interest rates and then the central bank negotiates private placements for the balance based on the rates set by the auction IF THERE ARE NO MORE BIDS TO BE ACCEPTED.
However in the year 2008 citing “unwarranted” increases in the interest rates on government securities the monetary board had authorized the mobilization of funds through direct placements. (MB/PD/1/26/2008) thereby distorting the market and opening the door to the manipulation of interest rates that collapsed the interest earnings of pensioners and other investors and led to the artificial stimulation of the stock market as well. How the monetary board put itself in a position to judge the market rates “unwarranted” is unknown and probably arises from a strong belief in “price controls” regardless of their outcomes.
This manipulation of the capital market is what led to the manipulation of the stock market and to the distortion of the economy and this is what is hidden by this report which blandly states in paragraph 04 that “The procedure adopted upto 27th February 2015 had been to get a minor portion of the governments debt requirements from the primary auctions and get the rest by the direct placement method” without commenting on the subversive nature of this practice and its consequences.
This was precisely what Arjun reversed and it is this reversal that accounts for the opposition that has arisen from all those who benefitted from the convenient nexus that had developed between the Central bank and its Primary Dealers to the detriment of the economy and the living standards of all those who invested in the capital markets who saw their yields fall from 16% to 6% in a few years.
Since I have to earn my living I do not have the time to do so but I can with ease analyze this report to show very clearly how this is an attack launched by a collaboration of disgruntled Primary Dealers who are having their comfort and ease of operation disturbed and the interests of certain elements within the joint opposition whose ideological commitments are openly opposed to the market economy. Arjun has done nothing illegal and is entitled to compensation for the purely political harassment that he has been put through by this cabal.
The anti market ideological bias – rather than any legislative framework – underlying the findings of the “13-member Special Parliamentary Investigation Committee that probed the alleged insider trading and favoritism in the recent treasury bond issue “ that established Central Bank Governor Arjuna Mahendran’s direct intervention on behalf of his son-in-law Arjun Aloysius owned Perpetual Treasuries” should be exposed and the committee taken to task for making judgments that it is not competent to do based merely on “the expert advice of former Deputy Governor of the Central Bank W.A. Wijewardena and a two day class given them by Dr. Wijewardena” rather than a thorough knowledge of the legislative framework and its interpretation and practice.
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crazyoldmansl / October 27, 2016
I would like to reiterate the position that the government must investigate the ideological motivations of this cabal because it is precisely such an unholy alliance of local corporate elites who have enjoyed playing fat cats in a small twenty million strong mud puddle of a market and who are now shivering in fear at the global players and world bank restructuring of the capital markets in order to allow the island to play its potential role, and discredited Marxists and incompetent professionals who cannot face competent global competition who will oppose the generating of the five megapolises and the global financial city that will provide employment and income to the ordinary people. These spoiled brats must be exposed and made to compete in the global market instead of continuing to enjoy comforts at the expense of the working people who are denied a decent income in order to make it possible for these alley cats who dream that they are fat cats to live lazy pampered lives.
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EDWIN RODRIGO / October 27, 2016
“In his report, Handunneththi has also recommended that a mechanism be put in place to ensure the transparency of such transactions in future, and safeguard the confidence of the Central Bank”.
So the problem is that there is no such mechanism right now. How has the Central Bank of a country operated without such basic norms and mechanisms up to now? Have they been scraping coconuts all this time? We might as well open up the doors of the Central Bank for anyone to walk in and take away as much he or she likes – Vessantara style.
Humans are fallible, selfish and are strongly motivated to acquire resources that don’t belong to them. Evolution has made us so. Given the opportunity most of would do the same.
That is why we need mechanisms, standards of behavior, laws etc. And who says that this sort of thing has not happened right through? Mahendran got caught. How many have done the same thing and escaped scot free?
The situation is unbelievable and we certainly need a Duaterte to clean it up. The present guys will never do it.
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crazyoldmansl / October 27, 2016
Edwin! I am reliably informed – and have seen the bloomberg portal open in at least one banks treasury – that the current Governor Indrajith has instructed all Primary Dealers to upload all transactions on Bloomberg within 30 minutes of execution….so the whole world can see what is going on in the bond market of the Monkey Kingdom…which of course the senior M Handunnetti probably has no clue…
When politicians are so clueless as to what is going on in the country then what can be expected by the ordinary man on the street or monkey on the tree tops…
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EDWIN RODRIGO / October 28, 2016
Thanks for that info.
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Tony Ranasinghe / October 27, 2016
A very simple philosophy when doing dealing ,specially sensitive deals such as bond deals, is to avoid Conflict of interest at all cost.I cannot understand how much learned personalities can play ignorant.When the people of this country is only wanting and begging to have transparency , honesty and integrity Mr. Mahendran you have disappointed the masses.
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crazyoldmansl / October 27, 2016
Tony are you crazier than I am…? You want all relatives of any governor of the central bank who is active in anything related to finance to give up their jobs…?
Do you want orphans who are also eunuchs to be the only people appointed to the post of governor of the central bank of Sri Lanka in order to avoid conflict of interest…?
What about those who hold other key positions…should they all also be orphans who are Eunuchs as well….? Please god where do you guys come from…?
How absolutely stupid can you silly Sri Lankans be…?
I know that you have a national average IQ of just 79…which you probably do not know borders on mental retardation…BUT still one expects at least a little bit of common sense based understanding…
I do not know how you are going to do business with the rest of the world…
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Douglas / October 28, 2016
If the “Overseeing Authority” in regard to Public Finances is the Parliament comprised of 225 Peoples’ Representatives and an “inquiry” conducted by another “Limb” called COPE of that “Authority” found CB Governor and others “GUILTY”; isn’t there a possibility to CANCEL this “Bond Issue” and do a FRESH ISSUE of BONDS in a legal and a transparent manner? Why the COPE did not “Recommend” that step? Can the Parliament vote on such a Resolution and make and end with this “Headache”. If that is done, definitely it will end up in Courts, because the affected parties would challenge that move. That is done in some cases involving Tenders and the courts have given rulings to call for fresh Tenders where proper procedures have not been followed. This is also a “Tender” and let the affected parties challenge and get a court ruling. In my opinion, Parliament must move to cancel this Bond Tender and call for a “Fresh Tender” .
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Gune / October 29, 2016
I voted for this government but I must congratulate the JVP for their tenacity and perseverance to ensure fairness for the people- in a way it is they who are ensuring good governance for the people which this government is failing miserably to uphold.
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Neil / October 30, 2016
I am responding to the comment of “Patta Pal”.
The COPE Chairman walked out when a section of its membership (UNPers) whose Party received payments from Singapore after the run up to the 2015 Presidential Elections.
Is it not evident that now is pay-time for the God-father from Singapore?
As the head of an important Government of Sri Lanka institution, Mr Mahendran has to abide by the principles that there be no conflict of interests when doling out contracts or deals of any nature. The awarding of contract to Perpetual Treasuries (where his Son in law has much interest) should be termed as inappropriate and all profits accrued from this deal should be returned to the Central Bank. Conviction or jailing of offenders is the duty of the Law Enforcers or any interested whistle blower group.
The public should be given correct information in this respect and not be fed with untruthful thrash just because you have a computer and can spew out lies.
Uphold the decent work done by the Chairman of COPE – Mr. Sunil Handunhetti.
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Gamini Mahawatta / November 10, 2016
Country is wasting so much time and energy on a petty and big time criminal who has been imported by the PM, much against the will of some of the cabinet colleagues and kept against the will of the majority of people, political Parties, the President and many others.Appearing in the “Satana Programme” of Sirasa TV on the 9th November Minister Rajitha mentioned how JSS the UNP union brought to his attention how this petty rogue Mahendran paid Nuwara Eliya golf club bills from a BOI account where he was the Chairman. It was a well known at that time this petty thief was paying from the BOI account to take meals to his family almost every day.He on many occasions shamelessly announced that he was travelling constantly to collect perdium (foreign exchange) to educate his children. Although PM placed trust and confidence in this mam By appointing him as the Chairman of BOI, he did not bring a single worthwhile investment into the country. When late Anura Bandaranaike was to expose the misuse of BOI funds and other misappropriations of this petty thief in the Parliament senior Mahendran went crawling and appealed not to do so. That is the history of performance of Arjuna Mahendran in this country.
Such a rogue was imported PM for the second time and appointed to the all- important post of CB Governor violating the constitutional provisions and all other norms and regulations and pave the way for big robbery. The robber baron is still kept by the PM against the interest of the country and the people. MR.Prime Minister one day you will have to pay for this national crime unless you rectify this big error by getting rid of this criminal without further delay.
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