18 September, 2019

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FM & CB Governor, You Are Accountable For Your Unwise & Unacceptable Actions

By Chandra Jayaratne

Chandra Jayaratne

Chandra Jayaratne

An Open Letter to the Minister of Finance and the Governor of the Central Bank; to be duly noted by the President, the Prime Minister, the Government, Commercial & Financial Services Sectors and Professional Practitioners

Dear Minister and Governor,

You are Accountable for Your Unwise and Unacceptable Actions and Inactions

Transparency International Sri Lanka and many professionals in Civil Society, (including much respected retired Senior Central Bankers), have sounded “Amber Lightsignals, warning you of your unwise and unacceptable actions and inactions, in connection with the open public call made by the Minister of Finance with the apparent concurrence of the Governor of the Central Bank, requesting investors to “park” foreign currency deposits in Sri Lanka, as “special deposits”, on “no questions asked” basis, with “no locked in investment period”.

The Minister has in fact boasted, a few weeks ago, of the success of the scheme, with an unnamed Belgian investor, working in partnership with a Sri Lankan, having agreed and partly funded, the ‘parking of one billion US Dollars in Sri Lanka’. He has also proudly announced this achievement as a due endorsement of the Sirisena-Wickremesinghe Government.

Ravi and ArjunaAt the time of this first announcement, connected bank officials had informed the media that the remittances have topped USD 1.5 billion; and as the remitting banks overseas would already have cleared the customer and due diligence performed, there was no real need for “Know Your Customer” (KYC) validations at the receiving end bank. However, the media had later quoted the Central Bank chief as having confirmed that, commercial banks will continue to accept foreign inflows under mandatory international monetary regulations to know the source of funds.

The media today headlines “Many more” ready to deposit says FinMin; and “Why do you want aid when you can trade? Trade should substitute aid. Likewise why do you need loans, when you can have deposits? When deposits come, your reserves go up” quoting the Minister of Finance; who had asserted that “many more” are ready to help Sri Lanka defend its currency and bolster its reserves”; and says “these deposits will replace loans drawn at high interest rates.”

The Minister too has assured that the relevant KYC validations are carried out and that the critics need not worry whether these are hot money; and actions taken are without corrupt motives as a clean government is in power.

Civil Society, however wishes to hold the Minister of Finance and the Governor of the Central Bank accountable for the following;

1. Potential consequential risks, in the medium to long term, of the of scheme now in force and duly prompted by the Minister, as way forward to protect the value of our currency and secure low cost funds in the short term, leading to monetary instability and a potential balance of payment crisis in the future

2. Consequential potential negative national economic and social outcomes, if any in the short to long term, in the absence of a transparent and publicly announced scheme, detailing the applicable guidelines, procedures and processes governing investors “parking” foreign currency deposits in Sri Lanka, as “special deposits”, on “no questions asked” basis, with “no locked in investment period”.

3. Consequential impact, due to the aforesaid scheme and its operations and reporting standards in practice in Sri Lanka, Sri Lankan Banks and Financial Institutions, violating any international conventions and commitments of Sri Lanka and the local legal and regulatory framework, in terms of;

  • International Anti Money Laundering and Terrorism Financing Conventions and Commitments
  • Acts and Regulations associated with the Financial Intelligence Unit of Sri Lanka – refer – http://fiusrilanka.gov.lk/acts_regulations.html
  • Financial Action Task Force on Money Laundering (FATF 40 recommendations)
  • Foreign Account Tax Compliance Act (FATCA) obligations
  • The new global standard on Automatic Exchange of Information (AEOI) introduced to minimize the possibility for tax evasion.

4. Consequential impact due to the aforesaid scheme and its operations and reporting standards in practice in Sri Lanka and Sri Lankan Banks and Financial Institutions on;

  • Sri Lanka’s International Credit and Risk Ratings
  • Sri Lanka’s Foreign Direct Investment attractiveness
  • Sri Lanka’s International Trade and Services linked Value addition options
  • Sri Lanka’s Competitiveness and Investment Attractiveness as reflected by Internationally accepted Investment and Trading Indices

5. Assurance that none of the investors making deposits under this scheme, their actual beneficial interest holders, their proxies or associated or related parties, are presently or are likely to be, subject to prosecution in the future, for any international crimes or serious financial crimes, bribery or corruption, carried out by any of them, either in Sri Lanka or overseas; and further an assurance that none of the funds so deposited form a part of or tainted by being proceeds of any such crimes carried out in Sri Lanka or overseas.

6. Assurance that the acceptance of such deposits under the scheme, will not be deemed to tantamount to be a grant of a ‘general or special’ amnesty to such persons depositing proceeds, where such proceeds are later discovered to be out of any proceeds of serious crimes; and that such acceptance of deposits will thus not jeopardize any of the investigations or prosecutions which are currently being progressed against persons and their related parties and associates in Sri Lanka or overseas for having possessed or having deposited proceeds of serious crimes in banks in Sri Lanka or overseas.

Provided, the Minister and the Governor does hereby accept such accountability as outlined above, they are called upon to make a transparent public statement to that effect; and if not, the Minister and Governor are requested to make such changes to the scheme as essential to safeguard the longer term interests of Sri Lanka and its civil society and advice the public of such amended scheme in a transparent way.

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Latest comments

  • 6
    3

    Well, the Swiss banks did this for many years. Although they are tightening the rules.

    The issue we have is the appreciating dollar and the balance of payment problem. Its a world wide issue with many central banks. IMF intervention will become inevitable.

    So how do we deal with the problem? We need people to buy the LKR. Innovative policies will make a difference.

    What are the current strengths of the local economy? I would say its tourism. Why not build on that?

    We have an airline that is making consecutive losses. Typically its the travel agents who make bundle deals and taking a cut. Why cant the airline itself get together with the hospitality industry and offer tour packages? The airline makes a small margin whilst bringing in volume numbers of tourists who purchase the LKR.

    • 1
      0

      No one is accountable.

      By the way are you aware that there is a hole of Rs 120 bn in the 2016 budget due to roll back of revenue proposals such as increase in VAT, telco levies etc from the budget. Hence a mini budget in April 2016.

  • 1
    3

    Dr Jayarathna,

    I know you guys didn’t have much respect for our Dalit Bank Boss Dr Cabby…Right.

    That is why the UNP Christian Faction Leader imported all Elite , Vellala Singaporean to run the joint.

    Cabby put a “No Standing any Time” sign for Foreign Investors, unless they provide proper IDs with 25 points in total, from 5 different sources.

    Plus they had to have clearance from Border Protection Authorities and Terrorism Investigating Units.

    Now our FM Galleon gets people with even no names to park their Billions in Colombo 1, under the good care of Singaporean.

    God knows what else is going on there .

    Only thing I know is their ( Singaporean and Galleon’s ) Report on our Yahapalana suckers Economy is not that crash hot.

    November issue says the deficit was close to USD 700 Million.

    Wonder what it was in Jan 2016 after Galleon’s maet parked his cool 1 Billion ?.

  • 2
    1

    Thank you for writing this.[Edited out]

  • 1
    4

    Shut up you moron,
    You have no knowledge on anything, .
    Why do you always have to be cynical?
    When your Brother in law was in Cabals mo teary board, where all the corruption took place, where was your mouth?
    Btw is he still squeezing his old bird, but she too has lost her head, after her Husband got a cabinet portfolio.
    I suggest you shut up,as no one with any brains will take you seriously,

  • 6
    1

    FM & CB Governer should not only be held accountable, but also responsible for their decisions. Powers vested in them should be diverted to more knowledgeable statutory bodies.

  • 2
    0

    These guys are unashamedly making Sri Lanka another place to park illegal or tax-evasion money meant to be laundered. After all the big moralistic lectures about corruption etc. this is just too rich!!
    Galleon Funds will find their way in and this is what it is all about, and what they’ve been waiting for. Of course other dirty laundry will follow, but the day the washed laundry is pulled out is when the country will feel the pain. How can the President allow this to happen?
    They cannot hope to fool all of the people all of the time and get away with it!

  • 1
    1

    This is probably the Mahinda Money(MM) coming in through the back door in order to avoid being treated the way Fonny was treated.Thet is why the IMF and international watchdogs are moving in to make sure that the government does not make a “deal” with the MM. We know that Ranil is very clean BUT we also know that there are other “R”s who are very messy.

    • 1
      1

      R. W is clean. . That is the legend that is built up _ How come he appointed. AM to the central bank knowing full well he is a Singaporean citizen to handle. S. L economy

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