21 September, 2019

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Gaping Omissions In Article On CBSL Governor Coomaraswamy

By Amrit Muttukumaru

Amrit Muttukumaru

Objectivity, balanced reporting and the public interest demands that gaping omissions in Dr. W.A. Wijewardena’s adulatory article on Central Bank Governor Dr. Indrajit Coomaraswamy published in the ‘Colombo Telegraph’ and  Op-Ed page of the ‘Daily FT’ be placed on record. It is because of the key public office Coomaraswamy holds that such scrutiny becomes necessary.

Dr. Wijewardena – a former CBSL Deputy Governor is a prolific writer and resource person on economic affairs. He is also regularly featured in the ‘Colombo Telegraph’ and ‘Daily FT’. 

Stint with Raj Rajaratnam

Dr. W.A. Wijewardena (WAW) while referring to Coomaraswamy’s engagement with HNB bank for “nearly one and a half years”, fails to mention his “professional services” for almost 2 years to jailed hedge fund manager for ‘Insider Trading’ Raj Rajaratnam. 

Has not Coomaraswamy in his response to the media admitted that after Rajaratnam was “charged” for ‘Insider Trading’, he continued in service for “another year” and drew remuneration for doing so? Does not the question arise why a person only providing “macroeconomic research” should be involved in its ‘winding up’? Should not Coomaraswamy clarify this?

EU ‘Blacklist’

Another omission is the EU ‘Blacklist’ placed on Sri Lanka for money laundering in February 2018 in the context of Coomaraswamy assuming the position of CBSL Governor in July 2016 – almost 19 months after he took office. The EU ‘Blacklist’ was subsequent to the ‘Financial Action Task Force’ (FATF) placing the country on its ‘Grey List’ from November 2017. FATF recommendations are “recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.”

While Coomaraswamy must bear some responsibility (together with Messrs. Cabraal and Mahendran) for the FATF ‘Grey List’ and EU ‘Blacklist’, must he not bear major responsibility for the country  continuing to be in this position even today? 

How could this have escaped WAW’s notice?

Money Laundering

In the context of the absence of the political will to enforce even existing laws and regulations on a level playing field, is it not downright dangerous to have in the statute book the ‘Foreign Exchange Act, No. 12 of 2017’ which further liberalizes foreign exchange transactions which in effect is conducive for money laundering if people are so inclined. This Act which repeals the Exchange Control Act No. 24 of 1953 became effective from 20 November 2017 – 16 months after Coomaraswamy took office as CBSL Governor.

The Act inter alia states “The Central Bank shall as the agent of the Government, be responsible for implementing the provisions of this Act”.

Given the virtues of Coomaraswamy extolled by WAW, should not Coomaraswamy have at the very least publicly cautioned the government against the enactment of such an Act which became effective in November 2017 especially when the country was on the FATF ‘Grey List’ from November 2017? This is in the context of FATF putting Sri Lanka on notice as far back as  October 2016 that the country would be assessed on the effectiveness of measures put in place to combat money laundering. Coomaraswamy took office as Governor in July 2016.

This is a country that proposes to establish an offshore financial centre as the centerpiece of the re-claimed land dubbed ‘Colombo International Financial City’. High end casinos are also said to be part of the mix. Frequent detections of large hauls of heroin, cocaine and other illicit drugs which most likely are the tip of the iceberg would suggest that Sri Lanka has become a regional hub for the trade in illicit drugs in the Asian region. Does not the Reuters report “Sri Lanka is becoming a hub for cocaine as it is a risk-free location with less legal restrictions” confirm this position?

How has WAW a former CBSL Deputy Governor missed all this?

Panama Papers

It is now more than three years since the International Consortium of Investigative Journalists’ (ICIJ) in a worldwide exposé named persons in several countries including Sri Lanka allegedly linked to offshore companies in tax havens revealed in the ‘Panama Papers’.

While not suggesting or implying that the mere listing of names and entities in tax havens is indicative of wrongdoing, it must be appreciated that until the accounts are determined legitimate, they will remain suspect and the persons concerned ‘not fit and proper’ to hold any position of trust involving the Public. 

A name included in the ‘Panama Papers’ is an erstwhile colleague of CBSL Governor Coomaraswamy on the Director Board of JKH arguably the country’s most diversified conglomerate with top tier market capitalization. This person from 1 January 2019 has assumed the position of Chairman of JKH. Until this date he was Chairman of a Bank controlled by JKH. Did ‘conflict of interest’ have a role in the inaction of CBSL’s Bank Supervision Department?

Coomaraswamy was a Board Director of JKH for more than 5 years from 7 February 2011 until his resignation on 3 July 2016 subsequent to his appointment as CBSL Governor. Unless he functioned pro bono, he would have received pecuniary benefits from this office. 

Now his sister Radhika Coomaraswamy has been appointed as an ‘Independent Non-Executive Director’ of JKH with effect from 1 October 2018.

It beggars belief that CBSL has the audacity to cite the new and contentious ‘Foreign Exchange Act, No. 12 of 2017’ to justify inaction on the Sri Lankan names in the Panama Papers:

“The time period prescribed by the Foreign Exchange Act No. 12 of 2017 to conclude investigations under ECA expired on 19.05.2018 as stipulated in the Foreign Exchange Act No 12 of 2017. These investigations also lapsed on that date.”

Are these of no concern to WAW?

Bond Scam – Forensic Audit

A key recommendation of the report of the Presidential Commission of Inquiry into the egregious Treasury Bond Scam is the Forensic Audit to be carried out by the CBSL. The Commission report was available in the public domain from 3 January 2018. The Forensic Audit has still not seen the light of day. The said scam is arguably the largest financial scam to have taken place in the post-independence history of Sri Lanka.

How long does it take for the CBSL to carry out its forensic audit? The CBSL which is the issuing agency for Treasury Bonds has to date not even quantified the loss incurred by the State which is widely perceived to be huge. 

Even crucial issues of governance incidental to the bond scam related to possible money laundering thrown up by witnesses at the Presidential Commission  which include possible tax evasion, PEPs (Politically Exposed Persons) being directors of banks and alleged bank malpractice do not appear to be even on the CBSL radar.

Politically Exposed Persons

In the context of Politically Exposed Persons (PEPs) being at the centre of the worldwide efforts for the prevention of money laundering, where else in the world (i) a Senior Deputy Governor of the Central Bank soon after retirement be appointed a Director of a leading bank? (ii) a Chief Justice of the Supreme Court soon after retirement be appointed a Director of a leading bank? (iii) a highly connected PEP previously Chairman of a leading bank be currently Chairman of a competitor bank?

Is it any surprise that Sri Lanka continues to be on the FATF ‘Grey List’ and EU ‘Blacklist’ for money laundering?

Conclusion

Dr. Wijewardena informs us that “According” to Dr. Coomaraswamy “the bank should have three attributes within it to do the job properly. The first was integrity. The second was technical expertise. The third was professionalism.” The readers can consider whether Coomaraswamy has been hoist with his own petard?

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Latest comments

  • 9
    22

    I am losing respect for CT You allow this venomous person to attack the Coomaraswamys time and again because of a personal vendatta.Time to stop publishing his posts .All topics are personal attacks

    • 6
      2

      Dear Ruwan,
      .
      Comments by you and Ranjit de Silva are the only two that are now on display below the article by Amrit Muttukumaru. The article that has appeared after this one by Muttukumaru has already had fifteen responses:
      .
      https://www.colombotelegraph.com/index.php/monk-led-unofficial-police-menace-is-raising-its-ugly-head-again/
      .
      When I turned on my computer this morning to make a proper comment of reasonable dimensions on the subject of Indrajit Coomaraswamy as a human being (I’d deliberately put it off), I saw that this Muttukumaru article was the latest of the “Opinions”, and I immediately read it through. I cannot evaluate it, since I don’t know sufficient Economics. However, I went ahead with my comments which were somewhat off-topic. In the writing of what I have said there:
      .
      https://www.colombotelegraph.com/index.php/indrajit-coomaraswamy-the-boy-from-cambridge-who-rose-to-the-pinnacle-of-the-central-bank/
      .
      I must confess that I was influenced by what I have read here.
      .
      In the context of Muttukumaru’s article what I have said is all, “Koheda yanne? Malle pol.” I wonder what the origin of that expression was? Anyway, we all know it.
      .
      Seriously, though, although I’m happy to read the responses of both of you, I’d like to affirm the right of Muttukumaru to ask questions. Matilda Ellepola and Lalith had raised similar issues in relation to the WAW article.
      .
      Since I just don’t understand all this, I will not attempt to deal with the issues raised here, but I have to add something that I had overlooked about Chandra de Fonseka and the JVP.

      • 9
        1

        SINHALA MAN

        1) In the context of ‘Shooting the Messenger’ and sycophancy being major reasons for the ills of this country, it is salutary you have informed those who have appealed to CT to ”stop publishing” my articles:

        “I’d like to affirm the right of Muttukumaru to ask questions. Matilda Ellepola and Lalith had raised similar issues in relation to the WAW article.”

        2) These desperate PROXIES have viciously inter alia accused me of “personal vendetta” and “jealousy” and characterized me as a “venomous person”!

        3) To date we are yet to hear from either the author of the article Dr. W.A. Wijewardena or CBSL Governor Dr. Indrajit Coomaraswamy. Even the ‘Daily FT’ which published WAW’s adulatory article on Coomaraswamy on its Op-Ed page has to date not published my response. This is the Sri Lanka of today.

        4) ‘Sinhala Man’ I am INTRIGUED as to why without commenting on my article you have gone into detail of INTIMATE household matters in Bandarawela concerning Coomaraswamy’s father-in-law, Chandra de Fonseka which include some details of the “19-year-old Thai girl” named “Ampai Anand (universally called “Dum” even now)”! You also state “His only child was Tara, who used to come up regularly, when in Sri Lanka. Indrajit, a little less often, but I got to know them well.” What are you trying to convey to CT readers?

        5) I understand you have been a good friend of the late Hubert Congreve of Wye Estate in Bandarawela who was a thorough gentleman.

        Amrit Muttukumaru

  • 6
    20

    Hello Ruwan not only Coomaraswamys but JKH too is on his hit list.No doubt it is all due to jealousy
    Heard he tried to play cricket at SJC and was not chosen so he is j that Indrajit made it

  • 1
    2

    I can understand your point. But you are focusing the quality of drinking water that was thoroughly filtered by limestone and fine gravel instead of the quality of our drinking water that is contaminated with sewerage water.

    First of all, the stock broker that you referred in fact exploited a system like a professional computer hacker. Then as expected, the crook covered his tricks with unsuspecting book smarts. In fact he was not the first one or last one to follow that script. He was caught because he forgot the fact that no one can become a billionaire over night by just trading stocks.

    You can question the judgemental call of unsuspecting professional book smarts. Well, that is a century old problem. Book smarts always have to work for street smarts. Book smarts are brainwashed to follow the rules and street smarts get the thrill of testing the boundaries.

    Now the focus is updating the boundaries for street smarts in any fields and not to worry about the book smarts.

  • 3
    1

    My friend, do you know who are the biggest money launderers in world- the biggest western banks. They earn 100s of billions dollars in this way, when they get caught, they pay few miserable billions as fine, and mind you, it too on long term instalment basis. Just look around in London, Paris, and other major western metropolis, one could see people from many countries, have bought match box like houses for millions, and parked their ill gotten wealth safely and securely in those places. They say every minister and high up officials in the government of Sudan has at least four to five houses in those high end gated communities in Dubai. In it’s the same for other countries, including ours. In Dubai, Singapore, Hong Kong etc, if a normal man brings in few hundreds thousand dollars without a proof of earnings, he is penalised for money laundering but those who bring in millions with arrangements go scot free. That’s how all the dirty moneys are parked safely in those places. They secretly welcome and happy with these money for they get dirt cheap money to put to use for the good of their country. Owners these money hardly get any big return, occasionally take little out of it, and rarely pull it out. So friend, it’s good if we too adopt this strategy. Those who preach these things in the West have looted the world and still do, and made their lots life better. Still our lots are in miseries, and these thing should wait until they get better.

  • 15
    2

    Muttukumaru lays it out clearly and concisely. As a person who sees the true situation of country separation and/or the Indian merger, he is ridiculed and insulted to the hilt. One doesn’t need to understand the intricacies of economics. Just understanding the overall impact of economic decisions is enough for our land is to retain her sovereignty or to be sold to the forces of division.

  • 6
    15

    Amrit appears biased also distorting facts again to mislead the public at large -to wit

    -Indrajit was paid a retainer for 3 months after Raj Rajaratnam’s arrest wherein all his staff were paid in full for 3 months.

    – Indrajit was not involved during the 1 year it took for Galleon Research Services to be wound up

    – Indrajit in fact assumed assignment in Jan-June 2010 with Commonwealth Secretariat when it was stuck with an unplanned resignation of a Director .

    – Unknown to Amrit far reaching progress executed on the FATF action plan to date to get SL off the grey list as well on all forensic audits with both processes scheduled concluded before the year.

    -On the Foreign Exchange Act, the CB was kept out of the drafting process but afforded an opportunity to comment.. Not all comments were taken on board, including concern expressed Re the tightness of deadline to complete ongoing cases. CBSL concers were expressed to Government. as inappropriate to comment in public

    – Radhika’s appointment as an Independent Director based on her exceptional credentials on unanimous Board invitation and much after Indraji”s resignation for Governor position

    – In my unbiased opinion Amrit’s article is a “hit job” on eminent Dr WA Wijayawardena, ,
    the CB , the eminent Radhika and highly respected service of Indrajit Coomaraswamy during his exacting tenure where he has rendered technological reforms and innovative results with total integrity and dedication as known both in the CB and to the public .

    • 8
      2

      But why was Coomaraswamy dealing with Rajaratnam at all……Rajaratnam’s involved whole different banking system ; Coomaraswamy was supposed to be totally focused on the Sri Lankan banking system. He would have had a whole different vision after associating with Rajaratnam.

      Only reason Sri Lanka went into the grey list in the first place was because UNP took over. Otherwise it was well in with BRIC (et al) system, of which returns would have come in very soon after 2015.
      _
      CBSL needn’t have been in the drafting process for the Foreign Exchange Act, or commented at all. It was all under the purview of the UNP, and so whatever happened within the FEA, the same thing happened in CBSL.

      There are many other people with Radhika’s credentials. It’s strange that someone of the same vision and brainwaves sit on the same CB aligned money-making firm.

    • 15
      2

      Mithila Gunaratna

      1) Instead of your CONVOLUTED meandering as a proxy for the author of the article Dr. W.A. Wijewardena and CBSL Governor Dr. Indrajit Coomaraswamy, the Public Interest will be best served by a response from either Wijewardena or better still by Coomaraswamy.

      2) The hard fact is that Wijewardena in his GLOWING article on Coomaraswamy has fought shy of addressing inter alia (i) He being employed by Raj Rajaratnam and his sense of judgment in selecting such employment (ii) His responsibility for the continuing EU ‘Blacklist’ and FATF ‘Grey List’ for money laundering (iii) Undue delay of the Forensic Audit of the egregious Bond Scam (iv) Inaction on the Panama Papers (v) Seemingly allowing without demur the dangerous ‘Foreign Exchange Act, No. 12 of 2017’ which could encourage money laundering (vi) Inaction on glaring PEPS (Politically Exposed Persons) being directors of banks.

      3) You state that Coomaraswamy was “paid a retainer for 3 months after Raj Rajaratnam’s arrest”. I again ask, what was the need for a person purportedly providing “macroeconomic research” to be involved in its ‘winding up’? Please pay attention to the implications of what Coomaraswamy has disclosed to the media https://youtu.be/SAgzdPrhyTA

      4) It beggars belief that CBSL has the audacity to cite the new and contentious ‘Foreign Exchange Act, No. 12 of 2017’ to justify inaction on the Sri Lankan names in the Panama Papers.

      5) A name included in the ‘Panama Papers’ is an erstwhile colleague of CBSL Governor Coomaraswamy on the Director Board of JKH arguably the country’s most diversified conglomerate with top tier market capitalization.

      6) You refer to his sister Radhika Coomaraswamy’s appointment as an ‘Independent Director’ of the very same JKH as “based on her exceptional credentials”.

      I bring to your attention that in regard to alleged “financial problems” at the International Centre for Ethnic Studies (ICES) at the time of the Dr. Rama Mani controversy, Radhika who was the head of ICES for a long period is alleged by the media:

      “Dr. Coomaraswamy, in accepting responsibility for some losses, has claimed that she simply signed anything put in front of her by the Financial Controller, who she thought was not competent.” (‘The Nation’ 27 January 2008)

      To the best of my knowledge she has to date not denied this media report

      One could perhaps stretch a point (albeit not acceptable) if the Financial Controller was “competent”. Here we have Radhika allegedly stating the Financial Controller was “not competent”!

      Are these the “exceptional credentials” which led to her appointment as a JKH director?

      7) You refer to both Dr. W.A. Wijewardena and Radhika Coomaraswamy as “eminent” and CBSL Governor Dr. Indrajit Coomaraswamy as “highly respected”. While alleging that my article is a “hit job” on these persons, you claim that your comments are “unbiased”.

      8) ‘Shooting the Messenger’ and sycophancy are major reasons for the ills of this country,

      9) The best service you could do for the country is to urge (i) CBSL Governor Dr. Indrajit Coomaraswamy (ii) author of the article Dr. W.A. Wijewardena (iii) Radhika Coomaraswamy to CLARIFY matters in the Public Interest.

      Amrit Muttukumaru

  • 4
    13

    I do not wish to further delve into the vile and vindictive writings of Amrit Muttukumaru which I believe is due to a deep seated envy of successful and respected people. No person with a modicum of decency will use a warm and personal felicitation of a gentleman to launch into a tirade of vicious and personal attacks under the guise of public interest.

    • 11
      3

      MITHILA GUNARATNA

      1) The link I have provided SOLELY refers to CBSL Governor Coomaraswamy’s response to the media on his employment with jailed hedge fund manager for ‘Insider Trading’ Raj Rajaratnam. It is captioned “Only provided professional services to Rajaratnam CB Governor”

      2) CT readers can listen to the link https://youtu.be/SAgzdPrhyTA and determine how COMFORTABLE or not he was in relation to his engagement with Raj Rajaratnam.

      3) Wijewardena’s “warm and personal felicitation” of Coomaraswamy more than 3 years AFTER he took office as CBSL Governor has glaringly AVOIDED addressing key issues of governance which include his engagement with Raj Rajaratnam. Are these not of Public Interest?

      4) Abusing me with INVECTIVES merely indicates the DESPERATION of your patrons for whom you are PROXY.

      5) Why are (i) CBSL Governor Dr. Indrajit Coomaraswamy (ii) author of the article Dr. W.A. Wijewardena (iii) Radhika Coomaraswamy fighting shy of responding?

      Amrit Muttukumaru

  • 3
    11

    Mithila you have summed him up correctly

  • 0
    5

    Guise of Public interest Where were you pre 2015 and will there be ink in your pen post 2019

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