21 May, 2019

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Governor Indrajit & EU ‘Blacklist’ On Money Laundering

By Amrit Muttukumaru

Amrit Muttukumaru

The greed for political power involving the selective recalling of democratic governance played out mainly as a Colombo phenomenon has papered over the hugely economically damaging year-long money laundering label affixed to Sri Lanka by the European Union (EU). The EU which considers Sri Lanka “high-risk” for money laundering issued the ‘blacklist’ subsequent to the ‘Financial Action Task Force’ (FATF) placing the country on its ‘grey list’ from November 2017. While Dr. Indrajit Coomaraswamy who has been Governor, Central Bank of Sri Lanka (CBSL) since 3 July 2016 for 16 months prior to this ruling must bear some responsibility, he must bear MAJOR RESPONSIBILITY for the country continuing to be on the blacklist. 

The EU stricture confirms what discerning persons have long suspected. Even before the EU blacklisting, the country was attracting questionable FDIs which include the non-existent Volkswagen AG assembly plant and the controversial tyre factory in Horana. There is also controversy surrounding the consortium investing in the EAP Group of Companies – ref. “Purchase of Edirisinghe Group: Investors in a labyrinth of multiple companies” – ‘The Sunday Times’ 3 June 2018. One wonders whether the CBSL has done the appropriate due diligence?

There is a mismatch on the one hand of a country with a weak economy, poor infrastructure and bad governance bending over backwards for FDIs and financial assistance and on the other the swanky high-rise apartments, office blocks, shopping malls and fancy restaurants dotting the city of Colombo with high-end vehicles which would do even a first world country proud. The large Chinese investments are mainly geo-political in nature connected to big power rivalry in the Indian Ocean with its own set of implications. No doubt these have not escaped the notice of the FATF and EU.

What follows below would suggest that Sri Lanka has done its utmost to earn this ignominy!

Bond Scam

The egregious Treasury Bond Scam is arguably the largest financial scam to have taken place in the post-independence history of Sri Lanka. It dominated the public discourse throughout last year after the submission of the report of the Presidential Commission of Inquiry (PCoI) in January 2018. The muted response of the opposition exemplifies the rot in the governance of this country.

For sheer impunity it is hard to beat. It involves a wide spectrum of politicians in collusion with influential sections of the corporate sector, bureaucracy and regulatory authorities. 

How long does it take for the CBSL to carry out its much vaunted 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 thrown up by witnesses at the PCoI which include possible tax evasion, money laundering and PEPs (Politically Exposed Persons) being directors of banks are not even on the radar.

For example, there is no record in the public domain of the CBSL having taken any meaningful action after: 

i) Kaushitha Rathnaveera, a Senior Dealer of PTL (Perpetual Treasuries Limited) disclosed to the PCoI probing the Bond Scam that “millions” encashed by him were “several times” left on “PTL CEO Kasun Palisena’s chair”

ii) Nuwan Salgado, Chief Dealer of PTL disclosing 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 

(iii) B.R. Sinniah, Chief Financial Officer of GTLPL said to be controlled by former Finance Minister (presently Minister of Power and Energy) Ravi Karunanayake’s family in his testimony to the PCoI disclosing:

“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”

Panama Papers

It is now more than two years since the International Consortium of Investigative Journalists’ 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. Inaction on the part of CBSL’s Bank Supervision Department as is the case today does injustice to those who have legitimate accounts.

This seems to be of no concern to CBSL Governor Dr. Indrajit Coomaraswamy who has ignored this writer’s exhortations to him also in the public domain to address this issue. In this connection I refer to the questions posed to him in my e-mail of 30 August 2017 which include:

Whether the Central Bank of Sri Lanka has investigated the legitimacy of the Sri Lankan accounts in the ‘Panama Papers’?”

A name included in the ‘Panama Papers’ is an erstwhile colleague of the CBSL Governor, Dr. Indrajit Coomaraswamy on the Director Board of 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 this conglomerate. Until this date he was Chairman of a Bank controlled by this conglomerate. 

There is speculation that ‘conflict of interest’ may have a role in the inaction of CBSL’s Bank Supervision Department. Dr. Coomaraswamy was Board Director of this conglomerate for more than 5 years from 7 February 2011 until his resignation on 3 July 2016 subsequent to his appointment as CBSL Governor. Now his sister Radhika Coomaraswamy has been appointed as an ‘Independent Non-Executive Director’ of this conglomerate with effect from 1 October 2018.

Illicit Drugs

If frequent detections of large quantities of illegally-trafficked drugs such as heroin is the  tip of the iceberg, Sri Lanka may well be on the way to becoming a regional hub for illicit drugs. There is wide perception of a nexus between drug dealers and politicians. Stories doing the rounds of widespread corruption in the customs establishment in the context of the alleged extravagant lifestyles of many customs officers does nothing to allay the fears one may have in the integrity of the proposed ‘Colombo International Financial City’.

These fears appear to be confirmed by regular news reports:

“Sri Lanka emerging as transit hub for cocaine smugglers” ‘Daily FT’ 1 September 2017

This news item inter alia reports: “Sri Lanka is becoming a hub for cocaine as it is a risk-free location with less legal restrictions,” a top police official who is aware of investigations into the smuggling told Reuters this week.

“Country’s second largest heroin haul detected” ‘The Island’ 7 December 2018

We have it on the authority of the Finance Minister himself (Mangala Samaraweera) under whom Sri Lanka Customs falls that Sri Lanka’s top dealers in illicit drugs are not those languishing in jail but some of those holding high posts in social service organizations such as some Presidents of Rotary Clubs, Lions Clubs and Buddhist organisations. He stridently made this allegation last year at a press conference claiming “PERSONAL KNOWLEDGE”. His back paddling a few days later: 

“Inadvertently, I also mentioned Rotarians and Lions Clubs, which I deeply regret.” does not hold up.

Readers can listen to his words in the link given below and decide for themselves whether there is any likelihood of any “inadvertence”? (3:27 onwards)

There was no “inadvertence” from the Finance Minister as far as ‘Buddhist organisations’ are concerned.

Casinos & Floating Armoury

Although not much is heard today of the proposed setting up of large casinos initiated during the Rajapaksa administration, the public are all at sea on the actual position under the current Yahapalana Government. The rate at which the Yahapalana administration is resurrecting Rajapaksa initiated projects which they condemned in the run-up to the elections, the country may also be on the verge of becoming a regional casino hub with all its likely implications for money laundering and mafia activities given the country’s “risk-free location with less legal restrictions”.

It is possible that the feasibility of some major property development investments in the heart of Colombo such as the $850 million JKH Waterfront project now renamed ‘Cinnamon Life’ are also  dependent on the establishment of large casinos. This writer is not stating that establishing casinos per se is all bad. In this day and age it can be argued it is inevitable particularly if tourism is going to be a major contributor to the economy. What needs to be flagged is that there must be appropriate laws and regulations which are enforced and zero tolerance of corrupt practices. Is this likely in the Sri Lanka of today? Will the Government and JKH shed clarity on this issue?

Controversy also surrounds the legality or otherwise of the activities of Avant-Garde Maritime Services Ltd. said to have operated a floating armoury on the high seas and alleged to be engaged in money laundering. The Yahapalana government claims it has led to the country incurring a loss in excess of Rs. 11 Billion. Confusion is worse confounded after two senior Cabinet ministers in the Yahapalana government allegedly defended Avant-Garde after which one of them resigned. It is now not clear whether the floating armoury is still operational.

This is the ground reality in a country that proposes to have an ‘International Financial City’ to function as an offshore international financial centre.

Conclusion

In the context of the foregoing – particularly the absence of the political will to enforce existing laws and regulations on a level playing field, it is downright dangerous to have in the statute book the recently enacted ‘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.

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

One would have expected CBSL Governor Dr. Coomaraswamy at the very least to have publicly cautioned the government against the enactment of such an Act.

In the context of little respect for the rule of law and regulatory agencies for the most part being indifferent or in some instances being active partners in wrongdoing, the proposed ‘Colombo International Financial City’ may well turn out to be a hub for money laundering.

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Latest comments

  • 7
    2

    I think thr buying out of Edirisinghe Group is Commercial corruption. [edited out]

    • 10
      0

      Many, many Thanks Mr. Muttukumru. Please keep up your great work!
      There is an external geopolitical dimension to the corruption epidemic, and bi-partisan UNP-SLFP corruption racket in the Parliament of Sri Lanka today. Washington’s Millennium Challenge Corporation (MCC) has been drafting Bondscam Ranil’s (fake) economic development policies to benefit America First and the global 1 percent these past 4 years, and this is why Sri Lanka is in a Debt Trap with the rupee crashing, so that land transport and energy infrastructure may be asset stripped to benefit US security and business interests in the Indian Ocean Cold war with China. This is the big picture.
      Sri Lanka, a donor darling, is sitting on a “Choke Point” in trade, energy and undersea cable routes in the Indian Ocean and is in a (Fake) Development Aid for Trade Debt Trap because of Corruption and IMF and western neoliberal development policy advice. IMF turned a blind eye to the Bondscam at the Central Bank. Why? Today Lanka is in IMF bailout business as are other countries like Greece, Argentina, Ecuador, Haiti etc
      Sri Lanka is being targeted by the Washington’s deep state because it is strategic in the Cold war with China. This is why Sri Lanka has lost Economic soveriengty to Japan-US bond dealers. Ranil is Trumpland’s puppet.
      His minister of finance and spin is a hairdresser of the butterfly club. Meanwhile, Washington’s Millennium Challenge Corporation (MCC) has been drafting Bondscam Ranil’s (fake) economic development policies to benefit America First and the global 1 percent. Please investigate MCC funding for the last 3 years, since 2015, to Sri Lanka in Bondscam Ranil’s office at Flower Road, to benefit US security interests in the Indian Ocean Cold war against China.

  • 7
    3

    you are a lone voice crying in the wilderness
    a voice that no one wants to hear
    but keep on dont let that worry you
    some day it will be heard

    • 6
      0

      The Financial Action Task Force (FATF) is “an independent inter-governmental body”

      Its RECOMMENDATIONS are “recognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.”

      Consistent with this, the European Union (EU) issued the ‘BLACKLIST’ on Sri Lanka SUBSEQUENT to the FATF placing the country on its ‘grey list’ from November 2017.

      From an ECONOMIC PERSPECTIVE this ‘blacklist’ is possibly the MOST CRUCIAL ISSUE facing the country.

      The people of the country led by the MEDIA must exert pressure on the government to get this YEAR-LONG ignominy lifted as soon as possible.

      It is REPREHENSIBLE that the MAJOR MEDIA controlled by BUSINESSMEN including stand-alone business and finance journals are not playing this role.

      THE OFFICIAL PRIMARILY RESPONSIBLE FOR THIS IS THE CBSL GOVERNOR.

      AMRIT MUTTUKUMARU

  • 0
    2

    We are lack to follow that proper procedure of Financial, Fiscal and Monetary by that politically heavily involvement by politics of UNP’s since 2015 January 8th has that created chaos of economic development in Sri lanka?
    The UNP leader of Ranil Wicks hard-landing that power of state that tools has been misadventure by CB Bond scam has looted billions of Rupees of Tax Payers money by Central Bank Governor of Arjune Mahaedaren .He is hiding at privileges of citizens of Singhopareen.!

    The nature of financial deal by CB Bonds of that has undermined whole rules of Monterey polices guided by IMF and Internaoianl baking operation. Not only that it gone beyond that violated International Bank of Settlement by Primer and CB Governor . No legal action has taken against any of that key culprits of RW of Primer and CB Governor .

    Therefor legal system and judiciary has weak and not function law by properly.
    By the way weak judiciary order has that No Fairness for Tax Payers money looted by PM and CB Governor are in free from that court of Law.

    We have so many cases of money laundering are pending before court of Law. Not yet address by rule of Law in our land .In term of justice better search for money launder by above political influences of UNP leadership?

  • 4
    4

    “The EU which considers Sri Lanka “high-risk” for money laundering issued the ‘blacklist’ subsequent to the ‘Financial Action Task Force’ (FATF) placing the country on its ‘grey list’ from November 2017. While Dr. Indrajit Coomaraswamy who has been Governor, Central Bank of Sri Lanka (CBSL) since 3 July 2016 for 16 months prior to this ruling must bear some responsibility, he must bear MAJOR RESPONSIBILITY for the country continuing to be on the blacklist.”
    *
    Many of us have an idea of what led to Sri Lanka getting on the Grey List and Black List.
    We also have an idea of how action to catch the culprits got delayed.
    The author picks on the Governor CBSL, knowing well where the problem lies and leaving out the ones that need to be challenged.
    Is there something missing here that we need to know?

    • 2
      0

      SJ

      “Is there something missing here that we need to know?”

      Yes there is a lot.
      Could you find out how the Chinese contractors bribed Mahindawamsa to get almost all contracts including Norochcholai thermal power plan, Matele Airport, Hambantota harbour, …… and importantly how did they account for amount in their books back in China?

      Where did Basil get the money to bribe Velupillai Prabaharan just before the 2005 presidential elections?

    • 0
      3

      I got the same feeling. It is good these frauds are exposed but his views seem to be a bit partial. Both parties have been corrupt, previous regime where a whole corrupt family was fleecing the nation is not mentioned adequately. Wonder whether he has something against the current Governor of CB?

  • 4
    0

    Amrit Muttukumaru: We, layLankans, are with you almost all the way, from A-Z, of what you say here.
    This must be directed to the GoSL of the time. Unfortunately the teams playing the friendly ‘us vs us’ governance game are bad and we have to choose one of them.
    .
    Yes, the ‘independent’ Governor of Central Bank SL must publicly point out as to why we get displaced from the Grey to the Black money laundering list.
    Is Dr. Indrajit Coomaraswamy is being realistic as to ‘independence’ of the CBSL?

  • 2
    2

    Amrith Muthukumaru: You understand that in Sri lanka, Bureaucrats are below politicians who think they should run everything. DId you here that Central Bank official said, Bond Scams begain in 1997. PArliament is full of Drug pushers, Jones, many kinds of Crminals and Fraudsters. Money laundring is OK with the USA but not with the EU. PENT HOUSE RAVI escaped Maoney laundring from RAJ” RAJRATHNAM of GAALON by changing the Exchange control act which acquitted more than politician including PENT HOUSE RAVI.

  • 5
    6

    Amrit appears to be “on a hatchet job ” against Governor Indrajit as it’s accepted by the country, legislature, financial markets, lending agencies & the CB that he has transformed the work ethic to highest standards and does not bear whatsoever the major responsibility for the blacklist as alleged.

    He also shifts with dexterity from diverse subjects as questionable FDI’s, due diligence, bond scam, forensic audit, the “pet refrain” for Panama Papers Re a Director alleging Indrajit together well before his appointment, to his sister’s appointment,, illicit drugs, casinos, floating armoury , Avant -Garde and finally to the FX act, whether or not related to Indrajit’s functions and critically of relative interaction with impunity !

    • 5
      2

      MG,

      Lankan legislature, financial markets, lending agencies, CB, currently operate with scant regard for the democracy of the Masses. And Indrajit ensures the chicanery. What a travesty.

    • 2
      4

      MG
      I share your fears.

    • 1
      3

      I got the same feeling. It is good these frauds are exposed but his views seem to be a bit partial. Both parties have been corrupt, previous regime where a whole corrupt family was fleecing the nation is not mentioned adequately. Wonder whether he has something against the current Governor of CB?

  • 2
    2

    Why isn’t’ the Buddhist clergy screaming to hell-on-high about this obvious foray into exactly what the Buddha preached against- this hideous aberration into the scared realm of reality? Why is this governor still around?

    Rajapaksa’s floating armories were at least China prone. This means that country was sold via easily payable shipping lanes; country tradition and heritage saved by the social network.

    What the hell is Ranil’s bond scam about? The Four-Billion dollar year-after-year industry of the hard-working Middle Eastern menial labor of the Masses (money which gives impetus to the local industry), gone into the greater South Indian-Lankan conglomerate. All to share, care, hold hands, and declare common low-caste heritage, whilst working at hard labor to uphold the global 1%’s right to excessive wealth.

    The Buddhist clergy will sit preaching about the individualistic brain-power, with the apex of human evolution being sitting in some Western Country preaching humility. And it will take a Tamil to see through the scam and see the potential of a more honorable existence in the egalitarian Buddhist land.

    • 1
      0

      ramona grandma therese fernando

      What the hell are you blabbering about?
      Can you please rearrange all those words in a meaningful and coherent sentences/paragraphs?

      • 0
        0

        NV,….rearranged especially for you as you get easily confused:

        1st and 4th paragraphs: Are Buddhist priests stupid? The will sit screaming at useless racial things but when country money is involved, it is over their heads.

        2nd para: A reply to the accusations against Rajapaksa for manipulating country money. His was mandated by the Masses, easily payable, and tangible investments with the correct forces: BRIC and China. His was unity for united country and heritage

        3rd para: A reply to accusations against Ranil for manipulating country money. His was mandated only by rich Colombites, impossibility-payable, intangible, together with the Division of Motherland into disunited provinces; Merging of Motherland with……………INDIA.

  • 2
    0

    I just can’t understand this writer’s presentation. I see this differently. We have too many stupid regulations with much restrictions for foreigners to invest. May be there is a divide and rule policy where some are more equal than the others.
    Innocent me invested my hard earned money from UK on a coconut plantation hoping to give employment to the humble people but I had nothing but trouble from the ungrateful people and I sold it invested in a shopping complex. I thought it was legally ok where my foreign born wife could also own it as she also worked to pay for this complex. We jointly had a NRFC account in HSBC for nearly 20 years. Then I was told after buying the land that I should be a SL national and for 7 years I struggled to get my dual nationality, just to get my file move from one dept. to another I had to come from UK several times until I openly criticised the procedures to Mr Ranjan Wijeratne and he asked me to come to his office at the old Senate house where he got down the files and got the persons in the President’s office to ok my application. Still my wife had no rights to my investments.
    Here in UK I sat with many High Commissioners at the same table where they all saw my only son and I mentioned about my investments in SL but they never mentioned that my foreign born son should be registered at the HC in London before he reached 18 so that he could have some entitlement to my hard earned properties in SL.

    • 1
      2

      Nimal,

      The article is exactly about what you say. Current GoSL does not want the country to be built up by the small-time private Lankan investor (I assume it is less than a 5-million US-dollar investment). If you are not willing to risk put your money on the S. Indian-Lankan conglomerate (returns, if any, in a 30 years’ time), they are just not interested.

      (Before that they were a bit better, and were afraid the profits would go out of the country….you would have had to have given up your British citizenship and utilize the money in Sri Lanka. Good thing, don’t you agree, for the sake of the Motherland).

  • 2
    6

    Amrit Muttu has many chips on his shoulders.He has it into persons of his vintage who have reached the top of their chosen paths To name a few Indrajit and Radhika Cumaraswamy and Hemaka Amarasuriya all widely respected people.
    His own relatives the Page clan have avoided him like the plague.
    He keeps on hammering all these people because he knows they are a cut above him and will not harm him.He keeps away from criticising persons who are real culprits because those types may make him vanish.
    For the record this guy could not hold a job for long was employed in about 15 top companies over a 15 year spell.

    • 5
      1

      ‘Ruwan Silva’

      A ‘Ruwan Silva’ I am aware of sadly passed away last week. Be that as it may, even if there has been a resurrection from the dead, I thank him for his compliment that I “was employed in about 15 top companies over a 15 year spell”! Notwithstanding this number being a figment of his imagination, the fact of the matter is that in his mind ‘TOP COMPANIES’ were QUEUING up to recruit me on an annual basis although they knew my longevity in previous positions was not extensive. For the record l state that I do not suffer people who cannot be respected gladly and I have CONSISTENTLY maintained this position.

      The “widely respected people” he refers to – “Indrajit and Radhika Cumaraswamy and Hemaka Amarasuriya” have chosen not to respond. However there are responses from proxies such as ‘Ruwan Silva’.

      As for his claim that the “Page clan” avoids me “like the plague” he appears to be privy to something I am not aware of.

      The CBSL has just given an EVASIVE response on behalf of Indrajit Coomaraswamy WITHOUT SOURCING the response to any particular official which is the norm in CREDIBLE organizations.

      I suggest the CBSL forward their response to:

      1) Financial Action Task Force (FATF) which placed the country on its ‘GREY LIST’ for money laundering

      2) International Consortium of Investigative Journalists (ICIJ) which 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’

      3) European Union (EU) which considers Sri Lanka “HIGH-RISK” for money laundering and issued the ‘BLACKLIST’ subsequent to the FATF placing Sri Lanka on its ‘GREY LIST’

      AMRIT MUTTUKUMARU

  • 2
    3

    Muttukumaru is jealous of Indrajit who is a Right honourable Gentleman.He is a sportsman and Mutt’s outbursts against him are unwarranted.

    • 3
      2

      Yeah, right honorable gentleman orchestrating the irregularities and criminalities into that “greater design” plan.

  • 2
    1

    Amrit you and other civil activists like Chandra Jayaratne must form a third front and come into the mainstream political scene.The country needs you and fellow travellers to lead it

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