8 December, 2022


Governor Indrajit’s Stewardship – Hiding Forensic Audits & Other Issues

By Amrit Muttukumaru

Amrit Muttukumaru

The media reports that Central Bank (CBSL) Governor Dr. Indrajit Coomaraswamy will be ‘resigning’ with effect from 20 December. Being held in high esteem by the intelligentsia and elite circles of this country, much was expected from him after he was appointed Governor on 3 July 2016. This was particularly so after the controversial exit of Arjuna Mahendran in the aftermath of the egregious Treasury bond scam in the context of the CBSL being the issuing agency. 

The jury is still out whether there was a marked improvement in the image of the CBSL in view of the EU ‘Blacklist’ on Sri Lanka for money laundering almost 19 months after Coomaraswamy 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.” Although Sri Lanka was removed from the FATF ‘Grey List’ last month (October 2019), it is not clear whether the country continues to be on the EU ‘Blacklist’. While Coomaraswamy must bear some responsibility (together with Messrs. Cabraal and Mahendran) for these strictures, he must bear major responsibility for the country continuing to be in this position at least until October 2019.

While wishing him well in his retirement, this writer believes that it is fair to state that overall the tenure of Coomaraswamy as CBSL Governor could be considered a disappointment for reasons that will be made clear in this article. Clarification from him is awaited. These include:

Hiding Forensic Audits

It is shameful that the CBSL has reportedly sought the approval of the Attorney-General to release to the public domain its long delayed ‘Forensic Audit’ of the egregious Treasury Bond scam on the premise that it “could influence the upcoming presidential election” (‘Sunday Times’ 3 November). Is this not the very reason it should have been in the public domain to enable voters to make informed decisions? I ask Coomaraswamy (i) Is the AG’s Department more competent than the CBSL on the subject of issuance of Treasury Bonds? (ii) Does not the CBSL have the independence to place the forensic audits in the public domain?

The forensic audit was a key recommendation of the report of the Presidential Commission on the bond scams which was available in the public domain from 3 January 2018. It is only after a protracted delay of 22 months that the audits have been completed. Now that the long delayed forensic audit has been completed, the CBSL is stalling its presentation by the shameful recourse to seeking the approval of the Attorney-General!

No one with fiduciary responsibility with access to official data on the 27 February 2015 and March 2016 bond scams has credibly quantified the loss incurred by the government and the people.  Various ‘unofficial’ estimates have indicated astronomical losses. As the issuing agency for Treasury Bonds, should it not have proactively engaged the attention of the CBSL long before a Presidential Commission had ordered it?

Money Laundering

Dr. Coomaraswamy was appointed CBSL Governor on 3 July 2016. It was under his watch that the contentious ‘Foreign Exchange Act, No. 12 of 2017’ was enacted on 28 July 2017 and became effective from 20 November 2017 – 16 months after he took office. 

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

This Act which repealed the ‘Exchange Control Act No. 24 of 1953’ further liberalizes foreign exchange transactions and in effect is conducive for money laundering if people are so inclined. 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 such an Act in the statute book? 

A precursor to this dangerous Foreign Exchange Act is the ‘invitation’ issued by then Finance Minister Ravi Karunanayake through India’s prestigious publication ‘The Hindu’ of 5 October 2015 to “Sri Lankans and Indians who had to take back their deposits from banks in Switzerland to place their funds in Sri Lanka”. He had further assured that “No questions would be asked”!

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 would (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?

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 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 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.

It beggars belief that CBSL under Coomaraswamy  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.”

Alleged HNB Tax Evasion

After the damning allegations in a website of an alleged tax evasion in HNB Bank was brought to the attention of Governor Coomaraswamy on 25 September 2017, it took the CBSL 42 days to advise me (i)“CBSL has not carried out any investigations” (ii) “the statements” in the article “are factually incorrect” (iii) “The matter is being brought to the attention of the Inland Revenue Department.”

It begs the questions:

i) How “the statements” contained in the article could be “factually incorrect” if “CBSL has not carried out any investigations”?

ii) Why it took CBSL 42 days (from my initial e-mail of 25 September) to belatedly state “The matter is being brought to the attention of the Inland Revenue Department.”?

iii) Has CBSL brought it “to the attention of the Inland Revenue Department” even now? If not why?

The allegations include:

i) Some portion of the “evaded tax” was “divided between the tax advising company and the officers at the Inland Revenue Department involved”

ii) “The current chairman of the bank Rani Jayamaha has also been able to identify the wrongdoing through an internal probe”. 

To establish the truth or otherwise of this alleged scam, has the CBSL at least inquired from “Rani Jayamaha” former Deputy Governor of CBSL whether she was “able to identify the wrongdoing” through “an internal probe” when she was Chairman of HNB? If not why?

The silver lining to unravel this ‘hot potato’ is Dinesh Weerakkody being the incumbent HNB Chairman (previously Chairman, Commercial Bank).  He should be more than capable to get to the bottom of this saga. He is described as a ‘thought leader’ in his frequent articles to the ‘Daily FT’.

Bank Supervision

1) NDB Bank

Did the CBSL investigate and respond to the damning allegations in the ‘Daily FT’ of 15 May 2017: 

“NDB is on the verge of firing its Chief Financial Officer (CFO) for blowing the whistle late, though he did so within the stipulated timeframe.”

It relates to the alleged “serious misconduct by a senior management personnel over a year ago. The revelation had come two months after the high senior management member concerned had left the bank.”

Is there anything in common between the alleged ‘HNB Tax Evasion’ and the alleged NDB misdemeanor?

When there are serious allegations, is it not incumbent on CBSL’s Bank Supervision Department to conduct robust investigations to ascertain whether such persons are ‘fit and proper’ to hold senior management positions in banks?

2) Sampath Bank 

There was even a mainstream media ‘blackout’ of the alleged “Massive Fraud At Sampath Bank” published in ‘Colombo Telegraph’ on 29 January 2019. It was alleged by the “victims” that CBSL “was in a deep slumber while Sampath Bank was siphoning off the customers’ money”. We are still to hear from the CBSL on this alleged “Massive Fraud”.

3) Dubai Arrest

It was widely reported in February this year that a high profile Sri Lankan arrested in Dubai for his alleged involvement in the illicit drugs trade had allegedly deposited as much as “Rs.10 billion in 23 bank accounts” in Sri Lanka and Dubai. Even if half this sum was deposited in Sri Lankan banks, does it not indicate that the CBSL has been in “deep slumber” in this respect too?

One could only speculate as to how many other cases concerning bank supervision not yet in the public domain have escaped the notice of the CBSL?

EAP Group Sale

The CBSL has not disclosed whether its claimed ‘due diligence’ in regard to the sale of EAP Group companies has considered the damning allegations in the news report in ‘The Sunday Times’ of 3 June 2018 “Purchase of Edirisinghe Group: Investors in a labyrinth of multiple companies”?

In particular CBSL has avoided confirming whether there is any truth to the terrible allegation:

“But punitive action is being blocked by the Ministry of Finance which has taken from the Customs Department a file containing evidence against the suspects”

If the CBSL considers the report spurious, has ‘The Sunday Times’ been taken to task?

Links with Jailed Hedge Fund Manager 

Intriguingly the CBSL has maintained ‘Radio Silence’ on Coomaraswamy’s links with jailed hedge fund manager Raj Rajaratnam for ‘Insider Trading’. When questioned on this soon after his appointment as CBSL Governor, he responded as follows:

(i) He was invited by Rajaratnam when he was “finishing at Commonwealth Secretariat” for “delivering some professional services” on “macroeconomic research”

(ii) “That happened for about 10 – 11 months and then of course he was charged and the operation stopped. It took another year for the whole thing to be wound up legally”

Watch 0.25 onwards:

By stating “It took another year for the whole thing to be wound up legally” does he not tacitly admit that after Rajaratnam was “charged” he continued in service for “another year” and drew remuneration for doing so? The question also arises why a person only doing “macroeconomic research” for an organization should apparently be involved in its ‘winding up’?


Dr. Indrajit Coomaraswamy is held in high esteem by the intelligentsia and elite circles of this country. If he person such as him fails to clarify these issues or gives an unconvincing clarification, is it not realistic to assume that the problems of this country are far more serious than we can imagine?

The ‘Daily FT’ which is the country’s only stand-alone finance and business journal when reporting his resignation referred to him as “Highly respected”. The same journal of 7 November 2019 quoted Coomaraswamy as having stated:

“no amount of policies and regulations would ensure growth, prosperity and stability if good governance and compliance frameworks were fragile”.

Should not Coomaraswamy put his money where his mouth is?

Print Friendly, PDF & Email

Latest comments

  • 2

    Could have been a LTTE mole, but sleeping with the enemy and crying patriotism has been a Buddhist trait for long long time.
    Portuguese, betrayal of the moors
    Dutch betrayal of Portuguese
    Britain betrayal of Dutch
    Rajasinghe betrayal of keppetipola who showed the way to the kandyan kingdom,
    MR with Prabakeren 2004

    • 14

      Amit, Thanks and keep up the great work!
      Coomaraswamy takes his orders from his colonial masters and of course the Washington Consensus and its IMF-MCC_WB “advisors” who said that the Report on the Bondscam with the list of who benefited should be “embargoed” for 30 years, just as the US State Dept. embargoes all documents on its war crimes in the Mid East, Africa and and Easter in Sri Lanka. Corruption is part of the current debt trap promoting global financial system to enable the rich to get richer by looting working people. Time to ask IMF, WB and MCC to take a hike and get rid of the dollar as reserve currency.
      What is astonishing is the JVP’s and Handunetti;s agreeing to meekly cover up the forensic Audit report.!
      JVP which has been playing LGBTQ and ethno-religious identity politics with US puppet Ranil and his gay mafia lately seems to have forgotten that what is needed in economic justice. Seems like time for a change of leadership of AKD – Mr 3 percent Seems that Uncle Sam had fingers in the JVP pie and its only now after kept mum about the MCC and SOFA that JVP has something to say!

    • 15

      Amrit, yours does not come as a surprise. It was only a matter of time before you took your final swipe at the Coomaraswamys, in what has now become a one sided personal feud in print. We all well remember how you generously tarnished Radhika’s work and reputation as well, sometime ago.

      Those who have come into contact with Indrajit Coomaraswamy even from a distance will refute each malice laden word you have written here with disdain. If finally it is his actions against your word that have to be evaluated, have you any idea where your word would stand in the swell of public opinion?

      The real disappointment is not Indrajit or Radhika Coomaraswamy at all, but you Amrit. You may want to search your inner-self as to why.

      • 13

        Justice & Fairplay

        1) I am viciously vilified the moment I question the ‘darlings’ of the Colombo elite and intelligentsia. I am amazed by their mindless and sycophantic adulation of persons in their ‘circuit’ who in their view can do NO WRONG. Instead of responding ‘HEAD-ON’ to crucial issues that impact on the GOVERNANCE of this country, I am attacked.

        2) It is no surprise that this article is of no concern to the country’s only stand-alone finance and business journal ‘Daily FT’.

        3) I have nothing personal against anyone. I have no “personal feud” against the ‘Coomaraswamys’ as you allege. Although I do not know Indrajit personally, I have known Radhika for a long time. We were colleagues at the Marga Institute way back in the mid 1970s when Neelan too was there. Their father Raju was known to the Muttukumarus. My father too was in the UN in the early 1960s and passed away in 1976 when he was heading the WFP operations in India based in New Delhi.

        4) You have accused me of “malice” and “tarnishing” their “reputation”. I REJECT these heinous accusations with contempt.

        5) Instead of responding to FACTS I am vilified. For EXAMPLE:

        6) INDRAJIT: Why is he not presenting to the PUBLIC the long delayed ‘Forensic Audits’ on the egregious Bond Scams?

        7) RADHIKA: In the context of the alleged “financial problems” at the International Centre for Ethnic Studies (ICES) connected with the Dr. Rama Mani controversy, has Radhika (former Executive Director) ever DENIED the damning media disclosure:

        “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.”

        Is this not preposterous?

        Amrit Muttukumaru

        • 0

          “is no surprise that this article is of no concern to the country’s only stand-alone finance and business journal ‘Daily FT’.”

          Perhaps Mr.Mutukumaru’s angst would be mollified if he started his own FT style journal to sling mud at people he doesn’t like. Or to paint himself lily-white.
          Or even better, to demand forensic audits on non existent ” scams”. Any fool can see that there is NO conclusive evidence of astronomical losses from the bond issue , and that’s why Mahendra is not deported from Singapore

      • 0

        Justice & FP
        I wonder if you read “Newest instrument of bond scam cover-up saga: The forensic audit – A response to Cabraal,” by Janitha Devapriya in the Financial Times today.
        I tried to post a request for the writer to take a look at Mr Muttukumaru’s article here but the paper rejected me.
        Any ideas how to solicit Devapriya’s attention?

    • 0

      hello my friend, these grass-eating Modayas voters did it by knowing it or they don’t know any history what happened just about one generation or two ago. It is no wonder that grass-eating Modayas have no memory of what happened last week. We cannot fight Rajapkses who were processed by same spies who had engineered same thing(killing of Keppetipola and others in 1815. Since then, these colonial spies have been actively promoting non Sinhalese by killing genuine Sinhalese to makes sure to repeat 1815. Colonialists follow their colonial book of espionage that has recorded all history of how they saved “Rajashinghe -Bandaranaike. They were behind all these all the way from killing Keppetipola to processing Bandaranaike’s party and processing Rajapaksas and creating Tamil Tigers .

      I later realized bringing Israelis back is the only way we can get rid of grass-eating Modayas voters who help colonialists to repeat the history and most importantly countering colonialist who initially promoted Tamil into Europe and North America.

      I knew since the day I found out about Rajapksas’ family and their relatives, who were set up by colonialists to disgrace us in front of Tamil gang and the world..
      To correct what colonialists have been doing , Sri lanka need get rid of not only these bribery-grass-eating Modayas voters but also Bandaranayke’s party which is the reminder 1815 blood shed. RW is corrupted, but not linked to disgraceful history. Also, UNP party almost finished. The best solution is to create new Sinhalese party and name Colombo and Colombo airport and other cities under Keppetipola and other leaders who were killed by colonialists

  • 6

    All high profiled Tamil in Government Service for the last 30-40 years did maximum damage to the government coffers/economy stealthily. They plundered money by hook and crook and some funds transferred to LTTE and LTTE rump diaspora for propaganda work to tarnish Sri Lankan State. Ranil always trusted these crooks.

  • 18

    Who is this two bit journalist Amrit Mutukumaru who thinks that Forensic Audits are something like he used to watch on the X Files and thinks he knows how to run a Central Bank? The most important thing that Governor Coomaraswamy did was to DEpoliticize the Central Bank, without which there is no such thing as stability. Further, improvement of reserves, Debt to GDP service ratio (different from the debt to GDP ratio) and many other fundamentals were credibly improved under his tenure, which will keep Sri Lanka’s risk profile (dependent on what the new government does as knee-jerk handouts) from skyrocketing borrowing costs. All these desk based journos who think they know a thing or two about running an economy should be glad that people like Coomaraswamy were willing to give up more lucrative pursuits overseas and exchange it for a paltry salary and mudslinging in this dump known as Sri Lanka! Of course with his exit and probable political lackeys like Nandalal taking over it’s back to the drawing board!

  • 17

    Conflicts of interest will always exist in such a small market. How naiive can you be to think otherwise? The difference is that people like Coomaraswamy have the decency to recuse themselves from any decision making that involves any of their past business dealings. Something you are clearly not able to digest and as such think everyone operates with your same crooked mind.

    • 3

      I have no idea of the background of the writer , but by his incessant attempts to vilify the Governor and his sister , he clearly demonstrates that he wouldn’t be fit enough even to tie his boot laces – pun intended .

  • 6

    Mr Amrit What do you think of former governor Cabraal’s comments on the forsenic audit

  • 7

    I think Sri lankan finance ministry and Central banks are HORA Guhaval for some decades. Even if a very honest computer placed, instead of a human being, as the Centrabk TOP official, that computer would go wrong. I think many knew that Ajith Kumaraswamy was doing just what Mangala wanted. Mangala was completing the MCC agenda. What happened to the $ 750,000 Bonus Mangala got in 2016 as he signed the MOU for MCC-compact. I think the next will be Nivarrd Cabraal.

  • 4

    Pretty a good one: How did you get the idea of merging Ajith Cabraal and Indrajith Kumaraswamy into one?

  • 3

    Israel PM, Benjamin Netanyahu’s 7 associates including his Lawyer have been alleged to be proven ‘money launderers’. Netanyahu himself has openly asked for bribe like expensive French liquor & Cheese, Cuban Cigars, Designer clothing etc. According to global financial experts, it is the Central Banks around the world that are part & parcel of a well organized “syndicate in Money Laundering” and other corrupt practices, and therefore CBSL is no exception nor are the high ranking individuals who work for it.

  • 0

    So Dr Samy seeked approval from AG well before the Election….??

    I thought Ranil Aiiyaa was in total control then with J C Weliyamunna , the UNP ‘s own Private AG was meeting up with Dr Ranil to decide all things Legal , including whom to investigate and whom to prosecute..

    How come Dr Ranil didn’t know about those” Forensics” if they were so damaging to Nnadasena and his backers..
    Unless Ranil Aiiya wanted the Kid to get done..

    As I mentioned earlier ,President Nandasena must retain the services of Dr Samy at least part time becauase he seems to me to be a cool character who looks the real deal among the Big End of the Bankers even in the West..

  • 10

    Amrit Muttukumaru, you always blame Indrajit, [period]

  • 4

    It’s funny. People expect the government servants to do their job, while voting for crooks to be leaders of the nation.
    There are many to stand up fearlessly to bring down government servants but only a few stand up against the politicians.
    It’s ok if they are scared to do so. Then they should stay silent. It’s funny because they are giving excuses to cover up their shame and stand with the majority.
    Morality and democracy at it’s peak.

  • 2

    Amrit how about you organising the forensic audit given your audit links

  • 1

    Asking for the opinion of the AG REGARDING THE RELEASE OF the Forensic Audit relating to the Treasury Bond scam is by no means a reflection on the CBSL on the subject of Treasury Bonds!

  • 11

    Why did Indrajith had to consult the AG to release FA?
    What was the delay in commencing the FA?

  • 0

    This comment was removed by a moderator because it didn’t abide by our Comment policy.

    For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 5 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.