19 August, 2019

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In Defense Of Arjuna Mahendran

By Sarath de Alwis

Sarath De Alwis

Sarath De Alwis

I am time, the destroyer of all; I have come to consume the world. That one is dear to me who runs not after the pleasant or away from the painful, grieves not, lusts not, but lets things come and go as they happen.” The Gita

Money markets need laws, rules and regulations. The integrity, competence and judgment of the Monetary Authority is what is at stake today. Lee Kwan Yew in his memoirs describes how he set up the capital market in Singapore and dismissed critics who complained of overregulation. ‘In Hong Kong what is not expressly forbidden is permitted; in Singapore what is not expressly not permitted is forbidden’.

To take up the assignment, Arjuna Mahendran gave up a lucrative career in International Banking and his Singapore Citizenship. When he sought more time, he was persuaded to take over immediately and his nationality issue was resolved by fast tracking the process.

Had he waited till April to take over, the bond fiasco would have been under the watch of someone else or there would have been no fiasco at all.

The rocket science of bond trading is explained by a central banker in a paper presented in 2008. The Additional Superintendent of Public Debt Department Central Bank of Sri Lanka Mr.C.P.J. Siriwardene explains the growth of the Bond Market.

ArjunaTreasury bonds are traded through competitive auctions conducted by the Central Bank on a regular basis. Primary dealers who have been involved in the government debt market since 1992 have direct access to the primary auctions. According to the present regulatory framework, primary dealers should subscribe the entire sale and single primary dealer minimum investment level is set at 10 per cent of the volume of sale to avoid any possibility of under subscription. The present auction system is on multiple price basis. Since 2000, all auctions are conducted electronically using an on – line system. Before each auction, the debt authority accesses the potential investors via primary dealers to make sure the availability of funds for the full subscriptions. Private placements of Treasury bonds also take place as a contingency to accommodate unexpected borrowings to avoid market shocks by offering large volumes to the auctions and cancellation of planned bond auctions. Successful 21 bidders are informed on the same day of the auction and the settlement is two days after the auction (T+2 system). Since the establishment of the primary dealer system, the Central Bank continued its role as a debt manager to develop the primary dealer system. They include streamlining of dealers (removing nonactive dealers, appointing new dealers, etc.), introducing necessary regulatory framework for dealers and building up close relationship between primary dealers and the Central Bank.

Dr. Harsha De Silva the Deputy Minister of Planning has announced that the committee of three lawyers will examine all issues and trace any irregularities up to 2012. His erudite posturing and justifying of three mediocre lawyers on a voyage of discovery tracing misdeeds up to 2012 amounts to bottom trawling for red herrings.

This writer did not know who Mr. Gamini Pitipana was until learning that he was to be the chairman of the probe committee. These days Google does much more than Dunn & Bradstreet. So the name was googled. What  appeared was mind goggling. Royal College Class of ’72. Attorney at Law. Apollo foods Private Ltd. In the absence of any further information from the usually expansive ,Dr.Harsha what should we make of the meagre information? That Mr.Pitipana is learned in the law and could cook? Is that what is expected of an old Royalist buddy? Cook a report?

Let us get back to the world of bond trading. A basis point is a hundredth of a percentage point. To make it simpler, if a yield moves from 5.5% to 5%, it has moved 50 basis points.

Obviously Prime Minister Ranil Wickremesinghe thinks that the average quantum of gray matter which serves to process information in the brain of the average Gamarala’ in Sri Lanka is far less than one basis point! But ‘Gamaralas’ are beginning to run out of patience. Moving from bad governance to good governance the ‘Gamaralas are now experiencing a spell of ugly governance. Indeed very ugly governance at that.

It would be grossly unfair to accuse Governor Mahendran of withholding any information pertaining to his son in law. Sri Lanka is a small country. The incestuous world of the money market knew about the two Arjunas. Ranil Wickremesinghe decided to play Sri Krishna and persuaded the elder Arjuna to battle in the harsh world of greed.

Arjuna Mahendran is only a man. Power is not of a man. Wright Mills the author of ‘Sociological Imagination’ the seminal study of twentieth century society identifies five problems we face today in a free market economy; alienation, moral insensibility, threat to the spirit of democracy, disregard to human freedom and most significantly the conflict between bureaucratic rationality and human reason.

The problems such the one that is discussed are commonplace.

“Wealth does not center in the person of the wealthy. Celebrity is not inherent in any personality. To be celebrated, to be wealthy, and to have power requires access to major institutions.” What is nauseating with the governance style of the Prime Minister is that he reminds us of the commandant of Auschwitz who insisted “I never got complaints!”

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Latest comments

  • 9
    20

    Why can’t you wait until the Committee enquiry report is out.Commonsense isn’t it. We will take it from there after that.

    • 26
      3

      KG – Why don’t you realize that the ‘Committee’ must consist of individuals who are noted for their expertise and beyond reproach (for instance being connected in some way to the PM/Mahendran/UNP), instead of opting for individuals that will strain the credibility of the PM/Govt and look like a ‘set-up’ to objective observers.

      “Commonsense”??? Right! We need to exercise some and not pander to a misplaced sense of ‘loyalty’.

    • 8
      3

      We should have a vibrant society who are really yahapalanized. challenge all politicians, government servants not to be corrupt.

      In that sense even if this Arjuna is innocent these type of yahapalana cross check is healthy.

    • 5
      14

      What a pity!
      Another pot shot at Royal. This writer’s “Royal envy” seems to be chronic and out of control.

      Sad, sad and sad.

      • 7
        4

        Yes it is indeed a pity that everytime this Cabinet under RW creates a royal mess a Royalist is always behind it either to have created it or to defend same

      • 4
        2

        No it is not a pot shot at Royal. But RW is making the mistake of depending too much on old Royalists, the same way the MR depended on his family.These trends not only affect the country but will stop only when it destroys both Ranil and the Country.

    • 14
      1

      Welcome to Colombo. Insider trading is the norm in Colombo, not the criminal exception.

      Arjun Aloysius, the hard working son-in-law can now retire. Dissolve Perpetual Pvt Ltd. His vehicle for plum “investments”. The envy of Warren Buffet.

      Arjun Aloysius has already achieved his target. Well with in the 100 day limit. One has to give the chappy some credit for that.

      Cheers!

      PS: Screw it, I am quitting my job. Joining bond trading in Colombo. Life is short. J. Muthu & Native Vedda are welcome to be partners.

      • 2
        3

        Ben Hurling

        J Muthu being a Tamil might consider joining you if his share of the profit is good.

        I will only join you if you are determined to clean up the entire country. You will see an unprecedented historical unity among the political party despite their ideological differences, irrespective of their race, language, religion, region, for achieving their common interest, bumping off the cleaners.

        • 2
          0

          Native,

          Forget cleaning up. Join Bond Trading. Manipulate the Stock Market.

          Make a fortune with in minutes. That’s how we roll in Colombo.

          Cheers!

          PS: Have you started working your netowrk? Got any senstitive info or intel for that matter. I have a feeling, J. Muthu is already in business.

  • 20
    2

    After reading this article, I do not know whether the writer has indeed defended the present Governor of the Central Bank as the headline describes. He definitely is critical of the way that the issue is handled.

    Irrespective of the standing and the background of the Governor, the publicized elements of the case are as follows:

    1) A close relation of the Governor purchases bonds of a very high value.
    2) Very near to the event the interest rates are raised at the behest of the Governor to very extra-ordinary levels.

    The event (1) alone need not cause a stir. But (1) and (2) combined requires the Governor to explain a hell of a lot as to why he increased the rates.

    Since it also amounts to a considerable conflict of interest, it sadly requires the Governor at least to step aside temporarily until this matter is sorted out IRRESPECTIVE OF THE FACT THAT THE CURRENT GOVERNOR MADE A QUITE A LOT OF SACRIFICES TO BE APPOINTED TO THE PRESENT POST.

    Strictly speaking it is not a committee of so called lawyers who should look into this but a retired senior judge or judges should look into his as a Commission of Inquiry appointed under the Act.

    This betrays the confidence of many who expected good governance and this to take place within 60 days thoroughly shakes them.

    • 3
      1

      good governance

      you have summed it up well.Why can’t the current ‘good governance'(or is it the same old year 2000 governance)prime minister just ask in writing from the governor answers to the following points you had raised just asking him to clarify the allegations of improprierity.

      “1) A close relation of the you Governor purchased bonds of a very high value. 2) Very near to the event the interest rates are raised at the behest of the you the Governor to very extra-ordinary levels.”
      3)kindly let me know why you did that as the people are clamoring for an explanation due to the fact that they and their children will have to pay the extra 3% interest for the rest of their life time.

      yours sincerely

      good governance prime minister of wonder of asia srilanka

      very simple one page letter isn’t it and the governor has to reply in writing to the PM.Instead what we have here is a time wasting exercise with commissions of old royalists,maybe he has got the idea from his old boss preme who always had motions after motions in parliament every day for every issue until some parliamentarians had to go to the loo and hide themselves stating they are having loose motions.

  • 4
    27

    Who is this author and what is his background, Mr Editor?????

    His knowledge is nothing but pathetic.

    Kohithey Yanne Malley poll of an article. Please be more careful in publishing articles…

    Donald Gnanakone

    • 22
      2

      Why would you want to know who the author and what his background is? Are you so hard in the head to see what every gamarala -type citizen sees as a glaring fraud involving father/son-in-law hocus-pocus with sovereign funds? The author has very clearly outlined the methodology involving bond issues and the technicalities behind it although he has stopped short of outlining the malafide machinations involving this specific case. So how can you say with so much authority that the authors knowledge is “nothing but pathetic”? You may be a family friend or even a distant relative. But let this not cloud the more serious issue behind the whole stinking affair where everyone involved including the Mr Clean- Mr Bean Pm and his advisors need to justify the unjustifiable or resign forthwith.

      • 0
        12

        I am not a family friend nor any kind of relative.

        This is fraud and the article is nonsense in his defense.

        My question was to the editor and not YOU. So you need not comment.
        That is my prerogative.

        Gnanakone

        • 9
          1

          “My question was to the editor and not YOU. So you need not comment”.
          Why are you so thick in your upstairs? This is a public forum for open discussion / debate. If you have questions to the editor, send a private (personal) message.

    • 0
      5

      I told the same thing in CT some time ago.

      It is important to understand the background of the author in order to what he is saying.

      That is simply to understand from which side he is talking and where should we read. That is whether we should read the article or not the article instead, lines in between the article.

      but, those who don’t understand, laugh at DJG.

    • 4
      1

      Donald

      “Kohithey Yanne Malley poll of an article. Please be more careful in publishing articles…”

      agree with you that not much relevance but at the same time it is a harmless piece without any untruths.Asking it not to be published is amounting to censorship like what the rajapakshes did.Don’t try to shoot the messenger mate just because you don’t like the message.

    • 0
      1

      I have heard this tone and type of questioning before from men in stripes in times of yore.

      “Nee yaar” the beasties used to roar, put gun to head and see you go.

  • 17
    2

    Donald JG – Your comment is more akin to “koheda yanne malle pol” than the “article” is. Or are you speaking of the misleading title (probably) composed by some editor of CT?

    • 0
      0

      those who know Mr.De Alwis surely will agree the “title”is his own and we need to know how to read it

      • 3
        0

        Worry about the content, not the container. Title of the essay, similar to headlines in a newspaper is to attract attention. From what you say it is evident you only wish to read agreeable articles and furthermore ( which is very unfortunate since it is the truth, however hurtful that matters) you are desperately waiting for ” in defense of Arjuna..” news story. Like the fox following the proverbial goat :-)

  • 5
    0

    The whole transaction needs to be addressed very transparently with eminent persons who are experts in these type of transactions also included in the inquiry committee and they should publicise their findings without delay as ordinary public is confused and opposition discards using same in a manner suitable for their propaganda.

  • 4
    0

    Sarath, has put things in perspective. For starters, people are questioning everything, they are no longer restricted by a marauding state. They are also impatient. Demanding Good Governance. Knowing our past, they are suspicious. Just like they are finding out China will have 50 acres of Srilanka forever. A Chinese separate state in Srilanka. Not a bullet fired. A gift from Srilanka.

    Sarath, points to the mishandling of the Bond Issue. However rightly done it may have been, it hasn’t passed the smell test.

    The Govt and it’s officials must be cautious how they proceed in the future, all things state related.

    What we don’t want is the JVP screaming blue murder, the state getting restless, one bugger throws a stone, the other bugger a bigger stone and off we go to another Southern Uprising.

    Let’s be cautious, shall we ?

  • 5
    2

    Governor Mahendran is responsible for the offer. His family then benefits from the offer. The offer is not peanuts. Its an amount that runs into billions.

    There is a clear conflict of interest. Regardless of the technicalities his family should have excused themselves from the deal.

    Sarath Plonking De Alwis has a habit of defending the indefensible.

  • 7
    1

    Sri Lanka is not Hong Kong. Sri Lanka is not Singapore. I don’t think, he did not know that.

    He knew his brother in Law was had previous allegations. Besides, he had a different set of rules for others and a different rule for his relative.

    For me, it is corruption.

    If he was a careful guy, he should have avoided his brother in law.

    It is nepotism. Family promoting family irrespective of the accusations.

  • 1
    2

    There is enough investigations going on.
    Soon it would be also the Police as this case proceeds towards a criminal one as well.

    I have aready made my comments on the article.

    Anybody is free to defend Arjuna Mahendran and his son in law as well as Bank of Ceylon giving the facilities.

    The Truth always will come out eventually.

    Gnanakone

  • 8
    0

    Father-in-law/son-in-law jillmart. Like the wife/husband EPF jillmart of the ex- CJ at the NSB. Fraud at the highest echelons of public life. Silly Lanka will always be a bankrupt and basket state, whatever government comes in. This is its fate.

  • 7
    2

    The way things are going with this govt, people are soon going to realize that bringing back MaRa Gota and BasilAkka is the only solution. One set of rouges replaces another. Aiyyo SriLanka.

    • 5
      0

      Kuseel,
      In fairness, the crooks of the previous government never cared about corruption/nepotism/thuggery/bad governance(obviously).
      The present government got elected on the anti corruption/good governance platform. So, they have a responsibility follow that for at least the first 100 days. We should have known things were going down the toilet when Ravi K was appointed Finance Minister. Enough said.
      As you have correctly pointed out, one set of rouges replaces another.

  • 1
    0

    With the greatest of respect the Govenor was aware of his financial regulatory obligations due to his international banking experience. He is no amature to this game. What ever happened he didn’t did not declare an interest about his sons financial affairs that is a significant breach of the financial code of conduct. It appears that this saga is what is known as insider dealings. A head of a central bank has be super clean and must give the perception that he is reputable and his integrity is beyond reproch. I am afraid his credibility is in taters therefore he must resign. He is a goner.

  • 1
    3

    Video: We Have Already Located Rajapaksas’ Stolen Assets Worth Few Billion: Mangala
    March 14, 2015 | Filed under: Colombo Telegraph,News,STORIES | Posted by: COLOMBO_TELEGRAPH
    Share
    Minister Mangala Samaraweera says that stolen assets of the Rajapaksas, worth a few billion have already been located.

    Mangala Samaraweera -Minister of External Affairs
    Mangala Samaraweera -Minister of External Affairs
    In an interview with The Hindu, Foreign Affairs Minister Mangala Samaraweera made these remarks as he spoke of the new government seeking assistance from several countries and various international agencies in locating the stolen assets of the Rajapaksas.

    “We have located a few billion already but it’s not as easy to get to those through an internal mechanism. . .,”he says adding the new government has requested the help of India as well as several other countries to SL in the process.

    While stating that no one would stop former President Mahinda Rajapaksa from returning to politics if he wishes to do so, Minister Samaraweera said the new government is however duty bound by the mandate they received to look into the allegations of the grave corruption charges against MR and his family.

    “That is why we have already got the services of some international organizations including the World Bank who have experiences in Tunisia and elsewhere in recovering stolen assets of the government. We are now going after Rajapaksas’ stolen assets because most of the money is hidden away internationally,” he said.

  • 7
    0

    It might interest you to know that the three lawyer spend their time between Sri Kotha and Temple Trees and know next to nothing of Finance.

    One of the lawyers is Chairman Bank of Ceylon Ronald Perera’s junior and works in his Chanbers

    Chidambaram Mahendran (father of Arjuna) spends his mornings at Temple Trees.

    Arjuna Mahendran will write the report – Ranil will get his committee to sign it.

    Alls welll that ends well

  • 4
    1

    Cassandra.

    Alls well that ends well.

    This could very well be the bottom line.

    The loud silence of Governor Mahendran with this issue in the public domain and along the corridors of Power points to one thing. Governor Mahendran will never plead Mea Culpa Mea Maxima Culpa.

  • 6
    1

    it appears the tongue of the straight talking economist Harsha has got twisted………..
    Ranil falls back to Royal for Rajakeeya-inquiry……

    Gnanakone aiya defending the A’s or Rajakeeya Vidyalam? He himself not certain but is huffed?

    Innocent 3% sudden increase…. has created a roar & laughter that is normally generated in the Mustang tent emerge from somewhere down South.

    Yahapalana goebbel Av-Mangala attempting to divert attention withstolen assests talk away from Arjunas.

    VISVAJITH – wants to hush up things from the JVP karayas. He is not aware the Rathana Theraya has got heated up. He too has learnt % recently.
    One Arjuna airbone to S’pore. The Arjuna sitting pretty for the next 60 years. Some unheard Lawyer Pikotapan probably no briefs & food saleman qualifies to inquire into bond transaction because he is from the class of 72.

    WHERE IS SUNIL PERERA OF THE GYPSIES? NEW SONG TO BE RELEASED
    “RAJAKEEYA PALANA COMEDY COUNTRYAK”… ACTORS FOR THE MUSIC VIDEO, The Arjunas, ranil, Avamangala & gamini Pitikotapan. Choreography Dosthara Harshan de Silva PhD from some mid-Western Uni in the USA.

    Not bad, Basil kakka was Mr. 10%……. This is only 3%
    A 7% yahapalanaya. Gamaralaya clueless going around worshipping everyone in sight and was seen dressed in Tri-Colour in the UK & received a hooting from the Diaspora.
    Wonder whether the colours nominated by the Astrologer?

    • 1
      0

      Not so my friend. The JVP has emerged as the conscience of the Nation.

      As Sarath opined on how transactions work in the Bond Market.
      What do you do if the Governor’s Son in law’s setup won the offer via electronic bidding ?

      Would we not have bothered, if some one else’s setup won the bid.

      On a broader note, should disallow any Govt officials family members to take part in any State related issues ? Citing conflict of interest ?

      What do you think ?

      Cheers.

    • 2
      0

      @thondamannar
      Gems from you I like:

      1.Some unheard Lawyer Pikotapan probably no briefs & food saleman qualifies to inquire into bond transaction because he is from the class of 72.

      2.Choreography Dosthara Harshan de Silva PhD from some mid-Western Uni in the USA.

      3.Not bad, Basil kakka was Mr. 10%……. This is only 3%

      4.A 7% yahapalanaya. Gamaralaya clueless going around worshipping everyone in sight and was seen dressed in Tri-Colour in the UK & received a hooting from the Diaspora. Wonder whether the colours nominated by the Astrologer?

      Believe me; Im still laffing. Keep it up dude.
      Laughter if what we all need to keep our spirits up and overcome this malaise affecting Silly Lanka.

  • 5
    0

    What a farce by the Government in appointing this ridiculous committee and skipping around the issue

    • 4
      0

      Rose,
      Not just skipping around the issue, the most vocal member of good governance of the previous opposition Harsha now wants patience and due process. As someone commented, this sure does not pass the smell test.
      As I have always said, all politicians have a conscious………………when they are in the opposition.

  • 2
    9

    You are all after his neck because he is Tamil. Tamils never commit crimes and are not corrupt like you Singalese. This is a racist targeted attack because Arjuna Mahendran is Tamil and also from an elite school. You Singala people hate that about well accomplished educated intellectuals. That is why Tamil people are more educated. you want to always pull and drag someone down.

  • 6
    1

    Ramanadan.

    You have your right to express views on any subject on this site.

    In these pages Sinhalese,Tamils,Muslims and practically every one else have been at the receiving end of vitriolic comments.
    So it would be futile to take up the position that Governor Mahendran is under seige simply because he is a Tamil!

  • 6
    0

    Here is something that will send shivers
    down any right thinking person, not just
    those who are familiar with stock markets.

    I went to the office of the Registrar of
    Companies office to obtain a certified
    copy of the registration certificate of
    Perpetual, Arjuna Mahendran’s son in
    law’s company.

    I was told that the file has been blocked
    and nothing could be provided.

    Who asked that the file be blocked? Why
    is it being hidden?Obviously there are
    embarrassing things there. Backdoor Prime
    Minister(BPM) must answer. Is this
    YAHAPALANAYA? My foot!!

  • 1
    1

    https://www.youtube.com/watch?v=Gp-QMxt3eEo

    I don’t think there is a need for an investigation.

    Arjuna Mahendran had by passed even the govt banks and had provided his Son-in-LAW newly created company which had been created just to handle this particular transaction.

    Govt should get that money back. Arjuna Mahendran should be fired.

  • 4
    0

    I order for Mr Mahendran to clear his name, he should step aside while the investigation is carried out. There is a conflict of interest situation and ideally the investigation should be carried out by a person preferably from outside the could, who is fully conversant with bond trading.
    So,please Mr Mahendran step aside till we see the final report of the Committee.If you are cleared well and good and continue as the Governor, otherwise you should go back to your old job in Singapore.

  • 1
    1

    I am aware of a Stock Exchange chief being tried, convicted, and ending up in Jail (Yes, it is where ” what is not expressly forbidden is permitted;”). Whether such privilege has befallen on a Central Bank chief I do not know. A Sri Lankan went to jail not too long ago convicted of insider dealing (No, he was not a Royalist).

    It was just a couple of days ago that another author on this very site was attempting to persuade us that ‘light touch regulation’ (which failed miserably in the West) was the way to go.

  • 0
    0

    First, Im a big supporter of the new government, Maithripala, Arjuna Ranatunga, Patali and some extent to Ranil, but not Ravi, he is a thief just like the Rajapaksas.

    Bond issues are not “rocket science” like the author claims. The government boasted that there is more demand for SL bonds than issued, that means the SL govt has all the leverage. High leverage means we can get a better deal, ie lower interest rates.

    In simplest terms, the bonds were given at higher interest rates. After the issuance, the interest rates will go down to normal levels, which means the original bonds sold at a higher interest rate will be worth much more because the return (interest on bond) is higher. The buyer will then sell the original bonds in a secondary market and make a quick buck.

    No one can deny that there was some kind of foul play here, if not for the governor, someone else did it. There was definite foul play, if not, no saint person will issue a high demand bond issue at a higher interest.

    Lets say the government is an individual and the individual have two offers for a loan, 6% and 9%. What the government did was the equivalent of the individual taking the 9% interest loan, which we all can say is beyond stupid. This is exactly what the central bank did in this case, so either Mahendran is stupid and have no idea about finance (which cannot be the case) or he is corrupt.

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