{"id":185080,"date":"2017-12-03T14:19:40","date_gmt":"2017-12-03T08:49:40","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=185080"},"modified":"2017-12-07T00:09:00","modified_gmt":"2017-12-06T18:39:00","slug":"bond-scam-whitewashing-will-boomerang-on-yahapalanaya-country","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/bond-scam-whitewashing-will-boomerang-on-yahapalanaya-country\/","title":{"rendered":"Bond Scam: Whitewashing Will Boomerang On \u2018Yahapalanaya\u2019 &#038; Country"},"content":{"rendered":"<p class=\"p2\"><span class=\"s1\"><b>By\u00a0<\/b><\/span><span class=\"s1\"><b><a href=\"https:\/\/www.colombotelegraph.com\/?s=Amrit+Muttukumaru\">Amrit Muttukumaru<\/a> &#8211;<\/b><\/span><\/p>\n<div id=\"attachment_142887\" style=\"width: 154px\" class=\"wp-caption alignright\"><a href=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2015\/04\/Amrit-Muttukumaru.jpg\"><img loading=\"lazy\" decoding=\"async\" aria-describedby=\"caption-attachment-142887\" class=\"size-thumbnail wp-image-142887\" src=\"https:\/\/www.colombotelegraph.com\/wp-content\/uploads\/2015\/04\/Amrit-Muttukumaru-144x150.jpg\" alt=\"\" width=\"144\" height=\"150\" \/><\/a><p id=\"caption-attachment-142887\" class=\"wp-caption-text\">Amrit Muttukumaru<\/p><\/div>\n<p class=\"p4\"><span class=\"s1\">The alleged Treasury <a href=\"https:\/\/www.colombotelegraph.com\/?s=Bond+Scam\">Bond scam<\/a> is probably the largest financial scam to hit this country in its<span class=\"Apple-converted-space\">\u00a0 <\/span>post-independence history. For sheer impunity and involvement of a wide spectrum of politicians in collusion with a section of the corporate sector and regulatory authorities it is hard to beat. The muted response of the opposition exemplifies the rot in the governance of this country. It is unforgivable it took place<span class=\"Apple-converted-space\">\u00a0 <\/span>under a so-called \u2018Yahapalanaya\u2019 government<span class=\"Apple-converted-space\">\u00a0<\/span>which was elected with much hope under trying circumstances to usher in \u2018good governance\u2019 after the traumatic Rajapaksa years.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">The expectations included holding those concerned under the Rajapaksa regime accountable for alleged (i) egregious corruption (ii) abuse of power (iii) violence to dissenters (iv) undermining democratic governance. Not only has the \u2018Yahapalanaya\u2019 government blatantly reneged on these undertakings &#8211; but worse is its own contribution to alleged corruption and abuse of power which in terms of sheer speed exceeds the Rajapaksa regime! For example, after being elected in January 2015 the first alleged bond scam took place February 2015. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">This has given a shot in the arm for a Mahinda Rajapaksa led comeback. A Deputy Minister in a KEY ministry held by the PM who while in opposition was arguably the most virulent critic of alleged wrongdoing under the Rajapaksa presidency, has suddenly after almost 3 years found merit in<b> <\/b>Gotabaya Rajapaksa\u2019s \u201cefforts in <a href=\"http:\/\/www.dailymirror.lk\/141426\/Harsha-praises-Gota-for-beautifying-Colombo\">beautifying<\/a> the City of Colombo\u201d! Is this a sign of \u2018coming colours\u2019?<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">However, one notable gain under \u2018Yahapalanaya\u2019 must be flagged \u2013 its relative \u2018openness\u2019. This most likely is not due to altruistic reasons but compulsions of \u2018Realpolitik\u2019<i>\u00a0<\/i>in the hodgepodge arrangement that passes for governance. If it was genuine, why is their lack of transparency in most things \u2013 the alleged bond scam being a prime example?<\/span><\/p>\n<p class=\"p5\"><span class=\"s2\"><b>Popular Imagination<\/b><\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">The alleged Bond Scam has caught the popular imagination unlike no other scam in this country \u2013 and God knows there have been other egregious scams over the years.<span class=\"Apple-converted-space\">\u00a0 <\/span>Even those who have not heard of \u2018Bonds\u2019 let alone \u2018Treasury Bonds\u2019 sense there has been TERRIBLE CORRUPTION involving the Central Bank of Sri Lanka. This is the reality which does not portend well\u00a0not only for the \u2018Yahapalanaya\u2019 government but also for the country at large. As a consequence, if the already PERCEIVED notion of a MEGA \u2018COVER-UP\u2019<span class=\"Apple-converted-space\">\u00a0<\/span>is CONFIRMED where its \u2018KINGPINS\u2019 are shielded and only some who have \u2018FACILITATED\u2019 it are exposed, it will create widespread disenchantment like no other and will further undermine the rule of law which already is in a pathetic state. Let us face it, when people get further confirmation that daylight looting of the public purse by high ups in the political, bureaucratic and corporate sectors is tolerated with such brazen impunity, is it reasonable for the masses to have respect for the rule of law? This may well be the tipping point. It is obvious that without the \u2018rule of law\u2019 there can never be any meaningful socio-economic development. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">It must be flagged that the \u2018rule of law\u2019 is also undermined if there is no social stability as witnessed on a regular basis due to our collective inability to ensure social justice and ethnic and religious peace in the context of a multi-ethnic, multi-religious and multi-lingual country.<span class=\"Apple-converted-space\">\u00a0<\/span>In its absence it exacerbates intolerance as witnessed recently in <a href=\"https:\/\/www.colombotelegraph.com\/?s=Gintota\">Gintota<\/a> and earlier in <a href=\"https:\/\/www.colombotelegraph.com\/?s=Aluthgama\">Aluthgama<\/a> and the harassment meted out to the already traumatized Rohingya refugees who were in Sri Lanka merely on transit.<\/span><\/p>\n<p class=\"p5\"><span class=\"s2\"><b>\u2018Core\u2019 of the Alleged Bond Scam<\/b><\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">At the CORE of the alleged Bond Scam is:<\/span><\/p>\n<p class=\"p7\"><span class=\"s1\">1) The Central Bank of Sri Lanka (CBSL), the issuing agency for Treasury Bonds which normally falls under the Ministry of Finance was brought under the purview of the Prime Minister.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">2) \u2018CONFLICT OF INTEREST\u2019 arising from then Central Bank Governor Arjuna Mahendran\u2019s son-in-law, Arjun Aloysius &#8211; owning\/controlling PTL (Perpetual Treasuries Limited) &#8211; a Primary Dealer. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">3) Arjuna Mahendran &#8211; a foreign national was HANDPICKED for the position of Governor, CBSL by the Prime Minister although he was aware of the \u2018Conflict of interest\u2019. The PM himself CONFIRMED this in his affidavit and while testifying before the Bond Commission (PCoI).<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">4) The PM continued to have Mahendran as CBSL Governor although he was aware that Mahendran had RENEGED on his \u2018assurance\u2019 to him that his son-in-law (Arjun Aloysius) will sever all links with PTL PRIOR to his appointment as CBSL Governor.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">5) The PM robustly defended and endorsed Mahendran for a second term despite the widespread perception of Mahendran\u2019s role in the alleged Bond Scam.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">6) Sadly, the PM\u2019s affirmation in his affidavit to the PCoI: \u201cUpon the formation of the new Government in January 2015 there was a general consensus within the Government that Mr Mahendran should be appointed to the post of Governor of CBSL.\u201d was NOT PURSUED by the PCoI.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">7) Unlike in the case of the other witnesses, the PM was given questions in ADVANCE by the PCoI to enable him to provide answers by way of affidavit.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">8) Unlike in the case of the other witnesses, the PCoI decided to invite the AG himself who wasn\u2019t involved in the investigation up to that point to personally lead evidence for the FIRST TIME.\u00a0Up to this time, Messrs. Dappula de Livera and Yasantha Kodagoda &#8211; Senior Additional Solicitor General and Additional Solicitor General respectively lead evidence.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">9) Unlike in the case of the other witnesses which included former Finance Minister Ravi Karunanayake who were GRILLED by Messrs. Dappula de Livera and Yasantha Kodagoda, limited questions were posed to the PM. The PM was at the PCoI reportedly for less than an hour to clarify matters arising from his affidavit<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">To adapt what Lady Macbeth said: <\/span><span class=\"s4\">\u201cAll the perfumes of Arabia will not sweeten\u201d these immutable FACTS.<\/span><\/p>\n<p class=\"p8\"><span class=\"s2\"><b>Incidental Issues<\/b><\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Crucial issues of governance INCIDENTAL to the alleged bond scam thrown up by witnesses at the Bond Commission and not even on the radar include:<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\"><b>Tax Evasion\/Money Laundering?<\/b><\/span><b> <\/b><\/p>\n<p class=\"p5\"><span class=\"s2\">PTL<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">A Senior Dealer of the Arjun Aloysius owned PTL (Perpetual Treasuries Limited) disclosed at the Bond Commission that \u201cmillions\u201d encashed by him were \u201cseveral times\u201d<b> <\/b>left on \u201cPTL CEO Kasun Palisena\u2019s chair\u201d. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Nuwan Salgado, Chief Dealer of PTL disclosed to the PCoI that on the \u201cinstructions of PTL CEO Kasun Palisena\u201d he maintained a record of payments to \u201cinformants\u201d code named as \u2018Charlie\u2019, \u2018Tango\u2019 and others.<\/span><\/p>\n<p class=\"p5\"><span class=\"s2\">GTLPL<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake&#8217;s family in his testimony to PCoI reportedly disclosed:<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">\u201cThe Rs.145 million used in making the initial payment of Rs.16.5 million and thereafter to pay the monthly loan installment of Rs.11 million\u201d for the purchase of the Monarch Residency Penthouse in Colombo by a company owned by Minister Ravi Karunanayake&#8217;s family \u201chas no origin nor has it been accounted for\u201d<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">The question arises of the rationale to obtain a loan from Seylan Bank in circumstances where cash was readily available?<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Sinniah also reportedly told the Bond Commission:<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">\u201cChairman \u2018Lakshmi Kanthan\u2019 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&#8217;s safe\u201d<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\"> \u201cit 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\u201d<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Should these not concern the Central Bank and the Inland Revenue Department? If not why?<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\"><b>Bank Malpractice?<\/b><\/span><\/p>\n<p class=\"p5\"><span class=\"s2\">PABC Bank<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">It was revealed at the PCoI that PABC (Pan Asia Bank) was \u201can intermediary in secondary market transaction between EPF and PTL\u201d<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">R. A. Benedict Dias, Deputy General Manager of PABC disclosed to the Bond Commission that \u201con the instructions of the former chairman of PABC, Nimal Perera, the decision to act as an intermediary was made\u201d<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\"> It was also revealed at the PCoI that Saman Kumara, the then dealer for the EPF at the CBSL had allegedly received a personal loan of Rs. 25 million from PABC when Nimal Perera was Chairman. It is relevant to ascertain whether this loan and its settlement (if any) took place in the ordinary course of banking practice or whether any special privileges were afforded.\u00a0 \u00a0<\/span><\/p>\n<p class=\"p9\"><span class=\"s1\">Should these not be of interest to the Central Bank\u2019s \u2018Bank Supervision Department\u2019?\u00a0 <\/span><\/p>\n<p class=\"p9\"><span class=\"s1\"><b>PEPs as Bank Directors?\u00a0<\/b><\/span><\/p>\n<p class=\"p9\"><span class=\"s1\">Politically Exposed Persons (PEPs) are at the centre of the worldwide efforts for the prevention of money laundering,<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">It was revealed at the Bond Commission that B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake&#8217;s family was \u201cappointed to the Board of Directors of the BOC in 2015 by the then Finance Minister Ravi Karunanayake for a period of one year\u201d.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Ravi Karunanayake being a PEP is a no-brainer. B.R. Sinniah too is clearly a PEP consistent with Sri Lanka\u2019s definition of a PEP which conforms to the FATF definition:<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Sri Lanka is a member of the \u2018Asia\/Pacific Group on Money Laundering\u2019 (APG) which is an\u00a0 Associate Member of \u2018The Financial Action Task Force\u2019 (FATF)<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">In the context of the Central Bank itself postulating that even the mere <i>\u201cOpening of accounts for \u2018politically exposed persons\u2019 (PEP) should have authorization of senior management.\u201d<\/i> how could a PEP be a bank \u2018director\u2019?<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Under no circumstances is it suggested that B.R. Sinniah is engaged in any criminal activities.\u00a0 It must be appreciated that not all PEPs are involved in criminal activities. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">The point being made is that laws and guidelines are there for a purpose and must be adhered to. There are also other clear instances of PEPs being \u2018directors\u2019 of banks in Sri Lanka which is not the focus of this article.<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Our Central Bank is evidently turning a blind eye to these transgressions.\u00a0<\/span><\/p>\n<p class=\"p5\"><span class=\"s2\"><b>Conclusion<\/b><\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">Things are so bad in Sri Lanka that the rule of law was SELECTIVELY applied NOT TO COMPEL Arjun Aloysius \u2013 owner of PTL to give evidence before the Bond Commission on the basis it would incriminate him since apparently in his own mind there was a high probability he would be prosecuted. The same rule of law was MUTE in taking the next steps that could have been taken INDEPENDENT of the report of the Bond Commission in the context of the damning evidence produced at the PCoI. It also indicates that the relevant regulatory and law enforcement agencies were on SLEEP MODE until the bond commission was appointed. This tardiness in taking necessary legal action has resulted in a situation where as disclosed by the Prime Minister during his testimony at the Bond Commission, Aloysius was even able to be present \u201cat one or two parties\u201d where he was in a position to converse with the PM himself!<\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">As I see it, the alleged Bond Scam had the MASTERMINDS and the FACILITATORS. I trust those concerned will not miss the wood for the trees! Of course, the \u2018facilitators\u2019 too must be held accountable.<span class=\"Apple-converted-space\">\u00a0 <\/span>What we have still not convincingly seen is the QUANTIFYING of the looted monies which must be RETURNED to the exchequer. <\/span><\/p>\n<p class=\"p5\"><span class=\"s1\">The diplomats and news agencies in Colombo are no doubt taking note of the ground reality in Sri Lanka. Is it any surprise that with the exception of the controversial Chinese investments which are largely driven by geo-political considerations, ethical FDIs are few and far between?<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p> [&hellip;]<\/p>\n","protected":false},"author":163,"featured_media":142887,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,46,8],"tags":[],"class_list":["post-185080","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-colombotelegraph","category-constitutional-reforms","category-editorial"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bond Scam: Whitewashing Will Boomerang On \u2018Yahapalanaya\u2019 &amp; Country - Colombo Telegraph<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.colombotelegraph.com\/index.php\/bond-scam-whitewashing-will-boomerang-on-yahapalanaya-country\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bond Scam: Whitewashing Will Boomerang On \u2018Yahapalanaya\u2019 &amp; 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