{"id":197759,"date":"2019-01-09T13:38:30","date_gmt":"2019-01-09T08:08:30","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=197759"},"modified":"2019-01-14T00:40:45","modified_gmt":"2019-01-13T19:10:45","slug":"governor-indrajit-eu-blacklist-on-money-laundering","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/governor-indrajit-eu-blacklist-on-money-laundering\/","title":{"rendered":"Governor Indrajit & EU \u2018Blacklist\u2019 On Money Laundering"},"content":{"rendered":"

By\u00a0<\/b>Amrit Muttukumaru<\/a> –<\/b><\/p>\n

\"\"<\/a>

Amrit Muttukumaru<\/p><\/div>\n

The greed for political power involving the selective<\/b> recalling of democratic governance played out mainly as a Colombo phenomenon has papered over the hugely economically damaging year-long<\/b> money laundering label affixed to Sri Lanka by the European Union (EU). The EU which considers Sri Lanka \u201chigh-risk\u201d<\/b> for money laundering issued the \u2018blacklist\u2019<\/b> subsequent to the \u2018Financial Action Task Force\u2019 (FATF) placing the country on its \u2018grey list\u2019 from November 2017. While Dr.\u00a0Indrajit Coomaraswamy<\/strong><\/a> who has been Governor, Central Bank of Sri Lanka (CBSL) since 3 July 2016 for 16 months prior <\/b>to this ruling must bear some responsibility<\/b>, he must bear MAJOR RESPONSIBILITY <\/b>for the country continuing<\/b> to be on the blacklist.\u00a0<\/span><\/p>\n

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\u00a0tyre factory\u00a0in\u00a0Horana. There is also controversy surrounding the consortium investing in the EAP Group of Companies \u2013 ref. \u201cPurchase of Edirisinghe Group: Investors in a labyrinth of multiple companies\u201d<\/i> – \u2018The Sunday Times\u2019 3 June 2018. One wonders whether the CBSL has done the appropriate due diligence?<\/p>\n

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.<\/p>\n

What follows below would suggest that Sri Lanka has done its utmost to earn<\/b> this ignominy!<\/p>\n

Bond Scam<\/b><\/p>\n

The egregious Treasury Bond Scam<\/strong><\/a> 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.\u00a0The muted response of the opposition exemplifies the rot in the governance of this country.<\/p>\n

For sheer impunity it is hard to beat. It involves a wide spectrum of politicians in collusion<\/b> with influential sections of the corporate sector, bureaucracy and regulatory authorities.\u00a0<\/span><\/p>\n

How long does it take for the CBSL to carry out its much vaunted forensic audit<\/b>? The CBSL which is the issuing agency for Treasury Bonds has to date not even quantified<\/b> the loss incurred by the State which is widely perceived to be huge.\u00a0Even 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.<\/p>\n

For example, there is no record in the public domain of the CBSL having taken any meaningful action after:\u00a0<\/span><\/p>\n

i) Kaushitha Rathnaveera, a Senior Dealer of PTL (Perpetual Treasuries Limited) disclosed to the PCoI probing the Bond Scam that \u201cmillions\u201d <\/i>encashed by him were \u201cseveral times\u201d<\/i> left on \u201cPTL CEO Kasun Palisena\u2019s chair\u201d<\/i><\/p>\n

ii) Nuwan Salgado, Chief Dealer of PTL disclosing to the PCoI that on the \u201cinstructions of PTL CEO Kasun Palisena\u201d <\/i>he maintained a record of payments to \u201cinformants\u201d<\/i> code named as \u2018Charlie\u2019, \u2018Tango\u2019 and others\u00a0<\/span><\/p>\n

(iii) B.R. Sinniah, Chief Financial Officer of GTLPL said to be controlled by former Finance Minister <\/i>(presently Minister of Power and Energy) Ravi Karunanayake\u2019s family in his testimony to the PCoI disclosing:<\/p>\n

\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\u2019s safe\u201d<\/i><\/p>\n

\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<\/i><\/p>\n

Panama Papers<\/b><\/p>\n

It is now more than two years since the \u2018<\/i>International Consortium of Investigative Journalists\u2019 in a worldwide expos\u00e9 named persons in several countries including Sri Lanka <\/i>allegedly linked to offshore companies in tax havens revealed in the \u2018Panama Papers<\/strong><\/a>\u2019.<\/p>\n

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 \u2018not fit and proper\u2019 to hold any position of Trust involving the Public. Inaction on the part of CBSL\u2019s Bank Supervision Department as is the case today does injustice<\/b> to those who have legitimate accounts.<\/p>\n

This seems to be of no concern to CBSL Governor Dr.\u00a0Indrajit Coomaraswamy who has ignored this writer\u2019s 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\u00a0<\/i>30 August 2017 which include:<\/p>\n

\u201cWhether the Central Bank of Sri Lanka has investigated the legitimacy of the Sri Lankan accounts in the \u2018Panama Papers\u2019?\u201d<\/i><\/p>\n

A name included in the \u2018Panama Papers\u2019 is an erstwhile colleague of the CBSL Governor, Dr. Indrajit Coomaraswamy on the Director Board of arguably the country\u2019s 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.\u00a0<\/span><\/p>\n

There is speculation that \u2018conflict of interest\u2019 may have a role in the inaction of CBSL\u2019s Bank Supervision Department. Dr.\u00a0Coomaraswamy 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 \u2018Independent Non-Executive Director\u2019 of this conglomerate with effect from 1 October\u00a02018.<\/p>\n

Illicit Drugs<\/b><\/p>\n

If frequent detections of large quantities of illegally-trafficked drugs such as heroin is the \u00a0tip 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 \u2018Colombo International Financial City\u2019.<\/p>\n

These fears appear to be confirmed by regular news reports:<\/p>\n

\u201cSri Lanka emerging as transit hub for cocaine smugglers\u201d <\/i>\u2018Daily FT\u2019 1 September 2017<\/p>\n

This news item inter alia reports: \u201cSri Lanka is becoming a hub for cocaine as it is a risk-free location with less legal restrictions,\u201d a top police official who is aware of investigations into the smuggling told Reuters this week.<\/p>\n

\u201cCountry\u2019s second largest heroin haul detected\u201d <\/i>\u2018The Island\u2019 7 December 2018<\/p>\n

We have it on the authority of the Finance Minister<\/b> himself (Mangala Samaraweera) under whom Sri Lanka Customs<\/b> falls that Sri Lanka\u2019s top dealers<\/b> 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 \u201cPERSONAL KNOWLEDGE\u201d<\/b>. His back paddling a few days later:\u00a0<\/span><\/p>\n

\u201cInadvertently, I also mentioned Rotarians and Lions Clubs, which I deeply regret.\u201d<\/i> does not hold up.<\/p>\n

Readers can listen<\/b> to his words in the link given below and decide for themselves whether there is any likelihood of any \u201cinadvertence\u201d<\/i>?\u00a0(3:27 onwards)<\/p>\n