{"id":199064,"date":"2019-02-19T18:11:21","date_gmt":"2019-02-19T12:41:21","guid":{"rendered":"https:\/\/www.colombotelegraph.com\/?p=199064"},"modified":"2019-02-23T00:12:08","modified_gmt":"2019-02-22T18:42:08","slug":"governor-indrajit-where-is-promised-press-notice-on-bond-scam-forensic-audit","status":"publish","type":"post","link":"https:\/\/www.colombotelegraph.com\/index.php\/governor-indrajit-where-is-promised-press-notice-on-bond-scam-forensic-audit\/","title":{"rendered":"Governor Indrajit: Where Is Promised \u201cPress Notice\u201d On Bond Scam \u201cForensic Audit\u201d?"},"content":{"rendered":"

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

\"\"<\/a>

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

Sri Lanka\u2019s apex monetary, financial and banking regulator – Central Bank of Sri Lanka (CBSL) in recent times particularly under the Governorship of Nivard Cabraal, Arjuna Mahendran and presently Dr. Indrajit Coomaraswamy<\/strong><\/a> has demonstrated to the world at large that the CBSL and hence the country does not have the will to fully implement the laws already in place (however inadequate) to combat money laundering.<\/p>\n

On 11 January 2019 the CBSL in one of its rare responses on behalf of Governor Coomaraswamy<\/strong><\/a> promised to issue a \u201cpress notice in a few days\u201d <\/i>on the \u201cforensic audits\u201d<\/i> carried out by CBSL \u201cto implement recommendations of the Report of the Presidential Commission of Inquiry\u201d<\/i> on the Treasury Bond scam which is arguably the largest financial scam to have taken place in the post-independence history of Sri Lanka.\u00a0 <\/span>It is now MORE THAN A MONTH <\/b>and the country is still awaiting the \u201cpress notice\u201d<\/i>!<\/p>\n

The rare CBSL response, a crude master class on PREVARICATION was subsequent to my article \u201cGovernor Indrajit & EU \u2018Blacklist\u2019 On Money Laundering\u201d <\/i>which related to the more than year old European Union (EU) \u2018BLACKLIST\u2019 placed on Sri Lanka for money laundering subsequent to the \u2018Financial Action Task Force\u2019 (FATF) placing the country on its \u2018GREY LIST\u2019 from November 2017. The FATF recommendations are \u201crecognised as the global anti-money laundering (AML) and counter-terrorist financing (CFT) standard.\u201d<\/i>\u00a0<\/span><\/p>\n

My said article published in the \u2018Colombo Telegraph<\/strong><\/a>\u2019 (CT) was of no interest to the mainstream print media as was the CT news item with the damning allegation \u201cMassive Fraud At Sampath Bank<\/strong><\/a>\u201d. <\/i>It was alleged by the \u201c<\/i>victims\u201d <\/i>that CBSL \u201cwas in a deep slumber while Sampath Bank was siphoning off the customers\u2019 money\u201d<\/i>. We are still to hear from the CBSL on this alleged \u201cMassive Fraud\u201d<\/i>.<\/p>\n

Not all the play on words by the CBSL in its evasive response in the \u2018Colombo Telegraph\u2019 \u201cCentral Bank Response To Muttukumaru\u2019s Allegations Against CBSL Governor Dr. Indrajit Coomaraswamy<\/strong><\/a>\u201d<\/i> can undo the HUGE DAMAGE to the economy by Sri Lanka continuing to be on the EU \u2018blacklist\u2019.\u00a0<\/span><\/p>\n

Of what use is the CBSL \u201ctime bound action plan\u201d<\/i> when just LAST WEEK the EU REITERATED that Sri Lanka continued to be a \u201chigh-risk third country\u201d<\/b> for money laundering? No doubt FATF and EU are aware that the CBSL will not stand up\u00a0and be\u00a0counted in the face of there being<\/p>\n

NO POLITICAL WILL to fully implement even existing laws.\u00a0<\/span><\/p>\n

Need we be surprised that the Foreign Direct Investments (FDIs) in recent times are tainted with controversy? It hardly needs comment that Chinese\/Indian investments are for the most part based on geo-political considerations which are themselves controversial.<\/p>\n

While Coomaraswamy who has been CBSL Governor since 3 July 2016 for 16 months PRIOR <\/b>to this ruling (November 2017) must bear some responsibility<\/b> (together with Messrs. Cabraal and Mahendran), he must bear MAJOR RESPONSIBILITY <\/b>for the country CONTINUING to be on the \u2018Blacklist\u2019 for over a year.\u00a0<\/span><\/p>\n

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

A key recommendation of the report of the Presidential Commission of Inquiry into the egregious Treasury Bond scam<\/strong><\/a> was the FORENSIC AUDIT to be carried out by the CBSL. The report was available in the public domain from 3 January 2018<\/b>.<\/p>\n

How long does it take for the CBSL to carry out its 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 Presidential Commission\u00a0 <\/span>which include possible tax evasion, money laundering and PEPs (Politically Exposed Persons) being directors of banks do not appear to be even on the radar.<\/p>\n

Of what use are the claimed \u201c<\/i>Steps initiated by the CBSL\u201d<\/i> if it has not resulted in holding those concerned ACCOUNTABLE?<\/p>\n

We trust the promised \u201cpress notice in a few days\u201d <\/i>of the forensic audit of the bond scam will also address:<\/p>\n

i) Kaushitha Rathnaveera, a Senior Dealer of PTL (Perpetual Treasuries Limited) disclosing to the Presidential Commission (PCoI) 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 (Global Transportation and Logistics Pvt Ltd) 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

It is likely that both FATF and EU will track the CBSL \u201cpress notice\u201d<\/i> (if issued) with interest.<\/p>\n

Politically Exposed Persons<\/b><\/p>\n

In the context of Politically Exposed Persons (PEPs) being at the centre of the worldwide efforts for the prevention of money laundering, CBSL\u2019s long meandering on PEPs in its response is nothing but a fig leaf to cover-up its blatant inaction on this front.\u00a0<\/span><\/p>\n

Why is the CBSL tolerating directors of banks who as per its own definition are clearly PEPs? To put it another way, when even the mere \u201cOpening of accounts\u201d <\/i>in banks by PEPs is under SCRUTINY, is it not RIDICULOUS for the CBSL to state \u201cthere is no legal restriction for the politically exposed persons (PEPs) to be appointed as directors of banks.\u201d<\/i>?\u00a0<\/i><\/p>\n

The PEPs we are talking about include (i) A former Chief Justice soon after retirement being appointed as a Director of a leading bank (ii) A former CBSL Senior Deputy Governor soon after retirement appointed as a Director of a leading bank. He is presently its Chairman (iii) An\u00a0 <\/span>individual known to be very close to the incumbent Prime Minister, holding crucial state office and the son-in-law of a senior cabinet minister being previously Chairman of a leading bank and currently Chairman of a competitor bank. By no definition are these persons run-of-the-mill\u00a0PEPs!<\/p>\n

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

It is now more than two years since the \u2018<\/i>International Consortium of Investigative Journalists\u2019 (ICIJ) 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\u2019.\u00a0<\/span><\/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 & 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 to those who have legitimate accounts.<\/p>\n

A name included in the \u2018Panama Papers\u2019 is an erstwhile colleague of CBSL Governor, Coomaraswamy on the Director Board of JKH 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 JKH. Until this date he was Chairman of a Bank controlled by JKH. There is speculation that \u2018conflict of interest\u2019 may have a role in the inaction of CBSL\u2019s Bank Supervision Department.\u00a0<\/span><\/p>\n

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. Now his sister Radhika Coomaraswamy has been appointed as an \u2018Independent Non-Executive Director\u2019 of JKH with effect from 1 October\u00a02018.\u00a0<\/span><\/p>\n

EAP Group Sale<\/b><\/p>\n

I pointedly ask the CBSL whether its DUE DILIGENCE has considered the DAMNING allegations in the news report in \u2018The Sunday Times\u2019 3 June 2018\u00a0 <\/span>\u201cPurchase of Edirisinghe Group: Investors in a labyrinth of multiple companies<\/a>\u201d<\/i>?\u00a0<\/span><\/p>\n

I ask is there any truth to the allegation \u201cBut punitive action is being blocked by the Ministry of Finance which has taken from the Customs Department a file containing evidence against the suspects\u201d<\/i>?<\/p>\n

Does the CBSL consider this report spurious? If so why has \u2018The Sunday Times\u2019 not been taken to task?<\/p>\n

Mano Tittawella until recently Chairman, EAP Group is currently Senior Adviser to the Minister of Finance and Media under which falls the CBSL.<\/p>\n

Links with Jailed Hedge Fund Manager\u00a0<\/span><\/b><\/p>\n

Intriguingly the CBSL has maintained \u2018RADIO SILENCE\u2019 on Governor Coomaraswamy\u2019s links with jailed hedge fund manager Raj Rajaratnam for \u2018Insider Trading\u2019. When questioned on this soon after his appointment as CBSL Governor, he responded as follows:<\/p>\n

(a) He was invited by Rajaratnam when he was \u201cfinishing at Commonwealth Secretariat\u201d<\/i> for \u201cdelivering some professional services\u201d <\/i>on \u201cmacroeconomic research\u201d<\/i><\/p>\n

\u00a0<\/span>(b) \u201cThat 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\u201d<\/i><\/p>\n

0.25 onwards:<\/p>\n