By the Daily FT News Desk
The parliamentary opposition was unified in its scathing criticism of the Government when the report of the Committee on Public Enterprise (COPE) on the controversial Central Bank treasury bond transaction was taken up for debate yesterday.
The auction allowed a company linked to the son-in-law of former Central Bank Governor Arjuna Mahendran to make millions in profits from the sale of Government securities. In October 2016, the parliamentary oversight committee COPE found that Mahendran was “directly responsible” for the bad transaction and recommended legal action against the former Governor and other Central Bank officials for negligence and a full investigation into Perpetual Treasuries, the company that profited from the auction.
The main opposition Tamil National Alliance (TNA), JVP and Joint Opposition flayed the Government for its failure to charge perpetrators of the controversial treasury bond auction in February 2015, just six weeks after President Maithripala and his UNP led administration was swept to power.
The Government hit back with charges of corruption at the Central Bank during the term of the previous regime and accused Bank officials of leaking information to the opposition.
Opening the debate on a fiery note, JVP Leader Anura Kumara Dissanayake charged that the Government that had come to power promising to punish the corrupt had proven that it was not up to the task.
“The Government has been unable to act against thieves who engaged in corruption even before the heat from its new mandate had died down,” Dissanayake charged.
In a detailed submission before the House, the JVP Leader claimed that Perpetual Treasuries had dumped 95 percent of bonds acquired at Central Bank auctions between February 2015-May 2016 on the Employees Provident Fund (EPF). According to Dissanayake, the EPF had incurred losses to the tune of Rs 14.9 billion from the transactions.
Dissanayake said that a report submitted to the Monetary Board of the Central Bank had showed Perpetual Treasuries, the company linked to the former Central Bank Governor’s son-in-law Arjun Aloysius, had bought Rs 227 billion of bonds.
Perpetual Treasuries is alleged to have purchased bonds at low prices at dubious auctions and dumped the securities on the EPF at higher prices, by selling them on the secondary bond market.
Perpetual Treasuries’ assets had grown exponentially in the two years leading up to November 2016, the JVP Leader added.
Expressing skepticism about the Government’s willingness to act against the perpetrators of the bond scam, the JVP Leader urged Speaker Karu Jayasuriya to take action against those implicated in the COPE report.
The strongest defence of the Government’s position came from Finance Minister Ravi Karunanayake, who charged that officials within the Central Bank were preparing documentation and notes for the opposition ahead of the debate on the bond scandal.
“These are the jokers who were with Nivaard Cabral those days,” the Finance Minister claimed, taking broad swipes at Bank officials. Karunanayake said that the Greek Bond scandal had incurred losses to the tune of Rs 2.6 billion. “The hedging gamble lost the country 90,000 billion. This is what we lost compared to the notional loss from Perpetual – these are actual losses,” the Finance Minister said.
“Do any of these Joint Opposition members speak one word on this?” he added.
Referring to former Central Bank Governor Ajith Nivaad Cabraal’s pyramid scheme, Karunanayake said he was naming the corrupt officials because “People should know where the thieves are.”
“Four of the people who spoke at this debate should be in jail. But they talk big now because of our democracy. We will not harass them like they harassed us,” he vowed.
Karunanayake said those who were engaging in corruption were doing so to soil the name of the Government.
“Where is the person who destroyed the economy? Where is Mahinda Rajapaksa? When we talk they run, they don’t have the backbone to face what we say,” the Finance Minister said.
He said the current situation was caused by loans that have been taken by the Rajapaksa regime.
“Only now we have started paying the loans taken by Rajapaksas, in 2015 $ 2billion, in 2016, it is $1.8 billion in 2017 it is $2.4 billion in 2018 it is 2.56, in 2019 3.92, then in 2020 it is 3460. This is what we have to pay. We have been forced to impose the VAT, not a single MP here approves it but if we don’t pay for Rajapaksas sins who will pay?” Karunanayake charged.
Addressing the House, Joint Opposition MP and COPE member Mahindananda Aluthgamage demanded that the Central Bank be removed from the Prime Minister’s purview. Aluthgamage charged that the Prime Minister was directly involved in the alleged bond scam.
Government Minister Champika Ranawaka also spoke during the debate, remarking at the way Perpetual Treasuries had managed to increase its assets from Rs 310 million to Rs 23 billion in under two years.
UPFA Hambantota District MP Namal Rajapaksa challenged the Government to arrest Arjun Aloysius, who remains a director at Perpetual Holdings, the parent company of Perpetual Treasuries. Namal Rajapaksa also criticized the President’s decision to appoint a Special Commission of Inquiry into the alleged bond scam, saying it would only add to a growing list of investigations into the same transaction.
Joint Opposition Member Bandula Gunawardane joining the debate identified the bond scam as the “greatest bank robbery in Sri Lanka”.
“A certain development program of the current government required an additional sum of Rs.15 billion, which was the starting point of this bond scam. Based on this price sensitive inside information the interest rates on the money market escalated to 12.5% from 9.5% within a few hours as a result of a secret plan of the then Central Bank Governor and his son-in-law who was to bid for the entire issuance and more.
Gunawardane charged that monies from this corrupt transaction was now being reinvested in different ways, including the purchase of media organizations, and urged Parliament to suspend the activities of Perpetual Treasuries.
However Leader of the House Lakshman Kiriella reminded the MPs that Parliament had no jurisdiction to act against any culprits. “This is a process that must be decided by a court of law.”
Kiriella also noted that soon after the bond transaction was questioned, three people went to Supreme Court and the Court had rejected the petition. “The Government has nothing to hide and we were the first to appoint a member of the opposition to COPE Chairman’s Office. There were 40 COPE reports during the Rajapaksa regime and we were the first to send a COPE report to the Attorney General,” Kiriella noted.
Minister of Public Enterprise Development Kabir Hashim said the system of holding public auctions for treasury bonds was better compared to private placement followed by the previous government. “Perpetual Treasuries is not a new company. During the Rajapaksa regime the sister of former Governor Nivard Cabral was employed at the Perpetual Treasuries. So, we need to investigate all transactions that took place during that period. The JVP was unable to talk about those transactions then. This is the first time ever a COPE report was sent to the Attorney general and action was called,” Hashim noted.
Deputy Minister of Foreign Affairs Dr. Harsha de Silva joining the debate said: “The COPE Chairman in his report held that the investigation was conducted fairly. How was he able to conduct a fair investigation? It was a dream to conduct such investigation during the previous government.”
De Silva said he was the first speak about Perpetual Treasuries in June 2014 highlighting white-collar crimes. “Nobody took any notice. Unless UNP supported you to conduct the investigation COPE investigation could have ended unsuccessfully. All this was possible due to our Government policy to promote good governance,” he explained.”
NFF Leader Wimal Weerawansa, who is currently in remand over vehicle misuse and abuse of state property, was released to attend Parliament and was very vocal during the debate.
UPFA MP Priyankara Jayaratne who recently quit his ministerial portfolio sat in the opposition benches in Parliament yesterday.
Meanwhile Minister of Development Strategies Malik Samarawickrema replying to the JVP said that former CBSL Governor Arjuna Mahendran was not acting as an advisor to the Ministry of Finance.
The Government Information Department also released a statement last night, disputing claims made on a private television network, and reiterating that Mahendran no longer holds any position in the Government.
Govt. insists Mahendran holds no positions in Finance Ministry
The Government Information Department reiterated that former Central Bank Governor Arjuna Mahendran no longer holds any positions in the ruling administration.
Reinforcing remarks made in Parliament yesterday by Minister Malik Samarawickrema, the Information Department statement chastised a private television network for continuing to make claims about Mahendran continued role in the Government.
The statement also said that the Prime Minister’s Office had confirmed that Mahendran had not travelled on the Premier’s delegation to Davos, Switzerland.
The statement said that publishing such false and outdated information was not only a violation of media ethics, but also a breach of the legal framework within which the electronic media operates.