BY Kavindya Chris Thomas
One of the most extraordinary financial frauds to have ever taken place during the Yahapalana Government’s tenure in its very first year in power is still being argued and debated in the public forum. It is the 2015 Treasury Bond scam. And just when things seem as if they are about to come to a much awaited conclusion, something new and exciting happens that more often than not, tends to deviate the attention from the main subject.
On 23 February (Thursday) the case of the controversial Treasury Bond issue was brought before the Presidential Commission of Inquiry to Investigate and Inquire into the Issuance of Treasury Bonds hearing session – that only commenced a week or so before – brought a certain Gazette notification that completely changed the course of the ongoing inquiry. As a result of this startling revelation, the Presidential Commission’s hearing is currently under hiatus.
Curious case of Gazette notification
The Extraordinary Gazette Notification No. 1895/19, issued on 1 January 2015 by the Central Bank of Sri Lanka and the Finance Ministry, revolves around the subject of Treasury Bond issued in the same year.
When this was brought to the attention of the Presidential Commission of Inquiry on 23 February, it was revealed that the Extraordinary Gazette had hinted on the issuance of Bonds to take place later that year.
And most importantly the Gazette had been published bearing signature of the then Minister of Finance Mahinda Rajapaksa, by virtue of the powers vested in him by the Registered Stock and Securities Ordinance. This, surprisingly, was something the Secretary of the Ministry, who was present at the session had not been aware of.
Once the story broke out, former President Mahinda Rajapaksa in a press release said he is seeking legal advice to file a case against the Finance Ministry and the Central Bank. He claims that he cannot be held accountable since his tenure as the Minister of Finance ended on 9 January.
Seeking legal advice
“I am currently seeking legal advice to file cases against the Ministry of Finance and the Central Bank. After the 9th, I was not the Minister of Finance. Therefore, I am hoping to file cases against this,” he said.
The United People’s Freedom Alliance (UPFA) MP, Dullas Alahapperuma charged that the Treasury Bond Issue took place on 25 February 2015, but the Gazette was published on 15 September 2015.
“… The Bond Issue took place on 25 February. The Gazette was published on 15 September 2015. Whose signature does it bear? In the village we call them the next level rogues.They are trying to say that Mahinda Rajapaksa committed the Bond scam …”
To make matters worse, the Finance Ministry also released a press communiqué. The ministry claims that the Gazette notification “is a unique example of fraudulent management of public debt by Mahinda Rajapaksa, Ajith Nivard Cabraal and his fellows in the Central Bank in violation of the laws.”
The ministry says that the Gazette contains authorization given to raise loans during 2015 through issuance of 31 treasury Bonds of different redemption periods at different interest rates at auctions as notified by the Registrar of Public Debt through newspapers.
The statement also says that the required protocol had not been followed when issuing the Gazette.
It says that instead of following the procedure required when a Gazette notification is issued by a minister, the Superintendent of the Public Debt Department had directly sent it to the Government Printer, after getting legal clearance from the Central Bank lawyers.
The Presidential Commission of Inquiry, observing the severity of the issue summoned the Government Printer Gangani Kalpana Liyanage on 27 February (Monday) to record a statement.
She said the Extraordinary Gazette was actually submitted for printing on 22 December 2016. She told the Presidential Commission of Inquiry into the Issuance of Central Bank Treasury Bonds that the relevant Gazette was submitted for publication by the Central Bank Public Debt Department.
Testifying before the commission, the Government Printer noted that the Extraordinary Gazette Notification No. 1895/19 was delayed as per the request of the Central Bank’s Public Debt Department, on 24 December 2014.
She explained that this was the normal procedure followed by public institutions. This was also corroborated by the Central Bank Governor Dr. Indrajit Coomaraswamy at a media briefing on the same day.
However, while the Gazette number had been set aside, the Public Debt Department had only provided the information required for the Gazette Notice printed on 17 November 2016.
The Government Printer testified that an official at the Proofreading Division had inquired from her regarding the Gazette Notification being published under the name of Mahinda Rajapaksa, adding that she had informed that advice should be sought from the Central Bank.
According to the Printer, when the official from her department contacted the Central Bank, the response was that “Since the notification was in relation to a period when the former President was the Finance Minister, it was not a problem”.
As such, she noted that following proofreading, the Gazette notification was sent for printing on 22 December 2016 and it was issued on 23 December.
Meanwhile, Finance Minister Ravi Karunanayake had said the Gazette was supposed to be issued about the Treasury Bonds issued between 1 January 2015 and 31 January 2015 by the Finance Minister who held the position at the start of the year, hence the Gazette should be issued under former President Mahinda Rajapaksa as he was the Finance Minister at that time.
“Usually this Gazette dates the 1 January of the following year and it contains all the information about the Bonds issued during a particular year. As per the Registered Stock and Securities Ordinance, the government is liable to inform the public about issuance of government securities. However, with the inclusion of the market dimension the government cannot determine the amount of Bonds to be issued prior to the Bond issues. Therefore, the Gazette notification is issued dating the beginning of the year indicating the amount of Bonds issued throughout the year,” explained Karunanayake.
Minister Karunanayake further said in order to avoid any confusion while adhering to the provision 4.1 of the Registered Stock and Securities Ordinance, the government will publicize the information about the next Bond issue on the following day of the Bond issue.
Central Bank Governor
Dr. Coomaraswamy further explained that due to the auction system followed by the Central Bank in issuing government securities, it is impractical to inform the public in advance about the amount of Bonds issued and the interest rates.
Who’s to be blamed?
The Anti-Corruption Front took no slack when it came to pointing out the accused in the situation. On numerous occasions, the Anti-Corruption Front issuing press communiqués has accused Deputy Governor of the Central Bank P. Samarasiri for issuing the misleading Gazette notification for publication.
On 27 February, the Anti-Corruption Front (ACF) issuing a letter noted that the Deputy Governor had sought legal assistance from a private attorney during the hearing session of the Presidential Commission, which leads to more questions than answers.
ACF also accuses Deputy Governor Samarasiri for issuing the press communiqué from the Ministry of Finance that claimed that the former President and his administration were responsible for the controversial Treasury Bond scam.
Regardless of the latest developments, many people are of the opinion that this will only deviate from the original plot. Who is responsible for the Treasury Bond scam? While we recognize the essential need to resolve the controversial matters, we cannot help but note that this large scale financial fraud was not committed by just one person. It might be so that in order to cover up the initial crime, several other crimes were committed by other people. This might all just be an act of misdirection. And the authorities who inquire into these matters, to see some justice being meted out, should definitely keep that in mind.