The Sri Lankan Foreign Minister Ravi Karunanayake resigned on Thursday before facing a No Confident Motion against him submitted by the Joint Opposition Group for his alleged involvement in the 2015 Central Bank bond scam.
Karunanayake made a Special Statement in parliament and then resigned from his post.
In the statement he said that he is innocent but is quitting in the interest of his party (United National Party) and the government led by President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe.
He termed the various allegations against him regarding the bond scam as “baseless” and emphasized that he has absolutely no connection with the incident in question.
However, certain media have already painted him as a criminal and “nailed him to the cross.”
Karunanayake stated that he made the decision to resign with pride and not with any sadness. He also said that he resigned in order to set a positive example to the country.
Karunanayake stated that he felt he needed to make a clarification in the wake of the various reports regarding him that have been published by the media and social media.
He said that he has lost his personal money due to politics but he has never earned money from politics. “I have no need to obtain a house illegally or wrongfully.”
He said that politicians of the UNP and other parties know that he has never used political power for his business activities. He said that even those who have signed theNo-Confidence Motion against him know that he never used politics to earn money.
Across The Board Demand
There had been an across-the-board demand for his resignation on the issue of being a financial beneficiary of Arjun Aloysius, the stock broker who is the principal figure in the bond scam. Karunanayake was Finance Minister when the scam took place.
The No-Confidence Motion submitted by 32 members of the Joint Opposition led by former President Mahinda Rajapaksa had said that Karunanayake had no right to represent Sri Lanka as its Foreign Minister in the context of the scam and sought his resignation.
While Parliament Speaker Karu Jayasuriya sent the motion to the Attorney General for a legal opinion, efforts were made by various leaders including President Maithripala Sirisena and Prime Minister Ranil Wickremesinghe to make Karunanayake resign, before facing the No Confidence Motion.
But the week-long effort bore fruit only on Thursday.
Although many in the ruling coalition were in favor of Karunanayake’s quitting, government did not want him to go after being voted out on the motion.
If there had been a vote, the ruling Sri Lanka Freedom Party (SLFP) of President Maithripala Sirisena and the United National Party (UNP) of Prime Minister Ranil Wickremesinghe, would have looked divided in contrast to the Joint Opposition led by Rajapaksa.
The apprehension was that many in the UNP and SLFP would have voted for the motion as the scandal had hurt the image of the government and the ruling coalition partners.
On the other hand, Rajapaksa would have gained if the motion got majority support on the floor of the House. He would have called for the government’s resignation.
Confession Before Commission
Karunanayake had told the Presidential Commission probing the bond scam that he was not aware that his wife, Mela, had leased, and then bought, a posh penthouse for LKR 165 million with money advanced by Arjun Aloysius of the stock brokering firm Perpetual Treasuries, the central figure in the scam.
In his defense, Karunanayake had said that he got to know about the payment only when an opposition MP, Mahindananda Aluthgamage, brought it up in parliament. Following this, the borrowed money was repaid ,he added.
Karunanayake was Sri Lanka’s Finance Minister at the time and the stock market came under his ministry. Hence there was a conflict of interest when his wife allegedly took the money.
In 2015, Arjuna Mahendran was appointed Central Bank Governor by the newly elected Sirisena-Wickremesinghe government. Mahendran’ son in law, Arjun Aloysius, a leading stock broker running the firm Perpetual Treasuries, made a killing by purchasing Central Bank bonds as he had influence in the bank.
In February 2015 the Central Bank advertised the sale of LKR 1 billion in 30 year government bonds at 12.5%. The sale was oversubscribed with 36 bids totaling LKR. 20 billion. The majority of bidders (26), bid for LKR 100 million or less at a rate of 9.5% to 10.5%. However, a few bidders, including Perpetual Treasuries of Arjun Aloysius, sought interest rates of 11% to 12%.
On 27 February 2015 the Central Bank accepted LKR 10 billion in bids at rates of 9.5% to 12.5%. Perpetual Treasuries was issued, directly and indirectly, Rs. 5 billion in bonds at 12.5%.
The issuing of ten times the advertised bonds, and that at a higher than the expected rate of 9.5%, allegedly cost the government an additional LKR 1.6 billion (U$ 10.6 million).
When existing inquiries did not unravel the truth, and as the issue was hurting the image of the government, President Sirisena appointed a Presidential Commission in January 2017.