Central Bank Governor Arjuna Mahendran, who took up the responsibility soon after President Maithripala Sirisena’s election victory in January, last year, has suddenly become a newsmaker.
His first term in office will come to an end on June 30 and there were various differences of opinion among political circles over the renewal of his contract. While the United National Party, the main stakeholder of the government, is strongly backing Mahendran, the “Joint Opposition group” and some elements in the SLFP have declared war on him.
The official reason behind ‘Joint Opposition’ group’s concerns over Mahendran’s re-appointment is the controversy surrounding the Treasury bond issue, in February, last year. In reality, however, their opposition has nothing to do with allegations of bribery and corruption. They want to remove Mahendran from the Central Bank’s top post as he was a close ally of Prime Minister Ranil Wickremesinghe. Their calculation is that any attack on Mahendran would amount to an attack on Prime Minister Wickremesinghe. In that sense, the removal of Mahendran from the top post of the Central Bank would be a ‘psychological victory’ for the pro-Rajapaksa camp.
Some elements in the SLFP are also against Mahendran’s re-appointment due to the same reason. They, needless to say, have an “inferiority complex” of sorts that they are being treated as ‘second class citizens’ of the government. They want to test their clout in the decision-making process of the government by pushing for Mahendran’s removal. They only used the Treasury bonds controversy to justify their opposition to the Central Bank Governor’s re-appointment.
 Minister John Seneviratne |
The same group worked under the Rajapaksa administration for nearly 10 years and they conveniently turned a blind eye to corruption allegations leveled against the top-brass members of the previous regime. Unfortunately, they had no qualms about defending and justifying various questionable appointments made by the Rajapaksa administration, over the past 10 years. But, they are now quite vociferous about Mahendran’s track record and the Treasury bonds controversy.
The only group who had genuine concerns about the bond issue and Mahendran’s appointment was civil society leaders who campaigned for President Sirisena, at the last Presidential election. They openly challenged the Rajapaksa rule as it turned a blind eye to bribery and corruption. On the same grounds, they said he had concerns about the re-appointment of the Central Bank Governor as the latter’s name was linked to the bond controversy.
At a special meeting held last week, several SLFP Ministers representing the national unity government voiced their serious concerns over the re-appointment of Mahendran. Among them were UPFA General Secretary Mahinda Amaraweera and Lasantha Alagiyawanna. They said any attempt to re-appoint Mahendran as the Central Bank Governor would reflect badly on the government.
“Serious allegations have been leveled against him. The public has lost their faith in the person holding the top post of the Central Bank. We need to go back to villages and engage in politics. We cannot go before our supporters and justify such decisions,” Alagiyawanna said, speaking at the meeting.
His views were endorsed by UPFA General Secretary Mahinda Amaraweera who said the SLFP, as a party, would have to make a strong political decision, if the government decided to re-appoint Mahendran as the Central Bank Governor.
“His re-appointment can cause problems for the President and Prime Minister. No one has, so far, dubbed the President and the Prime Minister as corrupt leader. Mahendran’s re-appointment can bring them into disrepute,” Amaraweera said, expressing his views on the matter.
Minister Sarath Amunugama, however, spoke in favour of Mahendran, saying the government should not play into the hands of the Joint Opposition by removing Mahendran. He also added that the Central Bank Governor should be given more time as the government had taken several important measures to resolve issues on the economic front.
The Prime Minister, trying to allay the fears of SLFP ministers, said there was no reason to worry unnecessarily about the re-appointment of the Central Bank Governor. He said the country’s legislature had sufficient powers to look into the conduct of the Central Bank Governor and make necessary decisions.
The majority of UNP MPs too are of the view that Mahendran should be re-appointed to the position. The UNP MPs, who attended the ruling coalition’s group meeting said, Mahendran’s international exposure and credentials would assist the government in attracting more foreign investors to strengthen the country’s economy.
Further demonstrating the UNP’s faith in the Central Bank Governor, Higher Education and Highways Minister Lakshman Kiriella, on Monday, said that there would be no issues with regard to the extension of Mahendra’s term.
Addressing the media, on Monday, at the ‘Maga Neguma Medura’, Battaramulla, Minister Kiriella said, none of the allegations against the Central Bank Governor had been proven.
He also added that even the Supreme Court had dismissed the Fundamental Rights application filed by good governance activists Dr. G. Usvattearachchi, Dr. A.C. Visvalingam and Chandra Jayaratne against the Treasury Bond issue, seeking an independent inquiry into the bond issue and the Governor.
“The Supreme Court, by dismissing the FR application, said there was no legal basis to issue notice. This move has cleared both Governor Arjuna Mahendran and primary dealer Perpetual Treasuries and others sighted as respondents,” he said.
Kiriella further added that a parliamentary investigation into the allegations against Mahendran was underway.
Kiriella’s remarks highlighted that the UNP was ready to back Mahendran, at any cost.
It is in this context that the government is buying more time, without announcing its final decision on the matter. Top government sources said the President would make a final decision on Mahendran’s next term, after a discussion with the Prime Minister. When a weekend newspaper asked President Sirisena about the re-appointment of the incumbent Central Bank Governor, he said it was too early to announce his decision on the issue.
Seneviratne, under fire
A statement made by Minister John Seneviratne on former Defence Secretary Gotabhaya Rajapaksa ruffled a lot of feathers among political circles, last week.
Addressing a meeting in his electorate, Seneviratne said discussions were underway to appoint Rajapaksa as the ‘second leader’ of the SLFP, led by President Sirisena.
Seneviratne’s remark, not so surprisingly, sparked a serious controversy not only within the ruling coalition, but also in the SLFP.
The former Defence Secretary, who controlled the country’s defence apparatus after the end of war, is facing a surfeit of issues on the anti-corruption front. On the other hand, he is facing issues in the international domain over alleged war crimes during the final phase of war, alleged white van abductions and other allegations relating to human rights allegations. He was also under fire from civil society groups for maintaining strong links with extremist organizations such as the Bodu Bala Sena and Ravana Balaya. Therefore, facilitating Rajapaksa’s re-entry into the political fold was a contentious move.
After Seneviratne’s statement, the former Defence Secretary too made several remarks, hinting at a political comeback. It was quite clear that Rajapaksa was testing the waters to strategise his future course of action.
“People living in Sri Lanka and outside the country have asked me to come forward to contest the next Presidential Election,” Rajapaksa said, in an interview with an English daily, last week.
“If I become the President,” Rajapaksa said, “I will put the current ‘mess’ on the right track. We are going on reverse, look at the economy and the development. Everything is at a standstill.”
He however added that he has not still decided whether to heed the public’s request to contest the next Presidential Election. “I have not decided yet, but it will depend on the situation and the circumstances. I just cannot plan now. I am not a politician,” he said.
The move, however, came under criticism from various individuals within the SLFP camp. For instance, minister Vijith Vijayamuni Soysa, addressing a meeting in the Moneragala district, lashed out at the attempts to make Gotabhaya Rajapaksa the deputy leader of the party. He said the former Defence Secretary was responsible for driving away Muslims from the SLFP at the last Presidential election.
Several MPs, at the ruling coalition’s group meeting last week, also voiced their concerns over Seneviratne’s controversial speech. They even questioned Seneviratne as to why he made a statement of that nature, without any permission from the party leadership.
Among them was former Army Commander Sarath Fonseka who launched scathing attacks on the former Defence Secretary and his family in the recent past. Minister Rajitha Senaratne too, criticised Seneviratne for attempting to facilitate what he termed as a Rajapaksa comeback.
“After the last Parliamentary election, the UNP was in a position to form a government on its own. A section of SLFP MPs were also ready to support the UNP’s attempt. But, the President and the Prime Minister made a decision on behalf of the country. Don’t try to sabotage their attempts. We will never allow the Rajapaksas to rule the country again,” a visibly annoyed Senaratne said, addressing the MPs who attended the group meeting.
Seneviratne’s statement also annoyed President Sirisena, who risked his life to become the Common Candidate at the last Presidential election, challenging his predecessor’s third-term bid.
The President, in no uncertain terms said, he did not want to accommodate the Rajapaksas in his government.
“What is the so called ‘Joint opposition’? I’ve heard even the ministers serving in the government using the term ‘Joint Opposition.’ There is no ‘Joint Opposition.’ It is only a clique,” the President said, directing his criticism at the pro-Rajapaksa camp.
Meanwhile, Seneviratne, in a desperate attempt to justify his statement, said he did not want to position the former Defence Secretary as the second-in-command of the SLFP.
“I just wanted to create unity in the party. That’s why I made the statement. I wanted to prevent division in the party,” Seneviratne explained. His explanation, however, did not solicit a positive response from other members attending the meeting.
The Minister’s questionable move came in the light of allegations that some government members representing the SLFP are deliberately attempting to play into the hands of the pro-Rajapaksa group.
There were allegations that an SLFP minister serving in the national government attempted to approach some ruling party members to vote in favour of the no-confidence motion presented against Finance Minister Ravi Karunanayake.
Several other members of the ruling coalition held discussions with former President Rajapaksa and key members of his group. Photos of their clandestine meetings went viral on social media and pro-Rajapaksa websites cooked up stories saying a group of ruling coalition MPs were planning to cross over to the opposition.
Some, addressing public events, openly praised the Rajapaksas, giving rise to serious doubts about their ‘loyalty’. They also spoke about forming SLFP-only governments, violating the collective agreement between the UNP and the SLFP, signed after the last Parliamentary election.
It was in this backdrop that Seneviratne’s statement alarmed leaders of the ruling coalition. However, top-brass members of the SLFP, after the last group meeting, made it clear that Rajapaksa had no opportunity to enter into the SLFP camp, as the second-in-command of the SLFP.
Who is Arjuna Mahendran?
Arjuna Mahendran has been Governor at Central Bank of Sri Lanka since January 27, 2015 and serves as its Chairman of the Monetary Board, the chief policy making body for the country’s economy.
Mahendran, who has vast experience in international banking, served as the Chief Investment Officer of the Wealth Management Division at Emirates NBD Bank PJSC.
 Central Bank Governor Arjuna Mahendran
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He has working experience of over 30 years in both private companies and public sector organizations, including senior positions with the Central Bank and Ministry of Finance of Sri Lanka as well as the World Bank.
He also served as Chief Economist & Strategist - Asia Pacific at Credit Suisse Group AG and was its Head of Research for Asia Pacific since October 2006.
He assisted the Wealth Management division to continue to grow from strength to strength. He served as the Managing Director; Chief Investment Strategist - Asia and Singapore and Head of Investment Strategy - Asia at HSBC Private Bank.
He was also responsible for driving research and providing in-depth analysis of markets in the Asia Pacific. Mahendran led the analytics team in interpreting market economics and developing investment strategies for HSBC’s clients in the region. He served as Chief Economist-Strategist, Asia Pacific at Credit Suisse Private Bank.
Mahendran served as the Director and Head of Economic Research (ASEAN and South Asia) at Societe Generale Cross Asset Research. He led an award-winning team of research analysts and economists in covering stock market ass set allocations, providing economic intelligence and forecasts as well as in-depth analysis of countries in the ASEAN region and the Indian sub-continent.
Mahendran also regularly presented to institutional fund managers in the United States, Asia and Europe. As the Chairman/Director-General for the Board of Investments of Sri Lanka, he was responsible for attracting and facilitating inflows of foreign direct investments to Sri Lanka. For Mahendran’s instrumental role in establishing the Board of Investments of Sri Lanka and driving its strategy, he was named a runner-up in Euromoney Strategic Direct Investor’s “CEO Lifetime Achievement Award” in 2003. He holds a Master of Arts in Philosophy, Politics, and Economics from the University of Oxford. (Courtesy: Bloomberg)
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