The Bond issue: Get the truth out | Daily News


The Bond issue: Get the truth out

“We pledge to bring to justice all those involved in the Central bank Bond scam, and other major financial crimes”

– Gotabaya Rajapaksa’s election manifesto, ‘Vistas of Prosperity & Splendour’.

The Central Bank bond issue, which resulted in a major clash between the two leaders of the last government, has surfaced once again with Attorney General directing the Acting Inspector General of Police (IGP) to obtain arrest warrants against several suspects in the Central Bank bond scam case including former Finance Minister Ravi Karunanayake, former Governor of the Central Bank of Sri Lanka (CBSL) Arjuna Mahendran and Perpetual Treasuries Limited (PTL) owner Arjun Aloysius.

The AG’s Coordinating Officer Nishara Jayaratne stated that the Acting IGP was instructed to obtain warrants from court for the arrest of Ravi Karunanayake, Arjuna Mahendran, Arjun Aloysius, PTL CEO Kasun Palisena, former Director of the Public Debt Department of the Central Bank T. H. B. Sarathchandra and several others.

They are to be arrested on charges of conspiracy, criminal misappropriation, cheating and market manipulation in respect of the bond auctions of March 2016. In his letter to Acting IGP C. D. Wickramaratne, the Attorney General Dappula De Livera states that there is reasonable suspicion against these individuals with regard to the criminal wrongdoings which had occurred during the treasury bond issuances on March 29 and March 31, 2016 and that they should be considered as suspects. The Magistrate would rule today (March 6) on whether to issue arrest warrants for the suspects.

Former Minister Ravi Karunanayake is facing charges under the Penal Code for conspiracy to commit or abet in an offence with Perpetual Treasuries Ltd. and dishonest misappropriation of property under the Offences against Public Property.

Senior Deputy Solicitor General Haripriya Jayasundera stated that investigations had revealed that Karunanayake, who was Finance Minister at the time the bond auction took place, had pressured officials of the three State banks, namely People’s Bank, Bank of Ceylon and National Savings Bank, and instructed them to bid at lower rates at two bond auctions in late March 2016 with the assurance that other bids at higher rates would not be accepted. However, bids made by Perpetual Treasuries on both occasions had been accepted, allowing them to make a profit of over Rs. 55 million within days of the auction by selling them in the secondary market to the Employees’ Provident Fund (EPF).

President Gotabaya Rajapaksa stated in his election manifesto, ‘Vistas of Prosperity & Splendour’ that all those involved in the Bond scam would be brought to justice. “We will ensure that none of our politicians or senior public officials engages in any form of corrupt practices. Whoever engaged in corrupt deeds, they will be brought before the law,” he promised.

Arjuna Mahendran as CBSL Governor

Referring to the Bond scam, former President Maithripala Sirisena admitted, the serious differences between him and Prime Minister Ranil Wickremesinghe started with Ranil’s insistence on appointing Arjuna Mahendran as CBSL Governor within days of the new government assuming office in January 2015. In a short time the Bond scam surfaced and it was found out that Mahendran had given tips to his son-in-law, Arjun Alosius regarding confidential information about the issue of Central Bank bonds enabling the latter to purchase them using funds from state banks and public lending agencies and make huge profits.

When these irregularities came to light, President Sirisena instructed the Attorney General to take immediate steps to appoint a Special Presidential Commission to inquire into the allegations of malpractices in the bond issue of the Central Bank of Sri Lanka and take required legal action.

A gazette notification to appoint a Commission comprising of a judge of the Supreme Court, a judge of the High Court and an expert in auditing was issued. The President called upon all relevant parties to extend fullest cooperation to the Commission to successfully carry out its assigned duties.

The people of the country wanted to know the truth about the bond issues and to see that the culprits were punished. They thought such investigations should not be left merely on the hands of the politicians. Earlier, the findings of the parliamentary Committee on Public Enterprises (COPE) revealed that the former Central Bank Governor Arjuna Mahendran “made an intervention or used pressure” in the issue of bonds. It also said that Perpetual Treasuries Limited, once linked to Mr. Mahendran’s son-in-law, “obtained large financial profits in the sale of bonds.”

Subsequently, it was decided that the investigations should cover a ten-year period of bond issues by the CBSL. Former President Sirisena expressed displeasure at the Criminal Investigation Department (CID), the Financial Crimes Investigation Division (FCID) and the Commission to Inquiry into Allegations of Bribery or Corruption (CIABOC) for probing small issues leaving behind the mega cases. As a result, for over 20 months, they have not been able to bring to book any of the big offenders, including Arjun Mahendran who is absconding.

Considering the long delays, it is laudable that the AG decided to instruct the Acting IGP to name the aforementioned individuals as suspects with the regard to the investigations, record statements from them and report information to the court naming them as suspects.

Illegal money-laundering

The AG further instructs to forward copies of their statements to him without delay and to carry out further investigations if necessary regarding the information uncovered from the statements. He urges the police to report to the relevant magistrate’s court on the charges against them and to obtain warrants for their arrests.

During the Commission hearing it was revealed that the rent of a luxurious apartment rented by Ravi Karunanayake’s family was paid by Arjun Aloysius. The same house was purchased and the payment was made through a company fund received from abroad. It was necessary to find out whether that deal was false under illegal money-laundering. There were also issues related to some foot-marks made by some UNP members in COPE Report.

Minister Vasudeva Nanayakkara, welcoming the AG’s decision said that bigger fish involved in the bond scam should also be arrested.

The Parliament debate on the Central Bank bond issue was used by some members as a platform for leveling allegations against each other. One side accused the others of frauds, and the other side leveled similar allegations of forgery. They did not come up with recommendations for immediate legal action against the culprits, though they claimed that their objective was to find out the truth about the bond issue.

By instructing the IGP to arrest the suspects, the AG displayed the Department’s desire to find out the truth and to take action against the guilty. This move should not be interpreted as an attempt to sideline one group in the government in order to strengthen the other group. The country needs to find out about the bond issue and to see that the guilty are punished. That would strengthen the government and it would enhance its credibility.


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