Desist from actions to risk future of the country An Open Letter to UNP Members of COPE
Posted on July 11th, 2016

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Please note that the memories of all the young professionals, the youth, the intelligent voters and civil society activists, who so actively canvassed for the 8th January 2015 regime change and in the General Elections that followed, are not short, nor fading. They presume that your memories too are neither short nor fading, impacted by arrogance of power after you were installed in the high seats of the legislature, or dictatorial directions of some in party leadership.

You were so agitated, when in the opposition then, when you witnessed:

1. A select committee of Parliament, act in haste, on the dictates of their leadership, and unfairly determine that the then Chief Justice was guilty and should be impeached

2. The pump and dump and other market manipulations in the stock market

3. The questionable hedging deal and overseas bond investments which caused heavy losses to the state

4. The Central Bank’s issue of long dated bonds to a leading foreign investor and within a few days reducing policy rates and yielding significant capital gains to the preferred foreign investor

5. When state property and state media were misused for electioneering

6. When state funds and promotional support of state entities were leveraged for egoistic and personal agendas /exploits and in advancing events of personal interest.

You will also recollect that transparency, good governance, rule of law, justice, anti corruption and waste control were the main platform themes of the Presidential and Parliamentary elections. Please recollect that even very recently, both the President and especially the Prime Minister, have reaffirmed their commitment to the above core values and committed to them being upheld in governance as an embedded part of their vision for Sri Lanka.

It is the fervent hope, of those who supported your election to office, that these recent memories and your own personal value commitments to uphold good governance, rule of law and eradicate corruption and waste from our governance systems, will be the guiding principles in your independent, professional and personal integrity, preserving decision making within the COPE Committee on the Bond issue.

Trust that your independence, professionalism and your core values will drive you to probe with an open mind; seek information; ask critical questions before you conclude your review; be aware that you are represented on the COPE Committee not to declare a verdict of ‘guilty‘ or ‘not guilty’ on the part of the Government, the former Governor, Deputy Governor in charge of Public Debt, nor even the Monetary Board, the relevant Primary Dealers, Traders of EPF and State Institutions and Banks . Your role is merely to satisfy whether the weighted evidence points to the essential need for the Committee to refer this issue to the relevant law enforcement agency, to investigate and determine whether a serious offense punishable under section 70 of the Sri Lankan Legislative Enactments dealing with Bribery and Corruption have taken place in respect of Bond issues of 27 February 2015, 29th March 2016 and 31st March 2016.

You are kindly reminded, that Civil Society members, satisfied by the prima facie evidence before them, have been demanding that a probe by an Independent and Competent Commission of Inquiry is essential to probe the purported Bond Scams of 2015 and 2016. They have also expressed a firm belief that the Bond Scams of 29th /31st March 2016 are unpardonable, unacceptable and cannot be condoned by any one in society with a just and fair mind, due to:

1. It being a mega serious financial crime;

2. It being a repeat of the Controversial Bond Scam of 27th February 2015;

3. It having been executed with more thought, crafty pre-planning and with no fear of the application of the rule of law;

4. It being executed with no concern for the consequential losses to the state, impact on the economy and the people and uncaring that many small holder retirement savings of common citizens have been appropriated towards the gain to the perpetrators;

5. It completely overlooked the “Trustee Accountability” commitments of the Government, Ministry of Labour, Central Bank and Employees Provident Fund Authority, in ensuring optimum best returns for the members of the Fund;

6. It being executed with arrogance of “being above the law and law enforcement”;

7. Purportedly having shared the knowledge with a few others to show commonality and that it is not a singular party led crime;

8. It being tainted by possible market manipulations by pre issue managed market signals e.g. Cancelled bond auctions in the period preceding the end March 2016 bond issues;

9. Strong appearance of a “joint enterprise crime” in association with traders of EPF, and possibly other dealers of state institutions;

10. Probably pre-arranging with Traders of EPF for low number of bids or bids most likely to be rejected;

11. Post-bond issue secondary market trades by EPF and state institutions, possibly being encouraged or facilitated towards being an associate in the crime, possibly supported by external inducements

12. Possible timing of issues to coincide with best opportunities to enhance gains to the perpetrators of the crime;

13. The Monetary Board announcements being timed to bring down market rates after winning bids have been awarded at high yield rates;

14. The long dated tenor of issues and decision to accept high interest offers in long dated bond categories;

15. The issue of long dated high yielding bonds being inconsistent with the commitment and expressed intent of the government to grow the economy strongly in the short to medium term and bring down inflation and interest rates in the medium term;

16. The change in auction system being unilaterally imposed by the Governor, without Monetary Board approval, merely on a decision and announcement by the Prime Minister, with no intellectual debate on validity, longer term implications and availability of better options even on introducing such a change;

17. Central Bank’s refusal to abide by the Constitutional provisions and the then pending enactment on the Right to Information ( both having been canvassed by the Government as high points of Good Governance of the Regime ) and failing to issue information transparently by hiding behind secrecy provisions of the Monetary Law.

18. The Central Bank Monetary Board Press Release of 2nd June accepting:

1. The need to hold pre-bid meetings and sharing of information better

2. The need to examine international best practices of vital importance, (being the same issues canvassed for in the Supreme Court petition by the undersigned with two other activists in 2015).

19. The Central Bank Monetary Press Release  of 2nd June accepting that there is a need for more active participation by the EPF, thus vindicating the allegation that it did not do so in the scam auctions;

20. The Governor in press interviews stating contrary to actual position that he and his dependents were cleared by the Supreme Court in 2015;

21. The Governor misrepresenting the position continuously that his son-in-law is not a director, whilst it is believed that he continues to be the effective shadow dealer behind Perpetual Treasuries;

22. The Governor ignoring the effective ownership control by his son-in-law of the Perpetual Group and failing to discharge obligations as per the Governance Code of the Central Bank, in relation to conflicts of interests and related party transactions;

23. The Governor failing to abide by the Code of Governance of the Central Bank in regard to Conflicts of Interests and Related Party transactions and actively participating in a leadership role and using his authority at the highest level of transaction sign off;

24. The Central Bank top management, including a Deputy Governor, being tarnished by the scam and appearing to have facilitated, covered up and approved knowingly that the awards were irregular and out of scope of best practices;

25. It being clear that the Dealer of the EPF may have a direct hand in the scam execution;

26. The information demand of the Auditor General being refused in the first instance.

I trust that the above facts will be a sketched in the back of your mind, when you consider the confusing signals and questions raised by the Leader of the House, guidelines and party directions issued by the leader and the chorus songs in the background sung by the “Hurrah Boys”, defending the position of the Governor on grounds that no scam has taken place and no loss has been suffered, and also that the Auditor General is erroneous in his judgment and further review by a new expert panel is necessary.

You must, therefore, immediately desist from any action that risks the future of this country; its future generations, as well as be cognizant of the current socio political economy; the image internationally of the country risked to be damaged permanently; and above all the impressions your voters will have of you next time round if you act outside your core values.

Chandra Jayaratne

cc. President; Prime Minister; Speaker; Leader of the House, Leader of Opposition: Chairman COPE

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