Alleged Bond Scam: Will mandate of PCoI be allowed to lapse without key witnesses?
Posted on October 12th, 2017

By Amrit Muttukumaru Courtesy The Daily Mirror

Will the mandate of the Presidential Commission of Inquiry (PCoI) into the Alleged Central Bank Bond scam be allowed to lapse without key witnesses being called?

This is arguably one of the largest financial scams to have taken place in the post-independence history of Sri Lanka. For sheer impunity and involvement of powerful politicians in collusion with a section of the corporate sector and regulatory authorities it is hard to beat.

(Whether the muted response of the opposition has anything to do with former Central Bank Governor, Arjuna Mahendran’s stint as Chief  Investment Executive at Dubai Emirates NBD Bank could be interesting to know).


  • Some Key witnesses not yet summoned by (PCoI) to clarify matters
  • Rosy was not a COPE member after 2015 parliamentary polls
  • PM hand-picked Arjuna Mahendran, a foreign national to head CBSL
  • PCoI did a commendable job bringing some alleged scams to light

The Presidential Secretariat attributes the objective of the PCoI to President Sirisena stating: to give the utmost punishment to those who are guilty of offences”
(http://www.presidentsoffice.gov.lk/?p=3778)

If the people of Sri Lanka are serious about good governance, should they not hold him accountable to this commitment? To be fair by the Presidential Commission, it must be flagged they have done a commendable job to bring some of the machinations of these alleged scams to the notice of the general public. This has whet their appetite to get to the bottom of these scams by identifying the key personnel involved.

Although Dr. Harsha de Silva was summoned by the PCoI in June this year, there has not been much information in the public domain whether he was adequately questioned on ‘footnotes’ saga

At the same time the (PCoI) to use a cricketing parlance has dropped sitters (straightforward catches) which include for example:

1) Failure to ask the Chairman, Bank of Ceylon when he was a witness last week (i) what made the BoC give Perpetual Treasuries Ltd., (PTL) facilities for billions of rupees virtually over the counter just prior to a Bond auction? (ii) why the BoC with a primary dealer license bought Treasury Bonds in the secondary market from PTL? (iii) why the BoC Chairman attended a meeting relating to bidding at the Bond auction said to have been convened by the then Finance Minister Ravi Karunanayake when state banks came under the purview of another Minister – Kabir Hashim in circumstances where Karunanayake had no authority over State Banks?

The same holds true to the Chairmen of People’s Bank and NSB in relation to the said meeting.

2) Although it was reported that Dr. Harsha de Silva was summoned by the PCoI in June this year, there has not been much information in the public domain whether he was adequately questioned on his role on the controversial ‘footnotes’ saga in the alleged Treasury Bond scam. He is Deputy Minister, Ministry of National Policies and Economic Affairs where the Prime Minister is the Minister in charge.

‘The Sunday Times’ of October 30, 2016 reports:As is clear, the thrust of these footnotes is to make clear that Mahendran has not been responsible of any impropriety.
The UNP is confident that it can, through the documentation Deputy Minister Harsha de Silva has received, prove its case that its man Arjuna Mahendran is not to blame.”
(http://www.sundaytimes.lk/161030/columns/the-dramatic-bond-issue-how-cope-went-beyond-bioscope-215374.html)

Key Witnesses 

I am glad to note at the time of penning this piece that ministers Malik Samarawickrama and Kabir Hashim said to have been present at the INITIAL meeting in 2015 on the issuance of Treasury Bonds have been summoned as witnesses by the PCoI. At this time Malik Samarawickrama who did not hold ministerial portfolio was Chairman of the UNP, Minister Kabir Hashim was UNP General Secretary and Prime Minister Ranil Wickremesinghe – UNP leader.

This is one of the largest financial scams to have taken place in the post-independence history. For sheer impunity and involvement of powerful politicians in collusion with a section of the corporate sector and regulatory authorities it is hard to beat

The following Key witnesses and others not yet summoned by the (PCoI) must be given the opportunity to clarify matters in the interest of their good name:

1) R. Paskaralingam – Advisor to the Ministry of National Policies and Economic Affairs (Ministry held by PM Wickremesinghe) is said to have been present at the meeting convened by then Finance Minister Ravi Karunanayake with Chairmen of State Banks (BoC, PB, NSB) relating to bidding at the Bond auction.

2) Rosy Senanayake, in connection with the allegation at the PCoI that COPE documents relating to PTL CEO Kasun Palisena’s testimony was given to ‘PTL owner’ Arjun Aloysius by Rosy’s son” identified as Kanishka Senanayake”.

This has been denied by Ms. Senanayake on the grounds she was not a COPE member after the August 2015 parliamentary elections. Does not the question arise whether in her capacity as ‘Deputy Chief of Staff’ in Premier Ranil Wickremesinghe’s ‘core team’ she would have access to COPE reports? Although requested, she has still not clarified this position.

It was also alleged at the PCoI that Saman Kumara, the then dealer for the EPF at the CBSL had received a personal loan of Rs. 25 million from PABC when Nimal Perera was Chairman

3) Premier Ranil Wickremesinghe (i) who hand-picked Arjuna Mahendran, a foreign national in whom he had the fullest confidence to be Governor – Central Bank of Sri Lanka and who he even endorsed for a second term (ii) the CBSL the issuing agency for Treasury Bonds falling under the purview of the Prime Minister (iii) who was fully confident on the propriety of the issuance of Bonds which he robustly defended in Parliament which is at variance with the other evidence presented before the PCoI .

4) Nimal Perera – former Chairman of Pan Asia Banking Corporation (PABC) said to have made the decision for PABC to act as the intermediary in secondary market transactions between PTL and EPF.

It was also alleged at the PCoI that Saman Kumara, the then dealer for the EPF at the CBSL had received a personal loan of Rs. 25 million from PABC when Nimal Perera was Chairman. It is relevant to ascertain whether this loan and its settlement (if any) took place in the ordinary course of banking practice or whether any special privileges were afforded.

Should this not be of interest to the Central Bank’s ‘Bank Supervision Department’ as well?

The PM who hand-picked Arjuna Mahendran, a foreign national in whom he had the fullest confidence to be Governor – Central Bank of Sri Lanka and who he even endorsed for a second term

(http://www.dailymirror.lk/132603/EPF-officer-who-dealt-with-PTL-interdicted )

5) The Chairmen of state financial institutions – Bank of Ceylon (Ronald Perera), National Savings Bank (Aswin de Silva) and Sri Lanka Insurance Corporation (Hemaka Amarasuriya) in the context of these institutions with primary dealer licenses purchasing Treasury Bonds in the secondary market from PTL.

Conclusion

More crucial than President Sirisena’s objective to give the utmost punishment to those who are guilty of offences” is quantifying the losses to the people of Sri Lanka and its immediate return.
The sooner this issue is put to rest the better. The country seems obsessed with this alleged scam while placing other instances of alleged corruption also under the Rajapaksa presidency and issues of governance on the back burner.

One Response to “Alleged Bond Scam: Will mandate of PCoI be allowed to lapse without key witnesses?”

  1. Ratanapala Says:

    There is enough evidence before the public as well as in front of the law enforcing authorities to arrest and remand several individuals pending further investigations and subsequent trials before courts of Law. There is enough material now in the public sphere for the Attorney General’s Office to file charges against all those implicated, as the money involved run into Billions. It is only the other day at Hambantota several were arrested and put in remand prison for damaging public property.

    The reasons as to why this has not been done, now even after nearly two and half years since the first scam coming to light is a mystery. Or is it really a mystery knowing the forces at play? The perpetrators of the crime went onto a repeat performance on 29 March and 31 March 2016.

    The people, the citizenry of Sri Lanka has been robbed and now they are paying for the losses through higher taxes, increased interest rates, the sale of national assets etc. Apparently every single individual in Sri Lanka – now over 22 Million are indebted to the tune of Rs 50,000 because of this day light robbery. This is public money, public property and as far as I know non-bailable offenses.

    The people of Sri Lanka are waiting with baited breath when among others those named as AA, AM, RK, Hon RW, Little Johnny, Kanishka etc will be arrested and arraigned for the alleged crimes.

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