Bonds Commission: An Untold Story
Posted on January 7th, 2018

BY Kavindya Chris Thomas Courtesy Ceylon Today

Sri Lanka has a long and vibrant history when it comes to formally inefficient inquiries and investigations carried out by various authoritative institutions. Yet, only a rare handful – let’s just say that it’s less than five and easily counted on the fingers of one hand – among the countless others that are established, have provided satisfactory solutions, which were implemented by the then administrations. We would like to believe that the Presidential Commission of Inquiry, investigating into the Treasury Bonds Auctions of the Central Bank, has achieved this unique disposition.

With its 1,257 pages and 100 annexures, the final report of the Presidential Commission of Inquiry is seemingly through and through. The inquiry carried out by the three Commissioners, its Secretary and the staff, and those who assisted the work of the Commission, Attorney General’s Department, Police Department and other relevant organizations and individuals, should be lauded. Yet, we cannot help but wonder how things could have been if matters were taken more seriously.

COPE Report at the AGs Department

Following the statement made by President Maithripala Sirisena last Wednesday (3) which, like seismic waves, sent the entire Government into shivers of fear, damaging the deeply rooted political relationships, the Prime Minister’s office also published a statement. This of course, did not have the same flare and attention-grabbing act of the President, after all, that would be abusing something that was already done. The Prime Minister cannot, of course, do that.

The statement read that Prime Minister Ranil Wickremesinghe had requested the Attorney General, in December in 2016, to make recommendations on legal action to be taken against those officials responsible for the controversial Bonds transaction. The statement added that the Prime Minister referred the COPE findings on the Bonds issue to the Attorney General on 31 October 2016.

The statement read, “the Attorney General had been assigned with the responsibility to institute legal action on the Bonds transaction by the Prime Minister in December, 2016 and by the President in January, 2018. The Yahapalana Government has been able to establish its law-abiding characteristic once again. It is expected that the Attorney General will initiate action.”

Furthermore, the Prime Minister’s Office once again touched on the recently pledged promise to probe the alleged frauds and irregularities, of similar nature, within the Central Bank, that happened since 2008. The Office said it was the duty of all to let the law prevail in this regard instead of resorting to mudslinging and character assassination.

Under this context, the 55-paged COPE findings on the Bonds issue came under massive criticism at that time. It reached a certain magnitude that it required another COPE committee to be established in order to understand what happened at the Central Bank on 27 February. This decision, to establish the second COPE into the Treasury Bonds matter, which would later on go on to become more controversial and poisonous, would have ultimately hindered the initial findings that were submitted to the AG’s Department.

Therefore, any attempt to pass the ball to the Attorney General’s court (pun intended) would be useless. The reason the second COPE was established and later on the Presidential Commission of Inquiry, is purely political. If those institutions were not established, the original COPE findings would have been sufficient for the Attorney General’s Department to take necessary legal action or at least recommend it against those who have been accused. Yet, things never took that turn. The COPE report was inundated by political waters at the Attorney General’s Department and now we have the current narrative which says otherwise.

Mahendrans Exit and the Future

In the fallout of the report and the President’s statement, there was a growing fear that those who stand accused, especially the former Central Bank Governor Arjuna Mahendran would leave the country to escape the repercussions. This comes as a palpable fear; as a Sri Lankan citizen with dual citizenship in Singapore, he could easily leave the country to Singapore, escaping the final report of the Presidential Commission. This would only go to make the matter of implementation much more complex. Of course, it’s not as if he has not done it before; the former Central Bank Governor left the country on 27 October, 2016 right before the findings of the initial COPE report was published.

However, if it was interpreted and argued properly, the Commission could have had the opportunity to stop him from leaving the country, as it would hinder the inquiry mandate. Seeing that the tenure of the Commission came to an end with the hearing of evidence last December, this would not have been possible unless it was predicted earlier on.

Mahendran stands large as one of the main culprits in the issue, as ruled by the Commission in its final report. While the actual report never saw the light of day, falling into the hands of the general public, we received the President’s narrative in a statement to media on Wednesday (3), President Sirisena said the list includes “relevant persons and officials who are responsible for the fraud including PTL, Arjun Aloysius and Kasun Palisena.” Accordingly, the Government is in consultation with the legal authorities in order to level charges in the criminal and civil Courts, the President said.

“The report stated that the Perpetual Treasuries Limited has earned profits through means that are not legal, with the involvement of then Central Bank Governor Arjuna Mahendran, Bank officials and some external parties,” he said.

The report stated that senior officials of the Central Bank were inactive before the former Governor.

The Commission also faulted Prime Minister Ranil Wickremesinghe for making a statement in Parliament supportive of Mahendran, because he “believed in the facts presented by Mr. Mahendran.” The Commission also wants action taken against former Minister of Finance Ravi Karunanayake, regarding the payment of rent for the ‘Penthouse’ apartment by Walt and Raw Company, owned and controlled by the Aloysius family.

Yet, last Thursday (4) Shanil Nethicumara, who allegedly threatened the initial witness- Anika Wijesuriya – in the Penthouse debacle, was released on bail. Nethicumara, who was charged with having issued death threats to Anika Wijesuriya and her sibling Vijith Wijesuriya over the telephone, for having submitted evidence against former Minister of Finance, Ravi Karunanayake, was released on a surety bail in Rs 150,000 by the Colombo Magistrate’s Court. Anika Wijesuriya, who fled the country due to certain death threats to her and her family, is currently living abroad.

implementation will take time

Undoubtedly, most of the directives given by President Sirisena, in his statement, would take time before they are in all actuality implemented. The Government has not set a deadline for it as yet. However, things seem to have started off with a bang. The President has already submitted a copy of the Commission report to the Attorney General to initiate necessary criminal or civil legal action. A minor amendment to the Bribery or Corruption Commission Act must be enacted to take legal action on the recommendations of the Commission. For this purpose, already experts at the Legal Draftsman’s Department are working on the required amendment.

A financial audit of the Central Bank and the Employee’s Provident Fund, as recommended by the Commission, will hopefully commence in the near future. According to reports, the Government is eyeing a foreign independent source for the audit. This would of course, ensure transparency and shed some light on the notorious similar frauds that had happened since 2008 under the then Central Bank Governor Ajith Nivard Cabraal.

Yet, the most major recommendation is the one that will take the most time. Under normal circumstances, recovery of money that was lost to the Government from the source that it was spent, is done through civil legal action. However, it is a time consuming method. As an alternative, the Commission has recommended that Parliamentary Legislation could be passed and the money could be recovered in a speedy manner through a Parliamentary procedure. This is a commendable method. However, before this happens, those who stand accused, those who have had a hand – nominal or otherwise – have to be dealt with.

Punishment is essential. Strict punishment is required; nothing less than the stripping them of their designations and powers. Unless this is achieved, there is a chance that recovery of losses through PTL assets might be a wasted move.

2 Responses to “Bonds Commission: An Untold Story”

  1. Dilrook Says:

    All recommended action must happen, soon.

    Recovery must happen concurrent to or before punishing crooks. There is no need for the crooks to be punished to recover the funds. That can happen independently as it is a civil action. Delaying funds recovery until crooks are punished is a sure way to allow PTL crooks to get away with the money.

    1. New laws
    2. Recovery of funds
    3. Punishment of all criminals

    These are independent action (not dependent on each other).

  2. Ratanapala Says:

    The fact that Arjun Mahendran has left the country and literally has escaped prosecution and Ajith Nivad Cabraal is still in the country ready to face any charges tells volumes for the Central Bank Bond frauds and who the culprits are?

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