CENTRAL BANK BOND SCAM AND MISLEADING THE PUBLIC PART 2
Posted on February 10th, 2020

BY EDWARD THEOPHILUS

TV programs conducted by TV companies and participants of the programs including Mr. Sunil Hadunneththi did not explain point by point to people and I have a reasonable question whether they wanted to mislead the public talking unknown and irrelevant matters rather than presenting the real picture of the central bank bond scam.

Many additional points than raised in part one the article could be raised from the Central Bank Bond scam and the audit process as follows.

•          Did the forensic audit process reveal that Mr. Ajith Nivard Cabral gained financial benefits from bond issues during his period? This is a controversial question and when there was a direct placement which was governed by the central bank how it has happened, Mr Hadunneththi should have clearly explained to the public.  There is no evidence that there were over purchases during the tenure of Mr Ajith Nivard Cabral and the effective interest rate was changed by him without disclosing to the monetary board.  I watched a TV program Mr. Hadunneththi was neither explain the relevant points nor described the factual incidents with evidence happened during the tenure of Mr. Cabral.

•          Interest rate and the exchange rate of Sri Lanka had been changed since the year 2000 and it should be accepted that the central bank has not been able to control the interest rate and exchange rate as expected by the policymakers of the country and the original law of the establishing the central bank of Sri Lanka.  It was not a problem with Mr. Cabral alone.  The executives who were responsible for the roles need to get the blame. There have been several governors since 1951 including Mr.NU.Jayawardane.

•          The clear fact in relation to the central bank bond scam is Perpetual Treasures have gained a large sum of profits at the cost of the government and it was a clear case of undue enrichment.  How the excess profit was shared and what was the relationship between previously mentioned over-borrowing by issuing bonds and related interest rate decisions. Did perpetual Treasuries interpret how a large sum of profit made and why the company distributes profits to various parties including UNP candidates of the 2015 general election?

•          It is quite clear that Perpetual Treasuries gained a higher volume of profits from bond deals eyewash of the government authorities and public. It also says that the perpetual treasuries gave money to UNP and its members for election expenses.  It shows that those who gained financially and other benefits also guilt to bond scam and the government needs to act against them.  It seems that the bond scam was organized crime.

The debate of bond scam also revealed that the central bank has failed to discharge its role as the regulatory authority of the financial system of Sri Lanka. The governor of the bank has spent over-time to engage in playing the role of a market player by engaging in investment activities of EPF than playing the role of the regulatory authority. The over-spending time for EPF management didn’t protect the right of EPF members and a huge to created to innocent employees of the country.

The other issue was Perpetual treasuries borrowed money to settle bonds from Bank of Ceylon, Peoples’ Bank and National Savings Bank. As the person who drafted the credit policy manual of the Bank of Ceylon, I know that the Bank of Ceylon cannot lend money to a customer in the corporate market.  How did it happen?  Did perpetual treasuries give incentives to trading bank executives?  When I was training Bank of Ceylon executives for lending decision making, I gave an example from various banks in the world how company executives rob banks and advised bank executives to not to engage such malpractices.  I wrote a case study, Contrite Contractors, to point out issues.  Did Bank of Ceylon follow risk acceptance criteria providing lending support to Perpetual Treasuries?

Neither Mr. Hadunneththi nor Mr. DEW Gunasekera nor Television precentors were concerned about the major role of the central bank, which is the regulatory authority of the financial system of Sri Lanka and how Mr. Arjun Mahendran failed to play the role as the chief of the regulatory authority.  If Mr. Arjuna Mahendran showed he was an inefficient manager did he play a responsible executive of an international bank?  Was his bio-data true information or fabrication to mislead the public.  Did the government of Sri Lanka check references before he recruits to the position? They are critical points to the management world.  Did he play the role of PAT GAME at CITI published in INSIGHT Magazine?

When he was recruited to the governor position a Sinhala newspaper published an article about Mr.Arjuna Mahendran, which was very impressive information about him and after reading the article, I had a suspicion about his qualifications. The author of the article was a person who went to the court against the change of Mr. Gotabaya Rajapaksa’s citizenship before the presidential election in 2019 and the author mentioned in the article, he was a doctor or a Ph.D. holder and why did such an educated person write fabricated information.  My feeling was Mr. Arjuna Mahendran a philosophy degree, not a degree in accounting, economics or management or business and why HSBC offered him the Chief Executive position?  HSBC is a refuted bank in the world and I am sure that HSBC would not give a higher post to a cunning person. It has superior recruitment methods.

The president of Sri Lanka must expedite taking legal actions against responsible people to the central bank bond scam   

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