COPE inquiry finds Mahendran had intervened in bond issue
Posted on June 28th, 2015


by Shamindra Ferdinando Courtesy Island

A Special Parliamentary Investigation Committee that probed the alleged insider trading and favoritism in a recent mega treasury bond issue has established Central Bank Governor Arjuna Mahendran’s direct intervention on behalf of his son-in-law Arjun Aloysius owned Perpetual Treasuries, sources familiar with the COPE process said yesterday.

The 13-member Committee named by Speaker Chamal Rajapaksa has obtained direct, documentary as well as circumstantial evidence to prove Mahendran’s role in the flawed process. The entire investigation took place in the presence of the Auditor General to ensure legitimacy to the process at the highest level these sources said.

The Auditor General is expected to prepare his own report on the parliamentary investigation.

The subject of the probe was a 30-year bond auction for Rs.1 billion on February 27. The CB received 36 offers amounting to Rs. 20 billion, it has been found. This enabled the Central Bank Governor to accept Rs. 10 billion. Earlier CB officials had given an indicative rate that interest rates of 9.5 per cent would be taken into consideration with such pre-auction advice being the usual practice.

The committee questioned both Mahendran and Aloysius regarding the alleged scam, parliamentary sources told the Sunday Island, adding that the Bank of Ceylon facilitated the investigation by furnishing records of telephone conversations to the probe team. However, the Central Bank lacked a similar recording system, sources said, adding that immediate as well as tangible remedial action should be taken without further delay. The BoC recordings are now in the custody of parliament.

The committee went to the extent of playing the records on several occasions much to the embarrassment of some of those who appeared before the committee as well as some members of the committee itself.

The committee also received documentary evidence to establish that Mahendran, contrary to specific regulations, had entered the Public Debt Department during the auction. The senior official present at the Public Debt Department at the time of Mahendran’s intervention had confirmed this.

The committee received the expert advice of former Deputy Governor of the Central Bank W.A. Wijewardene, in addition to technical advise while veteran public administrator Lionel Fernando also assisted the group.

The committee comprised Chairman of the Committee on Public Enterprises (COPE) and General Secretary of the Communist Party, D. E.W. Gunasekera, UPFA MP Susil Premajayantha, Minister of Health and Indigenous Medicine Rajitha Senaratne, UPFA MP Lasantha Alagiyawanna, Democratic National Alliance MP Sunil Handunetti, Minister of Ports, Shipping and Aviation Arjuna Ranatunga, UPFA MP Hassan Ali, Deputy Minister of Highways and Investment Promotion Eran Wickramaratna, Prof. Rajiva Wijesinha, Deputy Minister of Justice Sujeewa Senasinghe, UPFA MP Weerakumara Dissanyake, Illankai Tamil Arasu Kadchi (ITAK) MP E. Saravanapavan and State Minister of Child Development Rosy Senanayake.

Sources said that the Parliament had never before appointed a special committee comprising members of COPE to investigate a specific allegation against a senior state official.

At the onset of the investigation, the members of the committee agreed that there should be no running commentary in the media on the proceedings as it would be inimical to the unprecedented assignment handed to them. The committee also decided against interpreting evidence or exploiting the situation to target any particular individual.

Contrary to speculation, committee sources emphasized that Premier Ranil Wickremesinghe hadn’t been mentioned in the report. Sources said that the committee felt no requirement to summon Prime Minister Ranil Wickremesinghe, who held the Policy Implementation and Economic Development portfolios, though Mahendran referred to the premier.

The committee asserted that whatever the advice or instructions received from the prime minister or any other authority, the CB Governor should be accountable for his actions.

The committee recorded the statements of over 40 persons, including BoC, CB, NSB officials as well as primary dealers.

Sunday Island learns that Premier Wickremesinghe had spoken to MP Gunasekera last week regarding the inquiry, but had not sought an opportunity to appear before the committee. There had been neither a verbal nor written request from the premier’s office for such an appearance, sources said, adding that the COPE wasn’t empowered to record statements from ministers regarding investigations.

In fact, the COPE refused to accept statements from the then Ministers Pavitra Wanniarachchi and Mervyn Silva on another matter on the basis ministers weren’t allowed to participate in the process.

The investigation also looked into the financial status of Perpetual Treasuries with the focus on the period after the last presidential election in January as well as the astonishing growth of this company.

The committee asserted that the Perpetual Treasuries had benefited by Mahendran’s relationship with Aloysius. During the investigation it also transpired that former Governor Ajith Nivard Cabraal’s sister had been a director of the same firm and the UNP at that time routinely accused clandestine relationship between the Central Bank and Perpetual Treasuries.

Perpetual Treasuries was the dealer behind an earlier crisis that rocked the market – during the tenure of former Governor Cabraal – when questions were raised on the Employees Provident Fund (EPF) and the Employers Trust Fund (ETF) investing in ‘dud’ share in the stock market.

For want of agreement on the report, the committee couldn’t table it in parliament during Friday’s sittings, sources said. They added that in spite of dissolution, the report would be handed over to President Maithripala Sirisena and General Secretaries of all political parties represented in Parliament.

Perhaps, it would be pertinent to make a copy available to Ven. Maduluwawe Sobitha thero, who had been campaigning tirelessly against waste, corruption and irregularities, sources said.

The committee has made a series of recommendations to the government to rectify the situation.

Previously a three-member committee appointed by the UNP-led government cleared Mahendran of any wrongdoing while recommending remedial measures to rectify shortcomings in other institutions involved in the process. However, the government had turned a blind eye even to those recommendations, sources said.

The Commission to Investigate Allegations of Bribery or Corruption (CIABOC), too, initiated an investigation though it was yet to make headway.

5 Responses to “COPE inquiry finds Mahendran had intervened in bond issue”

  1. Ancient Sinhalaya Says:

    Catholic traitor chief gb rw’s tiger buddy mahendran is also a catholic. Of course he has to be catholic to get
    traitor chief’s endorsement. UnPatriotic Party (UNP) supporting Sinhalese donkeys (specially Buddhists)
    still want to support these traitors? Of course they will still do. The traitors think it is fashonable to
    support the traitor party. Carry on aiding the slow death of the Sinhalese and Buddhism you traitors!

  2. Indrajith Says:

    LankaCnews reports: මහ බැකුවේ අධිපති අර්ජුන් මහේන්ද්‍රන් මහතා ඊයේ රාත‍්‍රියේ සංගප්පුරුව බලා පිටත්ව ගොස් තිබේ.

    එමිරේට්ස් ගුවන් සේසවාවට අයත් EK 348 යානයෙන් එරට වේලාවෙන් රාත‍්‍රී 09.30ට පමණ සිංගප්පූරුවට ගොඩ බැස තිබේ.

    ගමන් මළු වැඩි ප‍්‍රමාණයක්ද සහිතව ඔහු එරට ගුවන් තොටුපලෙදී දුටු අප වාර්තාකරුවෙක් කියා සිටියේ ඔහුගේ සූදානම ටික කාලයක් සිංගප්පුරුවේ නැවතීමට විය හැකි බවයි.

  3. Indrajith Says:

    LankaCnews reports: නව ආණ්ඩුවේ මේ දක්වා කාලය තුල විදේශ සංචාර 40ක් ගොස් ඇත්තේ ඇමති නන්දිමිත‍්‍ර ඒකනායක හා ඔහුගේ පුත් චින්තන ඒකනායක මහතා යයි වාර්තා වෙයි.

    මේ දක්වා මෙම සංචාර සඳහා කෝටියකට වැඩි මුදලක් අමාත්‍යාංශයෙන් වියදම් කර ඇතැයි මාධ්‍ය වාර්තා කලේය. මේ අතර පාර්ලිමේන්තුව විසුරුවීමට පෙර තවත් රටවල් නවයක සංචාර සඳහා සූදානමින් සිටින බවද දැනගන්නට ඇත.

    කෙසේ වෙතත් මේ වාර්තා ප‍්‍රතික්‍ෂෙප කරන ඇමති නන්දි මිත‍්‍ර ඒකනායක අමාත්‍යාංශ ඇතුලෙන්ම ආ බොරුවක් යයිද සඳහන් කරයි.

    මේ අතර තොරතුරු වාර්තා වන්නේ ඇමතිවරයා එන මැතිවණයට තරඟ නොකර තම පුත‍්‍රයාට අවස්ථාව ලබා දීමට තීරණය කර ඇති බවයි.

  4. Kumari Says:

    Could this report be a reason for dissolution of parliament? If parliament is in session then the report comes up for discussion, it could have dragged other names too. Sirisena is doing his best to protect the traitors.

  5. Indrajith Says:

    Dissolution nullifies COPE report on bond issue
    Opposition alleges cover up:

    by Uditha Kumarasinghe

    The dissolution of Parliament on Friday has effectively squashed the release of the much- awaited COPE report on the Treasury Bond controversy.

    The Parliamentary Committee on Public Enterprise (COPE) has been investigating Central Bank Governor, Arjuna Mahendran’s alleged involvement in insider trading, favouring a particular brokering house, in the matter of a 30-year Treasury Bond issue.

    The Committees report on the investigation was not submitted on Friday, as scheduled, and with the dissolution of Parliament midnight Friday, COPE will also cease to function.

    Speaker Chamal Rajapaksa had originally directed COPE, which consists of 13 MPs, to conduct a special investigation on the Treasury Bond issue and submit a report within two weeks, by May 20.

    Opposition MPs alleged the failure to present the report prior to the dissolution of Parliament was attempt to cover up COPE findings.

    Questioned as to the delay in submitting the report, COPE Chairman, D.E.W. Gunasekara, told the Sunday Observer that though the Committee had reached approval stage for the report, they were unable to secure all the approvals needed to release the findings. According to Gunasekera, although the report was finalized at 11.00 p.m. on Thursday (25), it had to be submitted to all COPE members for final approval and signature, to make it final.

    Gunasekara said with the dissolution of Parliament, COPE and all other parliamentary committees cease to function.

    Asked as to why the report exceeded the Speakers’ initial two week deadline, Gunasekera said, the technical nature of the bond issue and the need to question over 40 people and investigate the functioning of the Central Bank’s systems made a swift compilation of the report impossible. He added, the assistance of economists, former Governors of the Central Bank and lawyers had been needed and this was time consuming.

    Meanwhile, Prime Minister Ranil Wickremesinghe addressing a ceremony in Rajagiriya on Thursday said, although he had volunteered to give evidence before the COPE Committee, he had not been called to do so.

    While the Premier acknowledged the Committee had the right either to accept or dismiss his evidence, he maintained its failure to question him at all cast doubt on its impartiality. “I offered to appear before it as the subject came under my purview,’ he reportedly told the gathering.

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