Whitewashing will boomerang on ‘Yahapalanaya’ & Country
Posted on December 5th, 2017

Courtesy The Daily Mirror

Alleged Bond Scam:

The alleged Treasury Bond scam is probably the largest financial scam to affect this country in its post-independence history. For sheer impunity and involvement of a wide spectrum of politicians in collusion with a section of the corporate sector and regulatory authorities it is hard to beat. The muted response of the opposition exemplifies the rot in the governance of this country. It is unforgivable it took place under a so-called ‘Yahapalanaya’ Government which was elected with much hope under trying circumstances to usher in ‘good governance’ after the traumatic Rajapaksa years.

The expectations included holding those concerned under the Rajapakse regime accountable for alleged (i) egregious corruption (ii) abuse of power (iii) violence to dissenters (iv) undermining democratic governance. Not only has the ‘Yahapalanaya’ Government blatantly reneged on these undertakings – but worse is its own contribution to alleged corruption and abuse of power which in terms of sheer speed exceeds the Rajapaksa regime! For example, after being elected in January 2015 the first alleged bond scam took place February 2015.

This has given a shot in the arm for a Mahinda Rajapaksa led comeback. A Deputy Minister in a KEY ministry, held by the PM, who while in the opposition was arguably the most virulent critic of alleged wrongdoing under the Rajapaksa presidency, has suddenly after almost 3 years found merit in Gotabaya Rajapaksa’s efforts in beautifying the City of Colombo”! Is this a sign of ‘coming colours’?


However, one notable gain under ‘Yahapalanaya’ must be flagged – its relative ‘openness’. This most likely isn’t due to altruistic reasons, but compulsions of ‘Realpolitik’ in the hodgepodge arrangement that passes for governance. If it was genuine, why is their lack of transparency in most things – the alleged bond scam being a prime example?

Popular Imagination  

The alleged Bond Scam has caught the popular imagination unlike no other scam in this country – and who knows there have been other egregious scams over the years. Even those who haven’t heard of ‘Bonds’ let alone ‘Treasury Bonds’ sense there has been TERRIBLE CORRUPTION involving the Central Bank of Sri Lanka. This is the reality which doesn’t portend well not only for the ‘Yahapalanaya’ Government, but also for the country at large. As a consequence, if the already PERCEIVED notion of a MEGA ‘COVER-UP’ is CONFIRMED where its ‘KINGPINS’ are shielded and only some who have ‘FACILITATED’ it are exposed, it will create widespread disenchantment like no other and will further undermine the rule of law which already is in a pathetic state. Let us face it, when people get further confirmation that daylight looting of the public purse by high ups in the political, bureaucratic and corporate sectors is tolerated with such brazen impunity, is it reasonable for the masses to have respect for the rule of law? This may well be the tipping point. It is obvious that without the ‘rule of law’ there can never be any meaningful socio-economic development.

It must be flagged that the ‘rule of law’ is also undermined if there is no social stability as witnessed on a regular basis due to our collective inability to ensure social justice and ethnic and religious peace in the context of a multi-ethnic, multi-religious and multi-lingual country. In its absence it exacerbates intolerance as witnessed recently in Gintota and earlier in Aluthgama and the harassment meted out to the already traumatized Rohingya refugees who were in Sri Lanka merely on transit.

‘Core’ of the Alleged Bond Scam 

At the CORE of the alleged Bond Scam is:

1) The Central Bank of Sri Lanka (CBSL), the issuing agency for Treasury Bonds which normally falls under the Ministry of Finance was brought under the purview of the Prime Minister.

2) ‘CONFLICT OF INTEREST’ arising from then Central Bank Governor Arjuna Mahendran’s son-in-law, Arjun Aloysius – owning/controlling PTL (Perpetual Treasuries Limited) – a Primary Dealer.

3) Arjuna Mahendran – a foreign national was HANDPICKED for the position of Governor, CBSL by the Prime Minister although he was aware of the ‘Conflict of interest’. The PM himself CONFIRMED this in his affidavit and while testifying before the Bond Commission (PCoI).

4) The PM continued to have Mahendran as CBSL Governor although he was aware that Mahendran had RENEGED on his ‘assurance’ to him that his son-in-law (Arjun Aloysius) will sever all links with PTL PRIOR to his appointment as CBSL Governor.

5) The PM robustly defended and endorsed Mahendran for a second term despite the widespread perception of Mahendran’s role in the alleged Bond Scam.

6) Sadly, the PM’s affirmation in his affidavit to the PCoI: Upon the formation of the new Government in January 2015 there was a general consensus within the Government that Mr Mahendran should be appointed to the post of Governor of CBSL.” was NOT PURSUED by the PCoI.

7) Unlike in the case of the other witnesses, the PM was given questions in ADVANCE by the PCoI to enable him to provide answers by way of affidavit.

When people get further confirmation of looting of the public purse by high ups is it reasonable for the masses to respect law?

witnesses, the PCoI decided to invite the AG himself who wasn’t involved in the investigation up to that point to personally lead evidence for the FIRST TIME. Up to this time, Messrs. Dappula de Livera and Yasantha Kodagoda – Senior Additional Solicitor General and Additional Solicitor General respectively lead evidence.
9) Unlike in the case of the other witnesses who included former Finance Minister Ravi Karunanayake who were GRILLED by Messrs. Dappula de Livera and Yasantha Kodagoda, limited questions were posed to the PM. The PM was at the PCoI reportedly for less than an hour to clarify matters arising from his affidavit
To adapt what Lady Macbeth said: All the perfumes of Arabia will not sweeten” these immutable FACTS.

Incidental Issues  

Crucial issues of governance INCIDENTAL to the alleged bond scam thrown up by witnesses at the Bond Commission and not even on the radar include:
Tax Evasion/Money Laundering?


A Senior Dealer of the Arjun Aloysius owned PTL (Perpetual Treasuries Limited) disclosed at the Bond Commission that millions” encashed by him were several times” left on PTL CEO Kasun Palisena’s chair”.

Nuwan Salgado, Chief Dealer of PTL disclosed to the PCoI that on the instructions of PTL CEO Kasun Palisena” he maintained a record of payments to informants” code named as


B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake’s family in his testimony to PCoI reportedly disclosed:

The Rs.145 million used in making the initial payment of Rs.16.5 million and thereafter to pay the monthly loan installment of Rs.11 million” for the purchase of the Monarch Residency Penthouse in Colombo by a company owned by Minister Ravi Karunanayake’s family has no origin nor has it been accounted for”
The question arises of the rationale to obtain a loan from Seylan Bank in circumstances where cash was readily available?

Sinniah also reportedly told the Bond Commission:

Chairman ‘Lakshmi Kanthan’ who resides in Britain had arrived at the Company on two occasions in February 2016 and 2017 and dumped cash amounting to Rs.145 million in the Chairman’s safe”

it had not been supported by any documentation or receipt issued to Mr. Kanthan neither were there any entries in the GTLPL accounts books regarding these two cash inflows”

Should these not concern the Central Bank and the Inland Revenue Department? If not why?

Bank Malpractice?

PABC Bank   

It was revealed at the PCoI that PABC (Pan Asia Bank) was an intermediary in secondary market transaction between EPF and PTL”

R. A. Benedict Dias, Deputy General Manager of PABC disclosed to the Bond Commission that on the instructions of the former chairman of PABC, Nimal Perera, the decision to act as an intermediary was made”

It was also revealed at the PCoI that Saman Kumara, the then dealer for the EPF at the CBSL had allegedly 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 these not be of interest to the Central Bank’s ‘Bank Supervision Department’?

PEPs as Bank Directors?  

Politically Exposed Persons (PEPs) are at the centre of the worldwide efforts for the prevention of money laundering,

It was revealed at the Bond Commission that B.R. Sinniah, Chief Financial Officer of GTLPL (Global Transportation and Logistics Pvt Ltd) said to be controlled by former Finance Minister Ravi Karunanayake’s family was appointed to the Board of Directors of the BoC in 2015 by the then Finance Minister Ravi Karunanayake for a period of one year”.

Ravi Karunanayake being a PEP is a no-brainer. B.R. Sinniah too is clearly a PEP consistent with Sri Lanka’s definition of a PEP which conforms to the FATF definition:

Sri Lanka is a member of the ‘Asia/Pacific Group on Money Laundering’ (APG) which is an Associate Member of ‘The Financial Action Task Force’ (FATF)
In the context of the Central Bank itself postulating that even the mere Opening of accounts for ‘politically exposed persons’ (PEP) should have authorization of senior management.” how could a PEP be a bank ‘director’?

Under no circumstances is it suggested that B.R. Sinniah is engaged in any criminal activities. It must be appreciated that not all PEPs are involved in criminal activities.

The point being made is that laws and guidelines are there for a purpose and must be adhered to. There are also other clear instances of PEPs being ‘directors’ of banks in Sri Lanka which is not the focus of this article.

Our Central Bank is evidently turning a blind eye to these transgressions.

There are also other clear instances of PEPs being ‘directors’ of banks in Sri Lanka which is not the focus of this article


Things are so bad in Sri Lanka that the rule of law was SELECTIVELY applied NOT TO COMPEL Arjun Aloysius – owner of PTL to give evidence before the Bond Commission on the basis it would incriminate him since apparently in his own mind there was a high probability he would be prosecuted. The same rule of law was MUTE in taking the next steps that could have been taken INDEPENDENT of the report of the Bond Commission in the context of the damning evidence produced at the PCoI. It also indicates that the relevant regulatory and law enforcement agencies were on SLEEP MODE until the bond commission was appointed. This tardiness in taking necessary legal action has resulted in a situation where as disclosed by the Prime Minister during his testimony at the Bond Commission, Aloysius was even able to be present at one or two parties” where he was in a position to converse with the PM himself!

As I see it, the alleged Bond Scam had the MASTERMINDS and the FACILITATORS. I trust those concerned will not miss the wood for the trees! Of course, the ‘facilitators’ too must be held accountable. What we have still not convincingly seen is the QUANTIFYING of the looted monies which must be RETURNED to the exchequer.

The diplomats and news agencies in Colombo are no doubt taking note of the ground reality in Sri Lanka. Is it any surprise that with the exception of the controversial Chinese investments which are largely driven by geo-political considerations, ethical FDIs are few and far between?

Leave a Reply

You must be logged in to post a comment.



Copyright © 2022 LankaWeb.com. All Rights Reserved. Powered by Wordpress