Last week Ravi Karunanayake resigned from his foreign ministerial post. However, it was not because of his alleged link to the infamous Central Bank (CB) bond scams, but pressurized by the controversy generated by an apartment his family had purchased. Astute onlookers feel the pressure for his resignation came too soon as it might shift the focus from the masterminds behind the scams. Meanwhile, two meddlesome fingers continue to watch from the shadows. That is, Maithripala Sirisena and Athul Keshap.
Many suspect Ranil Wickremesinghe, Malik Samarawickrema, Kabir Hashim, Arjuna Mahendran and Arjuna Aloysius to have played a direct role. In fact, in the first Committee On Public Enterprises (COPE) investigations headed by DEW Gunasekera, Mahendran directly pointed the finger at Wickremesinghe.
At first, he claimed he never went into the room that the auctions were taking place on that questionable day. This was contradicted by the cctv footages. Thoroughly rattled, he confessed that he succumbed to Wickremesinghe’s severe pressure to accept the post of CB Governor. Furthermore, he attested that the scam was Wickremesinghe’s idea and the latter planned and instructed its execution to the last detail.
This confession firmly placed the noose on Wickremesinghe. However, certain entities in the National United Party managed to prevent the COPE report from been presented to the Parliament on 26 June 2015.
Maithripala Sirisena at this juncture dissolved the parliament. It is being whispered in the power corridors that Sirisena was activated by the U.S. ambassador Atul Keshap. On 14 July 2015 addressing the Nation, Sirisena confessed to dissolving the Parliament to save Wickremesinghe. He claimed to have pointed to Wickremesinghe that the bond scam had become a problem to the country.
State Minister of Enterprise Development Lakshman Yapa Abeywardena on 8 August 2017 stated, the country will suffer a staggering loss in excess of Rs 1 trillion over the course of the next 30 years as a direct result of this scam. Coming on the pledge to clean corruption, Sirisena has not excuse. His interference resulted in more scams since the August 2015 general elections. This was revealed by a confidential CB report on the financial transactions of Perpetual Treasuries (Pvt.) Limited. This report was intended for the CB’s director board, but someone surreptitiously leaked it to the public domain.
According to the facts stated in this report, Perpetual Treasuries (PT) was registered with the CB on 30 September 2013 as a primary dealing company. It is the ‘youngest’ out of 16 such dealers and started its dealings on 5 February 2014. According to this report, when the other 15 dealers’ asset growth from 31 October 2014 to September 2015 was roughly 1.9pc, the asset growth of PT had grown by 160pc. During 2015, the company’s assets have grown by an astounding 375pc and by December 2015, the capital had grown to Rs. 11,075 million. During the period March 2014 to May 2016, all other primary dealers’ market growth was roughly 31pc, but PT’s growth was 1853pc. By May 2016, the nett profit of this company was Rs. 6,215 million and had earned a total profit of 83pc.
Despite the persistent rumors, Keshap and the American embassy had maintained a studied silence. This is not an idle rumor, but an allegation that places a direct black mark on Keshap and his office. This puts the credibility of the U.S. government at odds as it implies that U.S. had not only interfered with the democratic processes of another sovereign country, but also had aided and abetted the biggest heist in that country’s banking history. The U.S. government should have immediately recalled Keshap and initiated a thorough investigation and practiced what they preach to us on transparency and accountability.
Sirisena and Keshap might not have had a hand in the February 2015 bond scam. However, they cannot excuse themselves from the scams that have taken place since. Had they not interfered, and allowed the COPE report to be presented to the Parliament, the culprits would have been identified. That would have ended their political career, but also have paved the way for a new, cleaner political culture in Sri Lanka.
Instead, the country continued to be drained by these scams. Furthermore, more politicians got caught in the current of corruption as they sought to save their political bosses. Today noted as the ‘footnote group’, this group comprises of young UNP politicians like Sujeeva Serasinghe, Harsha de Silva, Harshana Rajakaruna and Ajith Perera. They participated in the second COPE investigations headed by Sunil Handunnetti. Since then, they too have been alleged to be beneficiaries to the scams.
As Handdunnetti notes, this was not an ordinary report. This focussed on the Central Bank that must maintain credibility as the authority vested with the authority to exercise functions on fiscal control in the entire country.
In an interview given to this newspaper, Handdunnetti said, “We studied the evidence, documents, data and notes for 18 months before we submitted the report. I cannot compile a report without including the facts discovered in the process of our probe. I cannot include my personal opinions in it. But the other group wanted the facts discovered in the process of our probe to be omitted from the report and instead to include conclusions drawn only from chosen evidence.
“We have exposed a massive fraud in the COPE report,” he explained. “On 27 February 2015, the primary dealers were not aware that a Rs 10 billion Bond Issue was on the cards. They did not know that the existing procedure had been completely changed. However, one of the primary dealers knew that there would be an auction. He, Arjuna Aloysius, knew that one billion rupees would be called and Rs 20 billion would be taken. Therefore, only he bid for 75% and as a result the interest increased.”
The Aloysius family name has a dark history. Arujuna’s grandfather closely associated the Premadasa government and allegedly used the connection to cheat Bank Of Ceylon Rs. 500 million. Wickremesinghe, though a prominent member of the Premadasa Government, had remained firm friends with the Aloysius family. This is obvious as young Arjuna refers to him as ‘uncle’. Further thickening the plot, Arjuna is married to Mahendran’s daughter.
Mahendran too does not have a clear history. He and Raj Rajrathnam were family friends. In 2006, Mahendran with Ravi Karunanayake visited Rajrathnam at his New York office. There he obtained USD three million, which was allegedly deposited in a Sri Lankan accounting flouting the regulations of the Central Bank and Exchange Control Act. Soon after Mahendran left Sri Lanka and became a Singaporean citizenship. Karunanayake however got embroiled in the money laundering case, which was dismissed when he became this government’s finance minister.
At the recent hearing, a witness dropped the bombshell that Aloysius paid eight months’ rent for the Monarch Residencies penthouse the Karunanayake family resided. The monthly lease rental was Rs.1.45 million. In his attempt to explain this controversy, Karunanayake revealed that Aloysius and his daughter were classmates.
Obviously, Mahendran, Wickremesinghe, Aloysius and Karunanayake have been close family friends for many years.
However, explains Handunnetti, this process got further complicated by the ‘footnote group’ when they tried to whitewash the role Mahendran as CB Governor played in the scam. Out of the 26 members in the COPE, 16 agreed to the report. The others agreed to the report but with footnotes stipulating conditions. He charged that they were trying to dilute the essence of the report.
“The UNP MPs belittled the Auditor General during the investigation,” he said. The Auditor General, when called upon to express an independent opinion on a State Enterprise’s performance, conducts a thorough study, he explained. “We may not agree with his independent opinion. But we cannot challenge it. We can express our dissent in Parliament.
“I cannot understand why the government is trying to save a couple of persons at the cost of sacrificing the Auditor General and the integrity of COPE. It has now been proved that they were instrumental in burdening the country with yet another massive financial loss and earned big money for themselves at the nation’s expense.”
He further observes, “I am perplexed about the fact that there has not been any individual or organization that has come out in protest against this shabby treatment of the AG.”
In the latest commission to investigate these scams, the revelations of Karunanayake’s and Aloysius’s connection and dealings were in reality just a stink bomb. Just before Karunanayake appeared before the commission, Keshap paid a ‘courtesy’ call on the newly appointed foreign minister. It was said to be a friendly visit, but given Keshap’s sticky fingers, it looked very much like a balancing act.
True to form, Karunanayake in his gentle, sincere tones, citing scriptures, claimed to have been hounded by the media, political opponents and the Additional Solicitor General. Yet he will “sacrifice” his ministerial post for the “honor of this august assembly…benefit of our party…new political culture we introduced…democracy of this country…continuance of our government.”
In reality though, he had to resign not because he was linked with the scams that are still under investigations, but because his testimony exposed his incompetency. He claimed ignorance to matters pertaining to the very apartment he was residing to such an extent, the ASG exclaimed relief that Karunanayake is no longer our finance minister.
To Sirisena, Karunanayake drama means one less contender. The 2015 Central Bank bond scam was considered Sri Lanka’s biggest heist. Yet to the president of the country, it gave him the rope to saddle the UNP. In the next presidential elections, UNP had better trot the way his foot nudges – or so he thinks, not realizing that they are all flies in Keshap’s web that just got stickier.