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• Sirisena wilts under pressure, Rajapaksa loyalists dancing in the rain as the clock is turned back
• UNP exposes itself to corruption charges over bond issue
• UNP, civic action groups and international community shaken by President’s about-turn

Six months after being voted out of the presidency, Percy Mahendra Rajapaksa has bounced back to become a candidate for the United People’s Freedom Alliance (UPFA) at the August 17 parliamentary elections. He will choose from three different districts — Gampaha, Kurunegala or Ratnapura.

“I was willing to agree to anything that would not divide our party. We will ensure a victory and protect our country,” Rajapaksa told the Sunday Times.  His successor, President Maithripala Sirisena, had earlier ruled out any role for him at the polls. The doors of the UPFA were thrown wide open to him on Friday. His close allies are now striving hard to persuade Sirisena to let Rajapaksa lead the campaign, though he has refused to name Rajapaksa as the prime ministerial candidate. They believe that is an issue to be tackled after the polls.

These developments saw dark clouds swallowing up the ‘rainbow coalition’ that emerged after the presidential election of January 8. Some 40 political parties and civil society organisations had led a turbo-charged campaign to ensconce Sirisena as the sixth Executive President of Sri Lanka. To say they were disappointed would be an understatement. They were livid. “It is unbelievable that such a thing could happen. In politics, nothing is impossible. We will have to wait and see,” said a shocked Minister Lakshman Kiriella, Leader of the House and Senior Vice President of the United National Party (UNP), after the UPFA decision was announced. Sirisena swore in a minority UNP Government after he won — an election pledge he had made. Most UNPers were strongly critical of him now. Their leader, Prime Minister Ranil Wickremesinghe, told close friends he had met Sirisena at a religious event hours before the announcement. Sirisena had told him that Rajapaksa would not be given nominations. There was disbelief in many quarters as a euphoric wave and jubilation shifted from one camp to another within just six months. Members of the Colombo-based diplomatic community, particularly those from the West, were shocked and even shaken. So was former President Chandrika Bandaranaike Kumaratunga who persuaded Sirisena to contest the presidential poll.

Allies livid over Sirisena’s decision
As a UPFA trio continued silent diplomacy with Sirisena in the past week, smaller partners of the coalition, privy to this dialogue were incensed. The Jathika Hela Urumaya (JHU) was then sounding out like-minded parties and groups to form a new alliance. Its efforts intensified after news broke that Rajapaksa would be a UPFA candidate. Now, the JHU wants to take on both Sirisena and Wickremesinghe. A few others in the Sri Lanka Freedom Party (SLFP) either want to join this proposed alliance or become members of the UNP. Among those mentioned as possible new members are Arjuna Ranatunga, S.B. Nawinne, M.K.A.D.S. Gunawardena and Nandimitra Ekanayake. Nawinne is expected to do so today.

J.C. Weliamuna, a human rights activist and a key figure behind the Government’s tardy anti-corruption drive, lamented, “It’s inevitable that Mahinda Rajapaksa will stop all investigations if he wins. He will want to make sure his family is protected. We have seen horrendous human rights violations under his rule. There was a collapse of law and order. Journalists were harassed. People should remember all this and vote him out.”

The Ven. Maduluwave Sobitha Thera, leader of the National Movement for Social Justice, declared, “We have not been formally informed of the decision.” He added that President Sirisena should make “a clear statement.” Nirmal Devasiri, spokesperson for the Federation of University Teachers, said. “We brought Maithripala Sirisena to power by helping to defeat Mahinda Rajapaksa. He is now bringing him back. This is a paradoxical situation. The one who was defeated and the winner are going to work together. Sirisena is going against the wishes of the very people who voted for him.”

However, one of the UPFA leaders, parliamentarian Dinesh Gunawardena (who heads the Mahajana Eksath Peramuna – MEP) and a member of the team that held the last round of talks with Sirisena, welcomed the move. “It brings tremendous strength to UPFA forces and unites all factions within the alliance. We are now more confident of a victory at the elections,” he told the Sunday Times. He said the President is the leader of both the SLFP and the UPFA. It is only natural that he would want to forge unity particularly with the elections around, he added. Another UPFA partner, Wimal Weerawansa, leader of the National Freedom Front (NFF), said a so-called 100-day work programme was over a long time ago. Both the President and his predecessor had personal differences but have come together to take the country forward. “The victory that was achieved by fooling the people through falsehood is now laid bare,” he said. “The UNP wanted to divide us, but failed,” pointed out Vasudeva Nanayakkara, leader of the Nava Sama Samaja Party (NSSP), another UPFA partner. Most of the UPFA leaders together with Rajapaksa were at the official residence of Western Province Chief Minister Prasanna Ranatunga till late Friday night. There was plenty of light hearted banter over the ‘success’ of their efforts.

The move to allow Rajapaksa to contest the parliamentary elections on the UPFA ticket was the result of a behind-the-scenes dialogue in the past days. It was carried out by Opposition Leader Nimal Siripala de Silva, UPFA General Secretary Susil Premajayantha and SLFP General Secretary Anura Priyadarshana Yapa, with President Sirisena. This was a follow up of the meeting Sirisena held with Rajapaksa on Thursday (June 25) night at his Wijerama Road residence. The outcome was a visit by the trio for talks with Sirisena last Monday. As revealed last week, this was the understanding the President and his predecessor had reached. They wanted to pursue a quiet dialogue. This was whilst different parties made different claims, including denials of any talks.

During a lengthy session that lasted more than two hours, they discussed several issues. The main focus was on the role of Rajapaksa at the upcoming parliamentary elections. The trio were unanimous in their view that if they were to win the parliamentary elections, Rajapaksa would have to play a role. Sirisena had ruled out the possiblity of the former President being made the prime ministerial candidate. It was both Yapa and Premajayantha who insisted that Rajapaksa should be allowed to contest from any district. This indeed was a dilemma for Sirisena. Here were the two General Secretaries, one for the UPFA and the other from the SLFP, taking up a strong position for Rajapaksa. It was coming at a time when the President had alienated the support of the majority parliamentarians in the UPFA. Most of them were accusing him of leaning heavily towards the UNP, allegedly ‘ignoring its misdeeds’ and thus endangering the UPFA’s prospects at the parliamentary elections. Sirisena’s close advisors even feared the two General Secretaries, who wielded all the legal power, could throw their lot with Rajapaksa and legitimately grant nominations to those of their choice. In such an event, removal of them could become a legal battle in courts. Sirisena was receptive to Rajapaksa being allowed to contest. Of course, he made clear there would be no conditions attached. He said he was not compromising on any matter since he contested under a different symbol. Since then he had become leader of the UPFA and the SLFP and it was now his responsibility to conduct its affairs. So he had to heed their calls and decisions. The talks had to be adjourned for a while. This was to allow Sirisena to attend Premier Wickremesinghe’s Iftar party at “Temple Trees.” When it resumed, the trio were to hint that they may even be forced to give up politics if they failed to put forward only a single list of candidates that included Rajapaksa. There was also the issue of nominations being denied to some parliamentarians. The names mentioned include Mervyn Silva, Duminda Silva and Sajin de Vass Gunawardena.

Rajapaksa in Kandy
That Monday evening, the trio drove to Kandy. Rajapaksa was on a visit there and a meeting followed at the residence of parliamentarian Lohan Ratwatte, son of the late Anuruddha Ratwatte. After Rajapaksa was briefed, he began making telephone calls. He asked MEP leader Dinesh Gunawardena for his views. He was in favour. Wimal Weerawansa was asked. He was agreeable too. It was Basil Rajapaksa, who used a mobile phone to reach Udaya Gammanpila who was on a tour of France and Italy. He sought details and was hesitant, but gave his nod. Vasudeva Nanayakkara said that Rajapaksa should work on an agreement. It was agreed that these UPFA leaders would meet on Tuesday night when Rajapaksa returned to Colombo. At that meeting he briefed them and a consensus was arrived at.

In that backdrop, a five-member committee appointed by Sirisena (soon after his meeting with Rajapaksa last Thursday) went to work. They were consulting UPFA partners separately to obtain their views on Rajapaksa’s candidacy and related issues. The first meeting last Monday was with members of the Communist Party led by D.E.W. Gunasekera. They said they were in favour of Rajapaksa’s candidature. The five-member committee comprised Sarath Amunugama, Thilanga Sumathipala, Lakshman Yapa Abeywardena, S.B. Dissanayake and Reginold Cooray. Amunugama later said they had handed in a report on how accord could be reached with parties within the alliance. “We recommended that every effort should be made to bring together all members of the alliance, irrespective of differences of views, to contest parliamentary elections,” Amungama declared at a news conference. He said the committee had talked to 17 parties and there were eight more to be spoken to. They were also talking to civil society groups.

On Wednesday the trio — Susil Premajayantha, Anura Priyadarshana Yapa and Nimal Siripala de Silva — met Sirisena to convey that Rajapaksa was willing to be a candidate consequent to their discussions. Sirisena was to reply that he would consult others in the party that same night and would get back to them. There was some confusion over the next meeting. The trio turned up at the Wijerama Mawatha residence to find Sirisena had shifted to his new official bungalow at Paget Road. It is located less than a hundred metres from the Senior Police Officer’s mess.

Finality was reached when the trio met Sirisena on Friday. He was shown a copy of a draft statement that was to be issued by Premajayantha as General Secretary of the UPFA. The President read through and gave his approval. This is what it said:
“As discussed at the United People’s Freedom Alliance (UPFA) party leaders meeting on July 02, 2015 presided over by the leader of the Sri Lanka Freedom Party and the UPFA, President Maithripala Sirisena, it was decided to grant nominations to former President Mahinda Rajapaksa to contest the upcoming 2015 Parliamentary elections under the UPFA. Accordingly, in the next few days nominations will be prepared.

“Soon after nominations are completed the UPFA elections operations committee, with the participation of the political parties will commence its activities. Our hope is to achieve victory at the 2015 Parliamentary elections contesting under a broad people’s front with the progressive forces of the SLFP and the UPFA.”

As a UPFA candidate, Rajapaksa will now take part in a rally in Anuradhapura on Thursday (July 9). Last Wednesday, from his ancestral home at Medamulana, he announced his candidature but did not declare on whose ticket he was contesting. He did indicate that all the UPFA leaders were with him that day and in support of him coming forward. There was no finality by then, however, to the dialogue under way with Sirisena. The Medamulana event was telecast live over Carlton Sports Channel (CSN) with which Rajapaksa’s sons are closely associated. Not all of the 87 MPs who are supporting him turned up. There were, however, some new faces like Neomal Perera, Gunaratne Weerakoon and Nirmala Kotelawala.

A reference in these columns last week that a dinner hosted by Western Province Chief Minister Prasanna Ranatunga at his official residence was originally planned to be held at the Water’s Edge in Battaramulla had drawn a response. Its General Manager Rohan Fernandopulle says, “Although inquiries had been made to host the dinner…….. due to unavailability with regards to prior bookings, the hotel could not accommodate the request. However, an available time was immediately suggested….” Parliamentarian Mahindananda Aluthgamage who made the arrangements for the dinner told the Sunday Times “the claim is utter rubbish. They accepted our booking made through my Secretary Ovinda Sikuradikpathi. It was for 120 guests. We even printed the cards with the venue mentioned. When they learnt Mahinda Rajapaksa was coming, they backed out. They said they could not allow it. They are now making misleading statements.”

COPE report and the UNP
Yesterday, UPFA leaders were busy preparing outlines for their polls campaign. As reported earlier, among the main issues they claim are “threats to national security.” This is the result of the Government’s talks with the Global Tamil Forum in London and related issues. Another is the Central Banks Treasury Bond scandal. Details of this scandal have entered the public domain.

Here is how the issue played out in the past days. In the hours before dissolution of Parliament on Friday June 30, Communist Party leader D.E.W. Gunasekera, Chairman of the Committee on Public Enterprises (COPE), was very busy. He wanted to lay before the public the details of the issue at the Central Bank of Sri Lanka (CBSL) over the Treasury Bonds. Gunasekera had worked on the interim report by a Subcommittee which he had chaired. The draft was being finalised on Thursday night (June 30) for presentation to Parliament the next day, Friday (June 31).

Ironically, five parliamentarians who were among the 13 members did not turn up in Parliament that night to place their signatures. Of the eight present, three were from the United National Party (UNP) and the fourth from the UNPs ally, the Sri Lanka Muslin Congress (SLMC). They raised strong objections. They argued that they had not studied it. The UNP foursome had their way. Chairman Gunasekera telephoned the Speaker and they agreed it would be presented on July 7 – the same day the House was billed to take up the vote of No Confidence against Finance Minister Ravi Karunanayake. However, Parliament was dissolved ahead of that.

The foursome who objected were Sujeeva Senasinghe, Rosy Senanayake, Eran Wickremeratne and the SLMC’s Hassan Ali. Those who wanted to ensure that the report is presented in Parliament were Lasantha Alagiyawanna, Weerasumana Dissanayake and Rajiva Wijesinha. Also in favour was Chairman Gunasekera. “I had to listen to the dissenting views since this is not my own report,” lamented Gunasekera. He told the Sunday Times, “the UNP is saying I wanted to bring it to the House (Parliament). The SLFP is saying I deliberately delayed it.” He said he took no sides and did what he believed was an honest job. See Q & A in a box story on this page.

Those parliamentarians who absented themselves and thus left a division of four on either side were Rajitha Senaratne, Arjuna Ranatunga, Susil Premajayantha (who was away in the US), Sunil Handunetti from the JVP which has been very vocal against corruption and E. Saravanapavan of the TNA. As a result, copies of the COPE draft only ended up in the hands of members of the Subcommittee. Copies have since been widely circulated.

A copy of the 19-page document obtained by the Sunday Times makes indictments on the Central Bank Governor Arjuna Mahendran and his son-in-law Arjun Joseph Aloysius. It has held that Governor Mahendran and Perpetual Treasuries Limited, a company held by his son-in-law Arjun Joseph Aloysius (who resigned two months before the transaction) but still co-owner of the holding company “had a related party transaction.” Details of the report appear in the Business Times section today.

• Some highlights:
•  ”Senior management” of the Central Bank have given verbal instructions to increase the Treasury bond issue ten times, from one billion rupees to Rs 10.058 billion. There is a Minute that the “Governor instructed to raise funds up to Rs 10 billion taking into consideration additional fund requirement of the Government.”
•  Governor Mahendran visited the Public Debt Department of the CBSL on two occasions on February 27 when the Auction took place. This has never happened before. He had visited around 10.45 a.m. whilst the bidding process was going on and remained up to the time of closing. (Also see Governor Mahendran’s comments in the Business Times today.)
• The Monetary Board of the CBSL has not approved the increase in the amount of Treasury Bond to Rs 20,708. They had only ratified it after the issue was carried out.
•  Though Perpetual Treasuries Limited has submitted bids for the Treasury Bonds previously, their bids have not been accepted in large amounts prior to February 27, 2015. However, after this date the majority of the bids placed by them were a success.
• Perpetual Treasures Limited had shown extraordinary performances after February 27, 2015. The maximum amount of the bid offered by them before was Rs 250 million.
•  Perpetual Treasuries Limited is a fully owned subsidiary of Perpetual Capital (Pvt.) Ltd. Geoffrey Joseph Aloysius and Arjun Joseph Aloysius are the shareholders, with equal shares, of Perpetual Capital (Pvt.) Ltd. Arjun Joseph Aloysius was a Director of Perpetual Treasuries Limited. He resigned on January 16, 2015. He is the son-in-law of the Governor of the CBSL. Since Perpetual Treasuries Limited is a fully owned subsidiary of Perpetual Capital (Pvt.) Limited, the interest with Perpetual Treasuries Limited with Arjun Aloysius cannot be ruled out. Thereby it is evident that the Primary Dealer Perpetual Treasuries Limited and the Central Bank had “a related party transaction.”
• Ms Shiromi Noel Wickremasinghe was appointed as a director of Perpetual Treasuries (Pvt.) Ltd. on December 23, 2013. She continued in office till March 9, 2015. She is the sister of the Central Bank’s former Governor (Ajith Nivard Cabral). Therefore, it was observed that there could have been related party transactions between the Central Bank of Sri Lanka and Perpetual Treasuries Limited at that time also.
•  The behaviour of Perpetual Treasuries Limited on the Bond issue, before and after, showed suspicious conduct. They had a capital of Rs. 1,20.84 million. According to Public Debt Department Circular the company could bid only up to 12.5 times of the capital. That amounted to approximately Rs 12,760.60 as at February 27, 2015. It had bid for Rs 15 billion which is 14.9 per cent.
• During the last few minutes of the auction time, Perpetual Treasuries asked the Bank of Ceylon to bid on its behalf. This is the first time that a Primary Dealer had asked another Primary Dealer to bid on its behalf. That request was at 10.48 a.m. with just 12 minutes for the issue to close. The Bank of Ceylon had asked for an extension of ten minutes.

The COPE subcommittee report was the outcome of a vote of no-confidence moved by opposition MPs against Governor Mahendran. It was listed in the Order Book without a date being allotted. Speaker Chamal Rajapaksa was of the view that matters in the motion should be investigated by a Subcommittee of the COPE. After a preliminary meeting on May 22, the COPE held sittings from May 29 to June 23 where oral, documentary and audio evidence were examined. Officials of the Central Bank, Treasury and Bank of Ceylon were among those who testified. The Commission to Investigate Allegations of Bribery or Corruption is also investigating a complaint against CBSL Governor Mahendran.

UNP targets DEW
As is clear from the interim draft report of the COPE, the UNP Government appears to have shot itself in the foot. At first it appointed a three-member team of lawyers who were not conversant with Treasury Bond issues. Their report was delayed for more than a month until the Opposition mounted pressure. When it was released, a provision not in the report that the Governor had no direct link to the Treasury Bond issue found a place in a Government news release. Now, even after dissolution making the COPE investigations officially invalid, some UNPers are targeting the COPE Chairman perhaps in the belief that the issue would blow over. To the contrary, they are re-igniting it with many asking why the critics were exceedingly sensitive over any probe. That no doubt lends credence to public perceptions that something is rotten.

President Sirisena, who declared ahead of the presidential election that he would remain neutral, has thrown in his lot with Rajapaksa. That indeed has jolted the UNP which was confident of a comfortable victory with a divided UPFA. The UNP faces a bigger challenge at the polls. Sri Lanka faces an even bigger challenge.

D.E.W. Gunasekera DEW says he acted independently on bond issue When a motion of impeachment against then Chief Justice Shirani Bandaranaike was before Parliament, former President Mahinda Rajapaksa telephoned parliamentarian D.E.W. Gunasekera to seek his vote. Gunasekera, Leader of the Communist Party, declined. “Sir, if you want you can sack me,” he said. With acceptances from both ruling and opposition parties, he has served as the Chairman of the parliamentary Committee on Public Enterprises (COPE) for four years. Just last week, he chaired a COPE Subcommittee that probed the Central Bank Treasury Bond scandal. However, his Committee’s report did not see the light of day in Parliament. Gunasekera spoke to the Sunday Times. Here are excerpts from the Q & A: ON THE SUB COMMITTEE PROBE: This is not a normal investigation. This is on a decision made by Speaker Chamal Rajapaksa after a vote of no-confidence was moved against Central Bank – Governor Arjuna Mahendran. It had called for his removal. The Speaker took up the position that the contents of the motion warrants an inquiry. He said he could not permit a debate without establishing the facts. Therefore, he announced in Parliament that he would direct the COPE to inquire into it. I was asked to investigate and report. The Speaker said that the COPE itself should set up a Sub Committee. There were 13 members representing all political parties. I was required to forward a report before June 12. It was humanly impossible. This was a technical subject. The Speaker was informed. It was only on Wednesday June 24 that we finished hearing witnesses. There were some 30 of them. I was assisted by the Auditor General, two Chartered Accountants from the Auditor General’s Department, a lawyer, retired Central Bank Deputy Governor D.A. Wijewardena, an ex-civil servant of the Ministry of Public Administration, Deputy Secretary General of Parliament, Director, Legal Enactments of Parliament and Secretary to the COPE. THE FINAL MOMENTS ON THURSDAY (JUNE 30): There was talk that Parliament would be dissolved. I told the Committee our investigations could become invalid. I told them we should therefore present an interim report. We started analysing the evidence. We were able to finish the final draft only on the previous (Thursday) night at 11 p.m. (i.e. before Friday night’s dissolution). We were not conducting sittings on days when Parliament met. We had to do that too. For the first time in history, the Auditor General sat there for one full month. At that time there were only eight members present. Four including me were in favour of it being presented. The other four wanted more time. Their argument was that they had to read the draft. I contacted the Speaker and told him of the position. He said we can then present the interim report on July 7. On Friday (June 26) night Parliament was dissolved. ON VARIOUS ACCUSATIONS: This matter has been unnecessarily politicised. Prime Minister Ranil Wickremesinghe has remarked that he had not been summoned to give evidence. There was no need for me to summon him. He is not involved. The Governor of the Central Bank made a statement to the Sub Committee that the Prime Minister had given him a direction that he needed money and to go in for an auction. Even if I was the Prime Minister I would have done the same thing. The issue here is how it was done. Moreover, according to the guidelines of the COPE I cannot summon ministers. I cannot question them on policy matters. Such matters have to be raised in the House. I never wanted to politicise the process. COPE started in 1979. In the last four years I was associated, I have submitted six reports. I have examined all the 234 institutions thrice. ON THE URGENCY FOR THE REPORT: There was an urgency. The findings were required by the Speaker for the No Confidence debate against the Governor. We have not found anyone guilty. We have laid bare the facts after a thorough investigation. The material can even go before the Supreme Court. The Governor says at the time of the auction he was in the auction room and gave directions. Who instructed him to do this? When the Governor went to the Central Bank, he removed people and put new persons. A lady was in charge of Public Debt. She knows nothing. She was in the welfare department before. Yet I admire her. She admitted that the Governor has instructed her. She gave it in her own hand writing that he gave the order. He had walked into the auction room. We asked the Governor. He said “yes I gave the order.” VIOLATION OF PROCEDURES: The Tender Board should recommend auctions. It should say what the position is. Then the Governor has the power to decide. Here, before the recommendation comes to him, he increases the amount of the Bond issue. The market was unaware. There are a number of other auctions. The interest rate there goes up from nine to ten percent. Between ten and twelve percent all are given to his son-in-law Arjun Joseph Aloysius. He committed the Government to Rs. 562 million. This is hypothetical. It may vary over the thirty years. The Governor told COPE that Prime Minister Wickremesinghe gave that policy directive and he carried it out. I did not want to drag the Prime Minister. As a Minister, he wanted money. It is the Governor’s duty to follow norms, legal and otherwise. The other thing is that there is no decision by the Monetary Board to go for auctions. It was not a collective decision. THE INTERIM REPORT: The last interim draft report was prepared at 8.45 p.m. on Thursday June 30 in Parliament. Therefore, this disproves wild allegations that it was drafted elsewhere. All the records are available. This is the first time in the history of the Central Bank that such a thing has happened. I made clear on the first day of the Sub Committee sittings not to make this investigation one like that of the then Chief Justice Shirani Bandaranayake. I also said not to leak any information to the media. I wanted to conduct an impartial investigation. Everyone had to take an oath of secrecy. The Speaker told me to select members for the Sub Committee. I did not do it. I got the entire COPE to meet and agree. If I was biased or had an agenda, I could have manipulated it. I did not want to politicise it. Instead of the wrong doers I probed, why am I made a target. Those doing it should know better.