Sri Lanka’s Central Bank – then and now
Lajjai, Lajjai, Lajjai. Wili Lajjai. Yes, as a person who had been in close association with the Central Bank (CB), I am ashamed. I am truly ashamed of the scandalous situations that the CB had plunged into willingly or otherwise during the last decade or so.
The CB that I joined in the year 1960, as told by its Secretary Jansz, was a unique institution. It was administered by the best of the best in the country, adorned at the top by men of high intellect like John Exter, Sir Arthur Ranasinha, D.W. Rajapathirana, William Tennekoon, H.E. Tennekoon and Dr. H.N.S. Karunatilleke to name a few. They were learned men of unmatched high intellect, integrity and character and highly respected cultured men. The Bank under them was un-spoilt and spotlessly clean. Under such Governors we stood tall, we stood recognised and we stood respected in any gathering. The others like A.S. Jayawardene, and Sunil Mendis also functioned as Governors. In my opinion, the appointment of others was a mistake. These men at the top were assisted by greats like Paul Jeyerajan, Dr. Gamani Corea, Dr. W.M. Tilekaratne, S.D. Amerasinghe, K. Kanagasabapathy, K. Gunaratnam, P.C. Munasinghe, T.G. Punchiappuhamy and many others.
EPF
My first appointment in the CB was to the Employees’ Provident Fund (EPF) Department in the early 1960s.Unlike today I did not have to go behind anybody to get the appointment, although I come from a remote village. Today however, one cannot get a job, even as a labourer without going behind a politician. At the time I joined there were less than 40 in the whole department housed in the new YMBA building which was still being built. The whole building was heavy with dust. But we did not care. Nobody, not even the medical students who worked on a daily paid basis to help clear the backlog complained.
With so much of money pouring into the EPF, the staff was unable to meet with the challenge, mainly because the employers were unaware of the basic rules relating to the remittance of funds. At the beginning more often than not the Cheque/Money Order/Postal Order was not sent with the C Form. The misery got worsened as the total contribution indicated in the C Form did not tally with the amount of the cheque. The worst was that employers sent currency notes in the mail. I would like to salute the minor staff that opened the mail, for their integrity and character and for being truly honest, as to bring such instances to the attention of the executive officer immediately. In contrast it is regrettable that in the 1980s the coins brought to the CB for depositing by many religious institutions were blatantly thieved in broad daylight by certain marauding members of the minor staff who attended to such currency operations. Such individuals owned cars. A guy who stole the notes to be destroyed just before the currency was brought to the incinerator, travelled from Ambalangoda in a Cambridge but later went to the quad helped by the judiciary. This is how the CB went down the pallang over the years. I yet again salute the minor staff of the yesteryear for their honesty.
CB fire
I was there when the CB caught fire in the mid-1990s. We ran hither and yon in search of water to help kill the fire. Some ran through the thick black fumes in search of those who needed a helping hand. Those who were trained in fire fighting were seen looking for the fire hoses. Amidst all this hullabaloo, the cashiers who had been in the midst paying the salaries of the employees respective departments, quietly tucked-up their notes and coins into their suit cases and calmly walked down the stairs, as if nothing has happened and gathered under the kottamba tree on the right hand side of the Bank. Within a few hours after the firemen withdrew, all cashiers walked in and returned their cash. Not a cent was reported lost or missing. THAT WAS THE CB THEN.
The Secretary to the Governor (SG), as he finished the conversation over the phone and looked up, saw the Governor walking briskly past his room, towards the centre tower of the Bank and it suddenly occurred to him that the Governor is in fact on his way to attend the Board Meeting, which will, in a rough estimate would take more than an hour. Realising that he promised to call back the VVIP caller, within a few minutes, after making certain inquiries had to act fast. He almost ran behind the Governor and told him about the VVIP’s inquiry in regard to the fate of a person with a name which literally means a ‘heap of ripe jackfruits,‘ who had applied for the post of Comptroller of Security of the Bank. “So, find out what has happened” was the Governor’s reply and walked away in his own inimitable ease. The SG came back to his seat and telephoned the Director of Establishments and inquired about the fate of the VVIP’s ‘concern’. Having found out the fate of the ‘concern’, the SG was inevitably entrusted with the unenviable task of informing the VVIP, of the ultimate result. He however, was a tad hesitant to call the VVIP and waited for the Governor to return. He walked up to the Governor and told him that according to the results of the interview, the person concerned, is 23rd in the merit list. “Tell him so, will you” and the Governor walked away. The SG having plucked up courage, knowing very well of the VVIP’s reaction, which is brazen and bizarre, to negative information, conveyed the message to the VVIP, who without much fanfare rightly accepted the outcome gracefully, perhaps because he himself once admitted that he is no more than a peon in the current set up. THAT WAS ANOTHER GOVERNOR.
The rot in the CB in fact, began with the new government ensconced in power in 1977. Certain inexplicable and invisible forces in the Bank close to the newly elected Government held captive the new Governor, on many matters regarding appointments and promotions in the Bank. Many who were not suitable to be even a peon in the CB were promoted to the staff class. In 1980 the Governor was faced with an inexplicable situation when he was asked to recruit to the clerical grade more than 40 personnel from a list provided. Later, in less than two years, many out of the lot, who did not have the basic qualifications, left on their own volition after the Bank filed a case in the courts against one such hora entrant. On the other hand, those who were promoted to the staff class ignoring all norms were found thieving monies in finance companies, they were assigned to examine. One such blackguard obtained a loan of Rs. 10,000 surreptitiously from the finance company he was assigned to examine. The company failed in 1987/1988 and it was found the loan remained unpaid for five long years. He was asked by the CB to settle the loan with interest. The fortune-seeking bounder, escaped unpunished, although he was guilty of two counts under CB rules and regulations. Aren’t such unscrupulous nitwits responsible for the failure of so many finance companies during 1985/1990? These are one or two of many such nefarious activities that took place during the period.
Worst era
It is however, no secret that the CB experienced its worst era during the period 2006/2015. Within a very short time of his assuming office, the media became highly critical of the new Governor and said he was both academically and morally unsuitable for the job. One newspaper editorial of 10.05.2009 said “When you have a fool as Central Bank Governor – Disasters keeping happening”. On 17.05.2009, the same newspaper accused the Governor of being intimately involved with the Gold Quest, the notorious Pyramid Scheme which many unsuspecting clients were subjected to deep financial trouble. At the time he was made the Governor of the apex body, the CB was investigating Gold Quest by a crack team headed by a three in one officer- an accountant, an economist and a lawyer. As soon as he assumed office, the fortune-seeking blackguard disbanded the crack team, with no questions asked. He fumbled again, unfortunately, when he decided to make an investment of over 22 million Euros, without the approval of the Monetary Board, in Greek Bonds on April 4, 2011. This faulty investment despite a huge credit risk was unprecedented. Almost all newspapers reported that the Auditor General reported that this transaction had resulted in a huge loss of US$ 15.6 million. The explanation offered by the Governor was that in overall investment in the Euro-Zone, there was a profit on the investment. The COPE although attempted an investigation, it was stopped by its Chairman through fear. In the other scandal involving the Governor, a matter that did not come under his purview, was the attempted Sri Lanka’s bid to host the Commonwealth Games in 2018, in which he was the chairman. He headed an unsuccessful and a disgraceful 150-strong delegation to St. Kitts and Nevis to help bid for the Games on November 11, 2011. He lost it by a huge margin to Australia whose delegation had only 20 people and had to come back empty-handed, having spent over Rs.16.5 million on air travel along. Overall, Sri Lanka had spent over US$ 8 million (Rs.880 million) all CB funds.
I mentioned at the beginning how the EPF was built up under trying circumstances at its inception. The office had a few adding machines and a few Comptometer Operators in early 1960s. All official receipts printed in book form with a duplicate copy were hand written and signed by an authorised officer. They were posted in a window envelope. All these operations were time consuming and could not help as technology was at its infancy and not available. There was no shirking. Everyone had to put his little bit. All worked till 8 pm. Clerical staff was brought from other departments for overtime work. However, recent managements of the CB appear to have failed to understand the facts and considered that they own it and with the stroke of a pen did enough damage which cannot be corrected even in 100 long years. The CB had been investing EPF monies, in unprofitable investments, incurring heavy losses. In 2010, EPF did not receive any income from the investment of Rs.500 million in Mihin Air, Rs. 205,489,613 in The Finance Co (TFC) and Rs. 810,321,611 in a hotel company. The gravity of such questionable investments is reflected in the fact that EPF continued to buy such shares at inflated prices. The end result was that EPF did not receive any income from the investment of Rs. 8,793,951,889 in 14 companies as at 31.12.2012. A special report submitted to COPE by the Auditor General, said that as on January 15, 2013 Rs. 54 billion worth of EPF investments in relation to 57 listed companies had lost Rs. 11.7 billion of their value.
The scumbags in the management, continued to play their dirty tricks with CB funds. The Sunday Times (ST) in its issue of 08.02.2015 reported that the Presidential Secretariat under the previous UPFA government had paid a staggering Rs. 1.39 billion to a middleman and two public relations agencies in the US to promote Sri Lanka and lobby on behalf of the former Government. Though the Cabinet did not approve the payment, the Presidential Secretariat had directed in writing that the amount be approved by the CB’s Monetary Board and remitted directly to those concerned. THAT WAS YET ANOTHER GOVERNOR.