Columns

• President highlights corruption issue in bid to prevent Rajapaksa’s breakaway party from gaining ground

• Bond Commission makes serious charges against Ravi, but he refuses to step down as UNP’s Assistant Leader

• Magistrate’s court issues orders relating to Mahendran and PTL’s Aloysius and Palisena; sub-judice issue on Tuesday’s debate possible

With just five days to go for the local polls, a joke doing the rounds on mobile phones this week is about an old American, a Russian and a Sri Lankan talking to God.

When will my country come out of the recession asked the American and god replied “a hundred years.” He cried saying “I will not live to see that day.” The Russian wanted to know “when will my country become prosperous?” He cried too lamenting he will not live to see that day when god replied“it would take fifty years.”

It was now the turn of the Sri Lankan. “When will my country become corruption free,” he asked. This time, the joke goes; god began to cry saying “I will not live to see that day.” The moral of the story, if there is one, is how sceptical even gods are when it comes to Sri Lanka and the suggestion that corruption at its high levels is an eternal affair for the country.

However, jokes apart, the word corruption has been echoing in both Sinhala and Tamil, in the far corners of the country, both villages and towns alike, in the past many weeks. Tragic enough, like the predator and the prey both preaching the same ideals, the corrupt and those claiming to be ‘Lilly white’ are vying with each other to punish or even put behind bars those involved. Their hoarse voices from campaign platforms have reached a crescendo with just five more days for the local council polls, the first since 2011. Promises, like those made during the presidential and later parliamentary elections in 2015, to deal with high profile cases no sooner the polls were over were galore. Then, for three years there was little or no action. Whether, like the proverbial god’s cry, the old and the new issues will go into the limbo of forgotten things until the next election campaign remains an obvious question.

Though election violence or violations of election laws are reported to be minimal, back-stabbing among the three main parties is known to be taking place in subtle ways before the February 10 election to 341 local councils. Pic by Indika Handuwala

The credit for introducing a national issue into a local polls campaign goes unquestionably to President Maithripala Sirisena, the leader of the Sri Lanka Freedom Party (SLFP), which is under political siege. At first he spoke of the findings of the Commission of Inquiry that probed the bond scam at the Central Bank. That it gave a more startling version of how a father-in-law (former Governor Arjuna Mahendran) and son-in-law (Arjun Aloysius of Perpetual Treasuries) literally looted public money at the bond auctions. A Committee of Inquiry which probed the matter first, the Commission noted, had not made any comment on the highly flawed bond auctions on February 27, 2015. Then the Commission shed a different light from the report on the subject from the Committee on Public Enterprises (COPE) of Parliament. The revelations were then followed by the Presidential Commission of Inquiry which probed specific issues under the previous administration. All this was kudos for Sirisena.

However, in the wake of making assertions over the findings by the Commission and other political disclosures, Sirisena left behind a trail of contradictions. The resultant confusion raised concerns over his credibility as President. It was made worse by his remarks, some bizarre, just this week.

At his residence at Paget Road last Tuesday morning, Sirisena met Prime Minister Ranil Wickremesinghe at his private drawing room for a 45 minute chat. It had been brokered by Speaker Karu Jayasuriya. During the conversation, at one point, the Sunday Times learnt Sirisena had declared that as a result of what he was saying “more UNPers were now coming out (in support of their party).” That claim seemed to suggest that he was in fact helping his coalition partner. Though paradoxical, the statement was correct. In fact, Wickremesinghe told his supporters on Thursday he was happy more UNPers would vote at the local polls in the light of Sirisena’s remarks. He said some what jokingly that he was grateful to Sirisena for this unsolicited act.

The Sirisena-Wickremesinghe meeting was the result of an appeal Speaker Jayasuriya made. He had met Sirisena during a public function and told him that the “political ceasefire” he brought about where the two leaders would not attack each other had lasted only a day. “Thereafter,” he told Sirisena laughingly that “you have been firing multi-barrel rockets and the ceasefire is gone.’ Sirisena had replied he would get in touch with the Speaker so he could arrange another meeting. A source familiar with what transpired said Jayasuriya took most of the time telling the two coalition leaders that the Colombo-based diplomatic community and the trade sectors were very concerned about what was being perceived as the spat between the two leaders.

The former had voiced reservations over the return of the Rajapaksas whilst the latter had also alluded to Sirisena’s comments that “trillions of rupees” in foreign funding has gone missing. There were fears that such remarks impacted adversely on would-be foreign investors. “They listened intently, both nodding their heads on different occasions, until it was time to leave for the weekly ministerial meeting,” said the source adding that Jayasuriya had wanted to leave after getting them together but was told to stay behind. Thus, the weekly ministerial meeting last Tuesday, the first since Sirisena staged a dramatic walk out, was confined to approving different memoranda.

Sirisena was to again ‘breach’ the ‘political ceasefire’when he told a group of media personnel that a move by Parliament for a one day debate on the two Commission reports was “a gimmick.” He had earlier charged that the decision by party leaders to conduct the debate on February 20 and 21 would be to get over the local polls, he challenged that the debate be held before February 10. Premier Wickremesinghe responded at a UNP rally in Deniyaya by offering to hold it on February 8. The move drew representations from Election Commission Chairman Mahinda Deshapriya that it may interfere with the 48 hour moratorium on political activity and media reportage. That requirement has been made mandatory to allow the voter an even chance to decide upon his or her candidate.

At a party leaders meeting, the conduct of the debate before the local polls became the subject of discussion. Reiterating the UNP’s position, House Leader and Minister Lakshman Kiriella insisted that the debate should be held, as agreed previously, on February 20 and 21. However, strong objections were raised by Dinesh Gunawardena, leader of the ‘Joint Opposition’ in Parliament and Janatha Vimukthi Peramuna leader Anura Kumara Dissanayake. Weighing in their favour was SLFP Minister Mahinda Samarasinghe. He said as the official representative of the party he was authorised to say that the debate should be held before the local polls. This was particularly in the light of President Sirisena’s challenge to other parties to conduct it before February 10. Thus, the party leaders agreed to choose February 6 as recommended by the ElectionsCommission Chairman Deshapriya. He had also said that February 5 was also a suitable date.

Sirisena’s subsequent remarks that the one-day debate was a gimmick prompted the Speaker’s Office to announce that more days will be allocated later for the same debate. Now, the political parties have gone into high gear preparing their own positions. This has naturally led to alarm bells ringing in the UNP though its leaders have declared categorically that the party is in no way involved in the bond scam. Yet, a thorn in the flesh, these leaders felt, was former Finance and later ex-Foreign Minister Ravi Karunanayake. It was at President Sirisena’s request, that he was first shifted from his portfolio of Finance to Foreign Affairs.

And later, he was told to step down by his own party with the assurance that he would be reinstated after the findings of the Commission of Inquiry into the bond scam. Thus, it was made clear that the appointment of Tilak Marapana as Foreign Minister was only temporary. Yet, such a reappointment did not materialise and the Commission’s findings appear to have gone against Karunanayake. This is not withstanding the fact that he claims he is not connected with the bond scam per se.

The Commission of Inquiry that probed the matter has said, “the evidence establishes that Global Transportation and Logistics (Pvt) Ltd. is a Company which is owned and controlled by members of the family of Ravi Karunanayake.” It paid the sale price of Rs 165 million to M.A. Vinodini by using the “Proceeds of a Loan” obtained from Seylan Bank. When asked how the loan was repaid, he had replied that his family “made the arrangements and that he was unaware of the precise nature of those transactions.” That company’s Chief Financial Officer Sinniah had said the loan was repaid using monies given to the company by Lakshmi Kanthan who lives in Britain. He had visited Sri Lanka “on two or more occasions and brought the money required to pay the Loan, in bags of cash which were kept in the safe” of the company.

The Commission has declared that “it has been clearly proved” that, from February 2016 till end of September 2016, Karunanayake and his family continued to occupy the Monarch Apartment taken on lease by Walt and Row Associates (Pvt.) Ltd, which paid the Lease Rentals.”
A more damning disclosure is the Commission’s declaration that “evidence establishes that, Walt and Row Associates (Pvt) Ltd is a company which is a member of the ‘Perpetual Group Companies’/‘Free Lanka Group’ and that, as at 14th December 2015, the sole shareholder of Walt and Row Associates (Pvt) Ltd was Perpetual Capital Holdings (Pvt) Ltd, which is, ultimately, fully owned by Arjun Aloysius and Geoffrey Aloysius.” Pointing out that “in these circumstances, it is clear that, Walt and Row Associates (Pvt) Ltd is an Associate Company of Perpetual Treasuries Ltd and that it is owned and controlled by Arjun Aloysius and Geoffrey Aloysius,” the Commission added that when giving evidence Karunanayake “agreed it was inappropriate.”

The Commission has added that “we find it difficult to believe” that he was initially unaware and “was informed of this fact, till much later.” The Commission to Investigate Allegations of Bribery or Corruption (CIABOC) has been told to probe this matter. In addition, the CIABOC and the Attorney General have also been asked to initiate action against him under the Penal Code for certifying on “oath, that he had no personal, business or official relationship with Arjun Aloysius. This is in addition to requesting the AG to take action over “incorrect evidence.”

Last Tuesday, Premier Wickremesinghe, the UNP leader, summoned Karunanayake for a meeting at ‘Temple Trees’.He urged that Karunanayake steps down from the post of Assistant Leader of the UNP at least until such time the current issues are resolved. The Sunday Times learnt that his initial response was to refuse such a request. He had told many a confidant he had worked tirelessly to ensure Maithripala Sirisena won the presidential election and bring the UNP back to office. He had said he would not allow himself to be the scapegoat and charged that an influential group within the UNP was manoeuvring against him.

Thereafter, UNP General Secretary and Minister Kabir Hashim, who has also been at the butt end of Karunanayake’s bitter criticism together with party chairman and Minister Malik Samarawickrema, issued a carefully crafted statement. It noted that a three-member Committee named by the leader Premier Wickremesinghe had recommended that Karunanayake should not exercise any duties in his capacity as Assistant Leader. The Committee was headed by Foreign Minister Marapana. This was until such time the Attorney General or the Bribery Commission decides no action is to be filed or if a case is filed then until legal proceedings conclude. The tenor of the statement, UNP sources said, was “more persuasive” and the idea was to let him make a voluntary decision. In fact, senior party members have been meeting him to urge that he step down, at least temporarily. So far, it has not materialised and Karunanayake is stubbornly holding on to his position.

Wickremesinghe later met UNP parliamentarians of the Colombo District. The subject of discussion was whether candidates for the Colombo Municipal Council from the Colombo North areas would follow suit if Ravi Karunanayake was removed as Assistant Leader of the party. One of the participants, a State Minister, declared that the candidates would still remain loyal to the party. The party leader then urged the MPs to extend their election campaign to the Colombo North areas as well.

This comes at a time when the Criminal Investigation Department (CID) detectives have sprung into action over the bond scam. They filed a “B” report in the Fort Magistrate’s Court on Friday listing three suspects — Arjuna Mahendran, Arjun Aloysius and Kasun Palisena. The Court ordered that Mahendran should make a statement to the detectives before February 15. A legal source said failure to do so may lead to the issue of a warrant against him. The Court also made an interim order prohibiting the transfer to third parties of properties of Perpetual Treasuries Ltd. or the duo leaving the country. The fact that the bond issue is now before Courts has raised questions on whether Parliament could debate a matter that may be sub judice.

The Commission of Inquiry has held that Arjun Aloysius and Kasun Palisena “were in control of day-to-day operations and transactions of Perpetual Treasuries Ltd,” during the period of its mandate from February 1, 2015 to March 31, 2016. It said that they can be, “properly, considered to be the persons who have primary responsibility for the actions” of their company.

They had made a Net Profit of Rs 5.124 billion (more than five billion rupees) in the Financial Year ended March 31, 2016 and a Net Profit of Rs 6.365 billion (over six billion rupees) in the Financial Year ended March 31, 2017. These “phenomenal profits,” the Commission revealed had been made using “inside information (price sensitive information) to obtain very high values of Treasury Bonds at low prices and very attractive Yield Rates at the Treasury Bond Auctions held on 27th February 2015 and 29th March 2015.”

Pointing out that “Perpetual Treasuries Ltd often succeeded in obtaining Treasury Bonds at auctions at attractive prices and yield rates,” the Commission noted that as a result, they were able to “acquire a substantial value” and profits made by them “accrued from Trading on these” when the opportunity to do so arose.

The Total Net Cash Inflows received (monetary gains made) by Perpetual Treasuries Ltd from all sales of Treasury Bonds bearing seven specified ISINs (International Securities Identification Number) to the EPF and other Statutory Bodies and Government Institutions, during the period relevant to the mandade of the Commission, aggregate to Rs 11,145,221,479/99 (over Rs 11 billion 145 million). The evidence establishes, the Commission has pointed out that, the estimated Total Net Cash Inflows bearing the aforesaid ISINs, to the EPF and other Statutory bodies and Government Institutions, aggregate Rs 8,529,964,495/61 billion (over Rs 8 billion 529 million).

Evidence before the Commission, the report says, establishes among other matters the following:

• At meetings held at the Ministry of Finance, prior to the Treasury Bond Auctions held on 29th March 2016 and 31st March 2016, the officers of the three State Banks “were directed to bid at low Yield Rates at these Auctions by the Minister of Finance, and that the State Banks did so;
• The recording of telephone conversations between Arjun Aloysius and Kasun Palisena on 29th March 2016 make it clear that, Perpetual Treasuries Ltd received “inside information” from a source within the PDD (Public Debt Department) or the CBSL (Central Bank of Sri Lanka) with regard to the “cut off rate” and other relevant details regarding the Treasury Bond Auctions held on 31st March 2016 including the fact that the State banks had been directed to bid at low Yield Rates,
• The recording of the telephone conversations between Arjun Aloysius and Kasun Palisena on 29th March 2016 make it clear that, neither Aloysius nor Palisena considered it unusual that Aloysius possessed such “insider information.” That raises a strong inference that there was a pattern of Perpetual Treasuries Ltd receiving “inside information” from the PDD and the CBSL.
• The Data extracted from Aloysius’s mobile phone establishes that, Aloysius was in frequent telephone contact with one or more key officers of the PDD.
• Perpetual Treasuries Ltd has deliberately misrepresented, to the CBSL, the details of transactions which Perpetual Treasuries Ltd had entered into and the prices at which these transactions were done. They have misrepresented these details and prices on 266 days during the period of the Commission’s mandate. This is approximately 70 per cent of the related reports submitted by Perpetual Treasuries Ltd to the CBSL misrepresented details and prices of transactions entered into by Perpetual Treasuries Ltd.
• These misrepresentations made by Perpetual Treasuries Ltd resulted in the CBSL receiving a false picture of the Yield Rates at which Perpetual Treasuries Ltd carried out its transactions. The CBSL has acted on those incorrect Yield Rates when publishing them in the Secondary Market and assessing the value of transactions done in the Secondary Market. That was especially so, due to the high volume of transactions reported by Perpetual Treasuries.
• Other evidence establishes that, following the Treasury Bond Auctions held in September and October 2015, Perpetual Treasuries Ltd entered into a series of transactions. By this, they sold Treasury Bonds to the Employees Provident Fund (EPF) and other parties at low prices (High Yield Rates). Then, they resold the Treasury Bonds to the same party and then bought the Treasury Bonds back from the same parties at lower prices (higher Yield Rates).
• Capital Gains made by Perpetual Treasuries Ltd. In June 2015 Rs 749.6 million, in November 2015 Rs 2.607 billion, in January 2016 Rs 983.790 million, in April 2016 Rs 1.561 billion and in May Rs 2.091 billion.
•  There is evidence that Perpetual Treasuries Ltd paid inducements to dealers in the EPF and several other institutions with which Perpetual Treasuries Ltd entered into transactions which were profitable to them.

Whether the vigour with which state investigative agencies are now pursuing new and outstanding cases will continue the same way after local polls on February 10 remains to be seen. Nevertheless, whoever wins the polls, some of the positions taken up by Sirisena and other coalition leaders will continue to reverberate and raise all important issues.

One in particular is the relations between Sirisena’s SLFP and coalition partner the UNP. As periodically pointed out in these columns in the past months, the acrimony on both sides had risen to newer levels that the foundation for cohabitation has been badly shaken or even partly cracked. The fallout of the new investigations will only add to that.

Unlike the previous polls, the upcoming one has many complexities. The new electoral system is being put to test for the first time. There has been no high visibility of a poll and the Police deserve to be commended for the job of keeping posters and cut outs away. Yet, national issues have played out. In 2011, local polls were held in three stages, in March, July and October. Then the UPFA secured 56.45 per cent of the vote whilst the UNP won 31.73 per cent. Since then, there has been an increase in the number of voters besides a new system being put to test.

A close look at the campaign trail has laid bare some realities. One is the fact that Mahinda Rajapaksa’s Sri Lanka Podujana Peramuna (SLPP) has been breaking new ground in the southern districts and the coastal belt north of Colombo not to mention a few other areas. It is not a case how many local councils he will win but one of how much votes from Sirisena’s SLFP will erode. The fact that it remains likely threatens to push Maithripala Sirisena into the third place unless there is a miraculous turn of events. This will portend a great blow for a President who has a high work agenda for the rest of his term. Thus, the guess is whether the UNP would face a formidable contender in the SLPP or not.

As Sri Lanka marks the 70th year of its independence, the conduct of elections has remained a noble tradition though politicians at times have sought to tinker with it. Now, it is that poll which portends the political future of Sri Lanka.