Col R
Hariharan | 31-1-2018
President Maithripala Sirisena’s moment of truth
seems to have arrived after a commission of inquiry held former Central Bank
Governor Arjuna Mahendran was directly responsible for causing a loss of SL Rs
11,145 million to the bank in the issue of Central Bank bonds. The
commission said there was a conflict of interest during Mahendran’s tenure as
his son-in-law Arjun Aloysius continued “to remain actively engaged with the
operation of Perpetual Treasuries Ltd (PTL) contrary to the assurance” which
Mahendran repeatedly gave to the Prime Minister.
The commission was scathing in its indictment of
Mahendran. Accusing of Mahendran of providing insider information, it said it
was “reasonable to conclude that he directed that bids to the value of Rs 10.58
billion to be accepted” at the Treasury Bond auction on 27 February 2015, “for
the improper and wrongful collateral purpose of enabling” PTL to obtain high
value treasury bonds at low bid prices and high yield rates. It said evidence
established that Mahendran and Deputy Governor Samrasiri “deliberately and mala
fide, misled and misrepresented the factual position” when they submitted a
briefing note to Prime Minister Ranil Wickremesinghe on the events related to
the bond auction.
Not only that, the commission
has recommended legal action against former foreign minister Ravi Karunanayake,
a prominent leader of Wickremesinghe-led United National Party (UNP). He was
said to have had financial links with the tainted bond dealer Arjun Aloysius,
son in law of Mahendran, who was involved in the scam. Aloysius firm Perpetual
Treasures had bought over half of the bonds issued in the auction in
2015.
The scam has left the President with little
option but to do a damage control exercise by taking action against Mahendran,
who was handpicked for the governorship by Wickremesinghe. The commission has
also held that the PM failed to take action against the governor for his
actions.
A huge public furore was raised in October
2016 after a parliamentary committee on public enterprises report held that
Mahendran responsible for the irregularities in the sale of Central Bank bonds.
The President had appointed the commission of inquiry in January 2017, probably
as a political ploy to buy time and to live up to his image of a crusader
against corruption. However, the commission’s findings have come as a big blow
to the credibility of the coalition government of the two main parties -
Sirisena’s Sri Lanka Freedom Party (SLFP) and the UNP, as they were voted to
power by the people to deliver upon their promise to provide corruption free
governance.
The SLFP-UNP relations within the coalition have
come under tremendous strain ever since the President appointed the commission
of inquiry. When the conduct of local government (LG) elections became
imminent, the bond scam gathered more momentum in the media with stories of
political posturing on the scam making it to the front page almost every day.
The civil society and SLFP rank and file and the Joint Opposition became
strident in their demand for action and forced Karunanayake to resign from his
ministerial post.
The President in a television speech said he
would “not hesitate to take steps to recover the loss” to the government and
take legal action against the offenders and punish them. These are brave words,
which would stand him in good stead during the SLFP’s campaign for the local
government election to be held on February 10. However, if he walks the talk,
the danger of the coalition coming apart appears real. If he does not, it would
be a big loss of face for him affecting his image.
The SLFP leader’s exasperation at the political
logjam he faced became evident when he spoke at an LG election rally at
Ratnapura. He said “I can easily form an SLFP government with all the 96 MPs
who were elected at the 8 August 2017 parliamentary elections supporting me.”
Sirisena said that he would be changing the institutional structures so that
corrupt could be punished after the LG polls, highlighting his USP (unique
selling point) that helped him to get elected.
However, the joint opposition and the Sri Lanka
Podhu Jana Peramuna (SLPP), formed by pro-Mahinda Rajapaksa elements, are
unlikely to be lured by Sirisena’s rhetoric as the bond scam has left him
highly vulnerable. It provides them enough ammunition to garner votes during
the LG polls. Finance and media minister Mangala Samaraweera of the
UNP has also pointed out that the LG elections could become a formidable
challenge to the ruling coalition as SLPP was gathering momentum.
In the meanwhile, the PM has at last agreed to
have a parliamentary debate on February 6 on the reports of the bond inquiry
commission and the PRECIFAC (Presidential Commission of Inquiry to Investigate
and Inquire into Serious Acts of Fraud, Corruption and Abuse of Power, state
resources and privileges). We can expect more political fireworks before the
nation goes to polls on February 10 to elect members of local government.
Col R Hariharan, a retired MI officer, served as the head of
Intelligence of the Indian Peace Keeping Force in Sri Lanka from 1987 to 90. He
is associated with the Chennai Centre for China Studies and the International
Law and Strategic Analysis Institute, Chennai. E-mail: haridirect@gmail.com Blog: http://col.hariharan.info
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