T bond scams take their toll
SPECIAL REPORT : Part 200
July 2, 2016 at Central Bank: President Maithripala Sirisena, Prime Minister Ranil Wickremesinghe and the then CBSL Governor Arjuna Mahendran meet amidst moves to replace the Singaporean over treasury bond scams.
By Shamindra Ferdinando
By Shamindra Ferdinando
Japanese Foreign Minister Taro Kono arrived in Colombo on the evening of January 4 with the Sirisena-Wickremesinghe administration in severe turmoil over President Maithripala Sirisena’s statement on Treasury bond scams involving Central Bank and Perpetual Treasuries Limited (PTL).
President Sirisena, who is also the leader of the SLFP, based his statement on the report of the Presidential Commission of Inquiry (CoI) that probed treasury bond scams and findings made by PRECIFAC (Presidential Commission of Inquiry to Investigate and Inquire into Serious Acts of Fraud, Corruption and Abuse of Power, State Resources and Privileges).
Kono was accompanied by a 24-member delegation. The first official visit by a Japanese foreign minister in 15 years, couldn’t have taken place at a worse time for the government.
President Sirisena’s move placed both the UNP, as well as the SLFP, in a deeply embarrassing position, ahead of the February 10 local government polls.
Kono met President Sirisena and Premier Wickremesinghe, in Colombo, amidst desperate damage control efforts undertaken by the latter. The Grand Old Party has never been humiliated and its top leadership castigated like this before.
Premier Wickremesinghe’s Office went to the extent of issuing a statement quoting him as having instructed Central Bank Governor, Indrajith Coomaraswamy, to implement recommendations made by the CoI once it was released.
The enormity of the fraud shook the country with Prime Minister Ranil Wickremesinghe being urged to step down over his role in the treasury bond scams.
Before further comment on treasury scams, let me produce a relevant Japanese Embassy statement that dealt with Kono’s visit: "This visit is aimed at further consolidating the Comprehensive Partnership between Japan and Sri Lanka, based on previous visits by President Maithripala Sirisena in May 2016, and Prime Minister Ranil Wickremesinghe in April 2017.
"Strengthening cooperation and collaboration with Sri Lanka is important for the realization of a free and open Indo-Pacific area, based on the rule of law," the Japanese Embassy said.
Japan and Sri Lanka finalized the ‘Comprehensive Partnership’, in Oct 2015, within months after the change of the Rajapaksa government, perceived to be very close to China. The partnership should be examined against the backdrop of joint US-Japan-India response to the growing Chinese challenge, with Japan facing an enormous economic and strategic challenge from powerful China in the entire Far East.
It would be important to keep in mind that the change of government, in January 2015, paved the way for the ‘Comprehensive Partnership’. In other words, had the US-spearheaded regime change operation failed for a second time, in January 2015, Japan wouldn’t have sought the Comprehensive Partnership. That is the undeniable truth.
A brief but high level visit took place at a time Japan is concerned about legal problems that had been caused to ITOCHU Corporation/Dole investment in agricultural sector here in addition to the long-delayed Japanese funded ‘Digitization of Television Broadcasting’ project.
Dole is one of the world’s largest producers and marketers of high-quality fresh fruit and fresh vegetables and produces and markets a worldwide line of packaged and frozen foods. Japan is pursuing an agenda of its own here in addition to being party to US operation.
The first US project went awry in January 2010 when war-winning Army Chief General Sarath Fonseka failed to defeat Mahinda Rajapaksa at the presidential poll. In the 2010 operation, those who had wanted the Rajapaksas moved out of office, fielded Fonseka as they believed he was the only one capable of depriving the former of claiming exclusive credit for defeating the LTTE.
The 2015 campaign depicted the Rajapaksas and their cronies as corrupt, while promising good governance and accountability. Those opposed to the Rajapaksas campaigned on anti-corruption platform, vowing to recover USD 18.5 bn Rajapaksa had allegedly stashed in offshore accounts. No less a person than US Secretary of State John Kerry assured US support to recover the stolen assets. The British did the same. Surprisingly, the US and the UK hadn’t said a word on treasury bond scams while foreign-funded NGOs that spearheaded the smear campaign against the overbearing former regime now are struggling to save their faces with the bond scam fallout.
Those who had backed the regime change, in Colombo would never have expected the new government to rob its own Central Bank. That doesn’t mean the US and its allies ever had problem in protecting some very very corrupt governments in various parts of the world. William Blum’s controversial Rogue State has exposed shocking US interventions in support of corrupt and murderous governments over the years. Nahil Wijesiriya, father of Anika, who had exposed Ravi Karunanayake as to how the Karunanayke family lived at a penthouse at the expense of Perpetual Treasuries owner Arjun Aloysius, sent a copy of Rogue State to the writer during the CoI sittings.
The US and its allies are unlikely to voice concern over treasury bond scams, in spite of the world’s solitary superpower currently engaged in high profile project to help Sri Lanka recover stolen assets. Obviously, they are only concerned about assets stolen during the previous administration whereas the present lot continues to remain in the good books of Western powers.
Obviously, the US and its allies will not undermine a government that will pursue their strategic line, in spite of being trapped by Beijing. Soon after the change of government, the Sirisena-Wickremesinghe government acted as if Beijing didn’t matter, with then Finance Minister Ravi Karunanayake publicly challenging powerful China. China hit back hard, swiftly brought Sri Lanka to its knees and caused enough turmoil until Colombo didn’t have any other option other than giving into Beijing’s dictates.
Although Western powers are likely to ignore the 2015 and 2016 treasury bond scams, what will be the reaction of the electorate at the forthcoming local government polls? With those who had contributed to Sirisena’s 2015 triumph over Rajapaksa in the fray with the SLFP sharply divided much to the disadvantage of the Sirisena faction, the polls outcome can be devastating. In fact, the UNP and SLFP partnership, under massive pressure in the wake of the presidential statement, on treasury bond scams, will suffer further, whatever the local government polls outcome be.
Second T bond scam
Had incumbent government’s international supporters intervened in the wake of the first bond scam, perpetrated on the 50th day of President’s100-day project, the UNP wouldn’t have gone ahead with the second, a far bigger heist, in March 2016. Instead, they reiterated support to the corrupt system by endorsing dissolution of parliament to pave the way for the August 2015 parliamentary polls that enabled the re-appointment of Ravi Karunanayake as the Finance Minister. They apparently even ensured that Karunanayake was rewarded with a fake international award as the best Finance Minister in the region.
General Secretary of the Communist Party, Dew Gunasekera, who had inquired into the 2015 treasury bond scam, unequivocally blamed the top UNP leadership for the 2015 and 2016 treasury bond scams. Gunasekera, on January 5, 2018, called a media briefing at CP office, Borella, where he discussed the anatomy of treasury bond scams.
The writer sought a clarification as to the responsibility on the part of President Sirisena regarding the second treasury bond scam. Could the second robbery have been averted if Gunasekera, in his capacity as the COPE (Committee on Public Enterprises) Chairman, was allowed to present his report to parliament? On the eve of its presentation, parliament was dissolved to save the UNP-SLFP coalition.
The decision to dissolve parliament should be examined against the backdrop of the arrangement between the UNP and Sirisena underwritten by the US and its allies. They couldn’t have allowed, under any circumstances, the collapse of a loyalist administration within months after its formation.
The UNP, SLFP and former President Rajapaksa, as well as those civil society groups, owed the country an explanation as to how Rajapaksa’s 2015 defeat automatically resulted in change of government. Rajapaksa, in spite of having a staggering two-thirds majority in parliament, for whatever the reason remained silent when Wickremesinghe was sworn in as the Prime Minister immediately after Sirisena took oaths as the President, before Chief Justice K. Sripavan. Strange, isn’t it?
Gunasekera acknowledged that the change of government, after Rajapaksa’s defeat at the presidential poll, was still a mystery to him.
The parliamentary group loyal to Rajapaksa never bothered to challenge Wickremesinghe or seek a vote in parliament to test whether the UNP leader had the confidence of the majority of the members of parliament. At that time, the UNP parliamentary group comprised less than 50 whereas Rajapaksa commanded very much more than that number.
Joint Opposition heavyweight MP Bandula Gunawardena recently told the writer that they didn’t really know what was happening when an explanation was sought as to why they accepted the change of government.
Gunasekera still insists the change of government is a mystery.
Turning blind eye to mega robbery
President Sirisena, in spite of being strongly opposed to the despicable UNP project, has had no option but to cooperate with the UNP. To his credit, the President made strong effort to discourage PM Wickremesinghe from appointing Singaporean Arjuna Mahendran as the Governor of the Central Bank.
Having named Mahendran as the Governor, those planning to commit the first daylight robbery moved CB employee Deepa Seneviratne to the Public Debt Department as its head in spite of her not been attached to that particular section before. It seems they had obviously felt comfortable in having a lady officer there they thought they could manipulate at will. But Seneviratne turned tables on the bond thieves by putting up a note to register her strong opposition to Mahendran’s move. The rest is history.
It would be of pivotal importance to keep in mind that the President appointed Commission of Inquiry (CoI) in January 2017, about 10 months after the second robbery, and two years after the first. The commission comprised Justice K.T. Chitrasiri, Justice P S Jayawardena and retired Deputy Auditor General V Kandasamy. Sumathipala Udugamsuriya functioned as its Secretary.
During cross examination of witness PM Wickremesinghe, it transpired how the government received US Treasury advice regarding issuance of treasury bonds in the wake of scams here. Wickremesinghe acknowledged that Sri Lanka had sought the expertise of the IMF and the US Treasury in 2017, to examine the system. Such a study wasn’t done before the 2015 change was made.
Recently, the US revealed the assigning of a resident legal advisor to help Colombo to recover funds moved overseas. The announcement was made by the State Department, in early Dec. 2017.
The Island sought an explanation from the Public Affairs Section of the US Embassy, in Colombo on Dec. 11, regarding the State Department categorizing Sri Lanka among a group of countries selected to receive US assistance to combat corruption. In spite of repeated reminders, the following questions went unanswered:
(a) Has the State Department examined treasury bond scams perpetrated in Feb 2015 and March 2016 before offering special assistance to Sri Lanka, including provision of Resident Legal Advisor, Colombo?
(b) As the State Department has revealed allocation of USD 115 mn annually for global anti-corruption activities, could the embassy reveal the allocation for Sri Lanka?
(c) What is the status of Rs 1.92 bn (USD 13 mn) USAID project meant to strengthen accountability and democratic governance in Sri Lanka against the backdrop of the country being named as one of the four countries which required US assistance to tackle corruption?
The US must be certainly ashamed of those who had been elected at the August 2015 general election, particularly against the backdrop of millions of US dollars spent on the regime change operations here.
The Attorney General’s Department that had assisted the Justice Chitrasiri commission sustained inquiry in spite of heavy pressure brought on it by an influential section of the UNP. Karunanayake publicly challenged the commission, both in and outside parliament until the very end and continues to do so even now. The UNP reacted angrily to the commission releasing shocking data pertaining to telephone, Viber and SMS contacts among those who had been investigated.
Senior Additional Solicitor General Dappula de Livera, PC, ASG Yasantha Kodagoda, PC, ASG Priyantha Nawana, PC, Senior DSG Milinda Gunathileka, DSG Dilan Ratnayake, Senior State Counsel Shahida Barrie, Senior State Counsel Nayomi Wickremasekera, Senior State Counsel Dr Avanthi Perera, State Counsel Dhanushan Ganeshayogan, State Counsel Jehan Gunasekera. The Attorney General team was assisted by five-member teams from the Central Bank as well as the Criminal Investigation Department.
The joint AG, CID and Central Bank team proved beyond any doubt that Sri Lanka had the required expertise to undertake complex investigation. Had investigators been given a free hand to inquire into revelations made by COPE and Public Accounts Committee (PAC), many Ministers would have been found guilty of waste, corruption and irregularities. Unfortunately, parliament, in spite of boasting of 70 years of parliamentary democracy, never felt the requirement to amend Standing Orders to enable the watchdog committees to summon ministers.
A former navy chief’s assertion
The likes of National Freedom Front leader Wimal Weerawansa are often ridiculed for alleging US interference in Sri Lanka. For some strange reason, political parties here are struggling to face up to US interference at the highest level. Thanks to Wiki Leaks as well State Department statement and information that had been obtained by US-based Hassina Leelaratne through legal means, the world knows the extent of US intervention here.
Much to the disappointment of the US, the new Sri Lanka leadership had jeopardized the project by robbing Central Bank, certainly a first for any country. Retired Admiral Dr. Jayanath Colombage, Director of the Center for Indo-Lanka relations of the Path Founder Foundation, recently commented on the US intervention here in 2015. The unprecedented comment on US project was made by Admiral Colombage in Islamabad. Colombage alleged that the US and Japan spearheaded the regime change operation here. It would be better to go through verbatim what Colombage said in Islamabad at an event organized by the Center for Global and Strategic Studies (CGSS): "Consequently, India, the USA and Japan realized that the Chinese involvement and influence was seen everywhere in the Indian Ocean Region and especially in South Asia. Chinese maritime infrastructure projects were taking place not only in Sri Lanka but also in Myanmar, Bangladesh, Pakistan and the Maldives. Thus, the major powers that are strategic partners of India preferred to see Sri Lanka move away from Chinese influence. When that did not occur, they considered the next option and supported a regime change in 2015. However, this resulted in a predicament as for nearly two years no nation came forward to help Sri Lanka’s economic development after the 2015 presidential and general elections. Following this, Sri Lanka had to reconnect with China in a position of weakness. During this period our economy suffered and now it has fallen to the 6th place among SAARC countries. This is a result of major strategic competition in the Indian Ocean. It is important to note that this region is heavily militarized and nuclearized. An example of this militarization is evident from the number of warships that belong to different countries visiting Sri Lankan ports. From 2009-2017 a total of 398 war ships have visited Sri Lankan ports. A breakdown of this is as follows: India - 82; Pakistan - 24; Japan - 67; Bangladesh - 23; China - 31; USA - 18; and Russia - 26."
Political parties should make a genuine effort to examine foreign interventions here without further delay. They lacked the courage to face up to the challenge....a growing challenge that seems to be too tough for Sri Lanka to handle.
One-time Indian High Commissioner in Colombo (1997-2000) Shivshankar Menon, in his Oct, 2016 launched memoirs, ‘Choices: Inside the making of India’s foreign policy’, indicated that New Delhi had reason to desire a change of government, in Sri Lanka, due to the then President Mahinda Rajapaksa going back on his pledge in respect of Sri Lanka-China relations.
Menon directly alleged that the former President received Chinese funds for his political campaigns, and projects.
The change of government, in January 2015, also paved the way for Western powers to secure the Sirisena-Wickremesinghe government’s consent on Geneva Resolution 30/1 meant to humiliate Sri Lanka. In accordance with the Geneva doctrine, Sri Lanka was told to introduce a new Constitution at the expense of its unitary status, with outgoing Human Rights Commissioner Zeid Ra’ad al-Hussein declaring, in June 2016, the new supreme law should be subjected to a referendum.
But now the project seems to be in tatters with the government being overwhelmed by the fallout of the treasury bond scams. Weakened by corruption charges, the government will find it difficult to sustain the constitutional making process, a project entrusted on the Sirisena-Wickremesinghe administration by Western powers.
For a government struggling to cope up with even basic responsibilities such ensuring smooth supply of petrol as well as fertilizer, bringing in a new Constitution, seems certainly a daunting task that cannot be surmounted.