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Treasury bond scams: Judicial process further delayed, Mahendran safe in Singapore
‘Parliament’s response pathetic’
DEW’s 2015 COPE report never tabled
By Shamindra Ferdinando
Chairman of the Committee on Public Enterprises (COPE) Charitha Herath said yesterday (4) that judicial process in respect of the treasury bond scams perpetrated in Feb 2015 and March 2016 had been delayed due to Sri Lanka’s inability to serve indictment on fugitive Central Bank Governor Singaporean passport holder Arjuna Mahendran.
SLPP National List MP Herath said so when The Island sought clarification with regard to the status of action taken by Parliament in that regard. Herath said that the report on treasury bond scams prepared by COPE during JVP MP Sunil Handunetti’s tenure as its Chairman was available. The data available therein were quite useful and could be utilized, the lawmaker said.
Responding to another query, one-time Media Ministry Secretary and University don Herath said that he wasn’t aware of the status of the Presidential Commission report on treasury bond scams that was handed over to Parliament.
The Island pointed out to the COPE Chairman that the report handed over in early 2018 hadn’t been debated so far though the parliament gave an assurance to that effect. MP Herath said that the Ministry of Defence, the police and the Attorney General’s Department had been involved in the process though it couldn’t be brought to a successful conclusion so far. Sri Lanka requested Singapore to deport Mahendran over a year ago. The request was made by the Defence Ministry in the second week of Sept 2019 in the run-up to the presidential election in Nov. Legal sources said that the then government took up the issue with Singapore consequent to the Permanent High Court at Bar where 10 persons, including the former Central Bank Governor, his son-in-law Arjuna Aloysius of Perpetual Treasuries Limited (PTL) and its CEO Kasun Palisena were charged with criminal misappropriation of public property. Sources said that Singapore had officially informed the government of Sri Lanka why Mahendran wouldn’t be handed over under the present circumstances. Mahendran is wanted for accepting Rs. 10.058 billion worth of bids at the 27 February 2015 auction, the first scam perpetrated within weeks after the 2015 presidential election. The then President Maithripala Sirisena replaced Mahendran with Dr. Indrajith Coormaswamy in July 2016. Former COPE Chairman Dew Gunasekera questioned the failure on the part of the Parliament to conduct a debate on the Presidential bond scam report received in January 2018. Gunasekera said that Parliament owed the country an explanation why a debate couldn’t be held for nearly three years.
Responding to The Island queries, Gunasekera said that in spite of the subject being listed in the Order Paper during the previous administration it was never taken up. The former Communist Party General Secretary pointed out that parliament should have properly taken up that issue even before receiving the treasury bond scam report. Gunasekera, who headed the 13-member special COPE subcommittee that investigated the first scam, said that he recently went through his 442 page report on the first treasury bond scam. Asked why he never submitted the report to Parliament five years after the investigation, the former Minister said that he couldn’t as the then President Sirisena dissolved parliament on the night of June 26, 2015, the day before he was to table it in the House. As the report couldn’t be presented before the dissolution, it couldn’t be tabled at all, former National List MP Gunasekera said.
“Such a valuable document never received parliamentary recognition,” the veteran leftist politician said. The CPSL General Secretary was not accommodated on the UPFA National List following the 2015 general election. Gunasekera recalled how when he questioned Mahendran in respect of the first treasury bond scam, the CBSL Governor revealed receiving instructions from Premier Wickremesinghe who held policy planning and economic affairs portfolios. Mahendran’s revelation included in the COPE report is significant as by January 18, 2015, the CBSL had been brought under Wickremesinghe, the former Minister said. Gunasekera emphasized that the CBSL shouldn’t have been removed from the Finance Ministry purview, a controversial move that was meant to effectively thwart possible intervention by President Sirisena. Gunasekera urged the Parliament to address the issue at hand.
The former minister pointed out that the treasury bond scams contributed heavily to the UNP’s crushing defeat at the last parliamentary election. Of the four UNPers summoned by the Presidential Commission, Wickremesinghe and Ravi Karunanayake suffered defeat at the last general, Malik Samarawickrema quit parliamentary politics whereas Kabir Hashim switched allegiance to the Samagi Jana Balavegaya (SJB). “Those responsible for the first scam brazenly manipulated Parliament. Imagine, they got Parliament dissolved and perpetrated the second far bigger fraud in late March 2016.
Investigations revealed how PTL provided funds to some lawmakers though all names were never revealed.” the former minister said. Alleging that the establishment failed to properly handle the treasury bond scams, Gunasekera said, adding that the overall failure to investigate Sri Lanka’s worst post-independence financial fraud exposed the limitations in the system. However, successful system manipulation couldn’t save the UNP from its worst defeat that brought the once great party to its knees, Gunasekera said, pointing out the reduction of parliamentary strength from 106 seats to one NL slot, destroyed the UNP.
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Prime Minister joins Gandhi Jayanti Commemoration
[Prime Minister’s Media Division]
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Unions resist tripartite EPF management plan
… warn of dire consequences
A group of trade unions and civil society groups has requested President Anura Kumara Dissanayake to abandon his government’s controversial plan for the proposed tripartite management of the EPF.
The group has told the President: “We strongly object to the government’s plan to transfer the EPF to a tripartite board—jointly promoted by the Employers’ Federation of Ceylon (EFC), International Monetary Fund (IMF) and the International Labour Organisation (ILO)—and to increase the investments of those funds within private equity and debt markets.
“While the EFC and the government jointly project this plan as a ‘modern governance framework’, it poses a serious threat to the EPF’s financial stability, fiduciary conduct, and returns to workers’ life savings, with severe consequences for broader macroeconomic stability. Rather than replacing the corruption existing in the public sector, this tripartite framework paves the way for a corporate takeover of the EPF. Through this, the fund is exposed to unlawful business practices such as insider trading using internal information of EPF investments, conflicts of interest and corporate bailouts of unstable private companies.
“Sri Lanka’s corporate sector has a tremendously negative track record, which you alluded to during your victorious election campaign in 2024. This was recently unravelled by the multi-billion-dollar illicit capital flight through trade misinvoicing, which your administration is now actively working to curb in the imports sector.
“The recent banking sector fraud exceeds Rs. 13 billion; widespread corporate tax evasion destabilised the fiscal position (Sri Lanka Auditor General’s Department Annual Reports) and consequently inflated the tax burden on the general public. The EFC has found it convenient to remain silent about these crimes, possibly assuming that their silence would preserve their social standing. Considering this inherent corruption within Sri Lanka’s corporate sector and its disregard to the living standards of the general public, there is no realistic basis to integrate corporate interests to actively manage the EPF. The corporate sector of Sri Lanka has not developed sufficiently on technical and ethical grounds to safely entrust the largest retirement savings pool in the country. The EPF is a captive fund that has no mechanism for the owners to divest if the management is corrupt. This further increases the possibility of corporate fraud when the management of the fund is jointly held with the corporate sector.
“Furthermore, during the recent public discussion with trade unions, Deputy Minister of Finance Dr. Anila Jayantha pointed out that the domestic debt restructuring (DDR) would inflict a loss of Rs. 600 billion to the EPF. Our independent calculations—formally submitted as an affidavit to the Supreme Court approved by the Federation of University Teachers’ Associations in 2024—reveal that nominal loss alone is Rs. 634.4 billion. When factoring in foreclosed reinvestment returns, the true loss skyrockets to Rs. 1,711 billion, wiping out 48% of the fund’s projected gross income for the 2023 – 2028 period. Under the pretext of safeguarding the banking system, this colossal robbery preserved high yields on government bonds held by commercial banks and high-net-worth individuals, subsequently reaping them astronomical profits. Now, the exact same plunder is rearing its head again disguised as a tripartite committee.”
“The main arguments supporting our resistance and viable alternatives for optimising EPF management directly under the Central Bank of Sri Lanka (CBSL), are outlined below.
“Objections to the government’s tripartite proposal:
1. The “International best practice and conflict of interest fallacies”
The government holds that tripartite management of pension funds is the “international best practice” and that there is a “conflict of interest” in CBSL managing the EPF. They are key pillars justifying government’s tripartite proposal.
These two positions are shockingly misleading given that four of the five largest pension funds in the world, in Norway, Japan, the U.S., and Singapore, are managed directly by state bodies or central banks. Therefore, ‘international best practice’ in pension fund management is the exact opposite of what the government and the IMF are proposing. We hence reject these baseless positions.
2. Corporate captivity and bailouts
It is clear that the EFC is desperately pushing for this proposal at a time of global uncertainty, to cushion the effects of the crisis and maximise gains. Under corporate influence within the proposed tripartite board, the private conglomerates can use the multi-trillion-rupee EPF to continue their unstable commercial operations without having to risk their own capital or savings to do so. This will severely erode the financial stability of the EPF and its returns.
3. Risk of front running
“Because the EPF is a colossal fund, its investment decisions can alter asset prices. This creates immense monetary value for the information generated by its investment decisions. Corporate representatives on the proposed tripartite board will be perfectly positioned to use this information to trade ahead of the EPF (front-running), buying assets cheaply and dumping them onto the EPF at inflated prices for guaranteed corporate gain, resulting in a reduction of returns to the EPF.
4. Unavoidable loopholes
“Presence of a separate group of investment analysts, trade union representatives and government officials within the proposed tripartite structure cannot prevent pre-market corporate access to EPF’s investment decisions. Investment proposals made by the analysts has to be first approved by the proposed tripartite committee, making it impossible to prevent corporate access to insider information on EPF investments.”
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Two arrest warrants issued for Gnanasara thera
The Colombo High Court and Court of Appeal yesterday issued arrest warrants for the Bodu Bala Sena general secretary Galagoda Aththe Gnanasara in a case involving an alleged statement insulting Islam.
The arrest warrants were issued on Tuesday and Wednesday. The Court of Appeal issued an open warrant two weeks after the court rescinded the presidential pardon granted to the thera when he was serving a six-year term for contempt of court.
The Appeals Court also imposed a travel ban on the monk and ordered that the Controller General of Immigration and Emigration be informed of the restriction.
The case was taken up before Colombo High Court Judge Buddhika C. Ragala. Gnanasara Thera was not present when the case was called.
A medical report was submitted stating that Thera was unwell, while his sureties also failed to appear before court. His counsel, Asoka Weerasuriya, told court that his client wished to bring the case to an early conclusion and that representations had been made to the Attorney General in that regard.
However, after considering the submissions, the High Court judge said he was not satisfied with the medical report submitted on behalf of the accused. The court also noted the failure of the sureties to appear.
The judge subsequently ordered that Gnanasara Thera be arrested and produced before court.The Attorney General filed the case under provisions of the Penal Code, alleging that remarks made by Gnanasara Thera concerning the Holy Quran amounted to an insult to Islam.
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