No Maithri for ‘Bond Brigade’

• President Sirisena in televised address to the nation bares highlights of reports of Presidential Commission of Inquiry into the controversial Treasury bond issuance and Presidential Commission of Inquiry to investigate and inquire into Serious Acts of Fraud, Corruption and Abuse of Power, State Resources and Privileges
• Back all key recommendations, seeks support of all for their implementation 
• Bond Commission faults Minister Ravi K, former CB Chief Mahendran, son-in-law Perpetual Treasuries’ Arjun Aloysius, Kasun Palisena and others for multiple criminal and civil offenses including bribery and insider dealing
• President directs Attorney General and Bribery Commission and other authorities to take follow-up action
• Commission faults PM for being misled by Mahendran and for not taking action
• PTL profit of Rs. 11 billion from secondary market within five months was largely the loss of EPF, Mahapola Scholarship Fund, NSB and Insurance Corp.
• State sector losses to be recouped from offenders via quicker Parliament approved new legislation
• CB ordered to carry out forensic audits; probe alleged irregularities in bond issues under former President Rajapaksa regime too
• Governor and Monetary Board members must be appointed by Constitutional Council; host of other recommendations made to improve regulation, public debt anagement and EPF 
• 68 reports by PRECIFAC to be referred to AG for necessary action
• Fraud, corruption, abuse of power and state resources are due to appointment of unqualified personnel in public sector
• President says his non-partisan action reaffirms no cover-up of wrongdoings and promotes transparency and accountability 
• Says people and country can be happy over independent and impartial judiciary

President Maithripala Sirisena yesterday revealed to the public recent incidents of corruption and bribery over the issuance of Treasury Bonds as well as serious acts of fraud and abuse of power and state resources, backing key recommendations from specialists tasked with an independent probe.

In a much-awaited prerecorded televised address to the nation, the President detailed the incidents, several of which were criminal in nature, and named the culprits, among whom were the former Finance Minister Ravi Karunanayake, the Central Bank Governor Arjuna Mahendran and his son-in-law Arjun Aloysius along with other officials and private sector personnel.  The presidential action followed the submission and study of final reports from the Presidential Commission of Inquiry into the controversial Treasury bond issuance (PCoI) and Presidential Commission of Inquiry to investigate and inquire into Serious Acts of Fraud, Corruption and Abuse of Power, State Resources and Privileges (PRECIFAC).

After revealing the various incidents and acts of bribery, corruption and insider dealing, abuse of power and state resources, the President ordered follow-up action by the Attorney General, the Bribery Commission, the Central Bank and other authorities as well as Parliament and civil society.

Referring to the probe on the controversial Treasury bond issuance, the President said the Commission had discovered found fraud and corrupt practices and legal action should be taken. He said the biggest losers were state sector institutions which had lost Rs. 8.5 billion as the primary dealer Perpetual Treasuries (PTL) of Arjuna Aloysius,  had profiteered Rs. 11 billion within five months of the Treasury bond auction. It was revealed that PTL earned profits through means that were illegal with the involvement of the then Central Bank Governor Mahendran, bank officials and some external parties.

The Commission also refers to the allegation against former Finance Minister Ravi Karunanayake regarding the payment of rent for the penthouse by Walk and Raw Company, owned and controlled by the Aloysius family. “Mr. Karunanayake was responsible for that and [the Commission] recommended that the Government should take necessary action under the section of bribery and corruption and further legal action should be taken under the Penal Code for giving false evidence at the Commission,” President Sirisena told the nation.

He said that although the Commission found the appointment of Mahendran as Governor by Prime Minister to be proper, the statement made in Parliament by the Premier was based on facts presented by Mahendran and Samarasiri. “The report also says that the Prime Minister should not have done that. The Commission stated that, moreover, these facts were before the COPE Committee and the Prime Minister had not stated that because of that he had not taken proper action against Mr. Mahendran,” the President said in his statement.

Sirisena’s and the Commission’s wrath was not confined to bond issuances of the current regime. The Commission was of the opinion that irregularities have taken place even in 2008 and hence has recommended that the Central Bank should first conduct a forensic audit with regard to alleged fraud and corrupt practices from 2008 to 2015 and based on such findings, legal action should be taken after an investigation.

The President also cited the Commission’s expose of the misuse of funds of the Employees’ Provident Fund (EPF), weaknesses of the systems and procedures at the Central Bank, the Public Debt Department as well as shortcomings in the Monetary Law Act, etc.

The Commission has made a host of recommendations including that the Governor and Monetary Board must be appointed by the Constitutional Council, an introduction of a code of conduct and that the EPF be restructured.

Noting that funds lost by state institutions which bought or traded bonds with PTL must be recovered from offenders, the President said that the Commission has recommended parliamentary legislation could be passed to expedite the recovery process instead of time-consuming civil legal action.

“I have already submitted a copy of the commission report to the Attorney General and he will identify the persons against whom the legal action must be taken and initiate necessary criminal or civil legal action to implement the recommendations of the Commission,” President Sirisena said.

The Secretary to the President has been told to hold monthly review meetings on the progress of follow-up action.

The President also said that the final report would be presented to Parliament and made public.

Commenting on PRECIFAC, he said 68 submitted reports would be referred to the Attorney General for necessary action. Sirisena said that PRECIFAC had found that fraud, corruption and abuse of power and state resources were due to the appointment of unqualified personnel in the public sector as well as several other reasons.

Denying various allegations levelled against him, the President said his apolitical action reaffirms that there is no cover-up of wrongdoings on his part and promotes transparency and accountability. He also said the people and country could be happy over the independent and impartial Judiciary.

(Daily FT)