CBSL Bond Scam: Mahendran received instructions from PM before bond auction

CBSL Bond Scam: Mahendran received instructions from PM before bond auction

CBSL Bond Scam: Mahendran received instructions from PM before bond auction

Written by Lahiru Fernando

02 Oct, 2017 | 6:42 pm

Arjun Aloysius, Kasun Palisena, Nuwan Salgado and Sachith Dewathantri of Perpetual Treasuries have been banned from travelling overseas by the Fort Magistrate.

Their positions at Perpetual are as follows;

  • Arjun Aloysius – Owner of Perpetual Group
  • Kasun Palisena CEO of Perpetual Treasuries
  • Nuwan Salgado – Chief Dealer
  • Sachith Devathanthri – Senior IT executive 

The magistrate issued the travel ban on the group earlier today, October 1, following an application made by the CID based on their investigations and on the advise of the Attorney General.

There were more developments at the Bond Commission today (October 2).

Our report begins with one question…;

To whom did Arjuna Mahendran pledge allegiance on taking up position as Central Bank Governor?

Prime Minister Ranil Wickremesinghe gave direct instructions to Mahendran, just three days before the controversial bond auction.

What were they? – PM asked the then-Central Bank Governor to stop Direct Placements.

And now, the Criminal Investigations Department is conducting investigations into bond issuance’s done during Mahendran’s tenure as Governor.

The Prime Ministers instructions are based on the recommendations made by Arjuna Mahendran, faults in the Public Debt Department manual and irregularities that took place in the past.

However, Senior Additional Solicitor General Dappula De Livera pointed out even at the 33rd meeting of the Monetary Board in 2017 there was no decision on stopping direct placements and it was never discussed at the meetings of the Cabinet Sub Committee on Economic Affairs.

Mahendran however, disagreed and said the minutes of those meetings were sketchy.

Senior ASG General Dappula De Livera claimed the meeting of the Cabinet Sub Committee on Economic Affairs (CSCEA) which convened on the February 24, 2015 only decided to prioritize and implement all road projects with available funds and list to be prepared.

In addition, the minutes of CSCEA which convened on the February 3, 2015 claim it was only advised to expedite and finish rural road projects and cost of highways to be re-evaluated.

Both these meetings were chaired by Prime Minister Ranil Wickremesinghe and attended by individuals including;

  • Then-Finance Minister Ravi Karunanayake
  • Minister Kabir Hashim
  • Malik Samarawickrama

The Attorney General’s Department pointed out no decision was taken at both these meetings on raising Rs. 15Bn or Rs. 75 Bn immediately.

The only document to substantiate Mahendran’s claim of a urgent funding requirement is the undated letter from Ravi Karunanayake, which was produced to the commission by Mahendran’s Counsel.

Arjuna Mahendran however disputed the minutes from the meeting dated February 24, 2015 and reiterated there was a urgent funding requirement of the government.

Arjuna Mahendran did not take oaths when appointed as the Central Bank Governor

According to the Constitution article 165 (1), Every public officer is required to take an oath on entering upon the duties of his office.

However according to Mahendran, he was never asked to take an oath and never advised on the necessity of taking an oath.

As Mahendran had failed to take an oath, the AGs Department said he had no intention of serving the republic but only to serve himself and his son-in-law Arjun Aloysius.

Mahendran disagreed.

Arjuna Mahendran said he did not direct the Superintendent of Public Debt to accept 20 Bn at first and then 10 Bn in bids following the auction on February 27, 2015.

However, Dappula De Livera said Mahendran was the sole crusader in that decision and was lying to the commission.

He went on to say the PDD was compelled to make a recommendation to the Tender Board to accept Rs. 10.058 Bn to suit Mahendran’s direction.

The three reasons given by Mahendran to Tender Board Chairman P.Samarasiri to accept the 10 plus billion, was the removal of penal rate, PDD miscalculated market appetite for a 30 year bond and governments requirement for more funds.

The Senior Additional Solicitor General said the only way Perpetual Treasuries Limited could have bid Rs 15 Billion – which is similar to what Mahendran claims as an initial funding requirement, is only if it had prior information.

He said Arjuna Mahendran gifted his son-in-law market sensitive information and fixed the auction.

Arjuna Mahendran said in early 2015, Aloysius communicated he would be stepping down as CEO of PTL due to accusations on conflict of interest.

Mahendran was appointed Governor in late January 2015, the question was how did Aloysius know Mahendran will be the Governor?

Mahendran said he told his family about the appointment but never discussed CBSL matters at home.

Arjuna Mahendran had discussed the matter on conflict of interest with Prime Minister Ranil Wickremesinghe, Ravi Karunanayake , Kabir Hashim and Malik Samarawickrema.

As Mahendran said he would keep an arms length when dealing with PTL, the above persons had said it was not an issue and there will be no conflict of interest.

Mahendran in fact raised his hands to show his arms length.

There is no record of Mahendran disclosing his relationship with Aloysius to the Monetary Board, said the AG’s Department.

Mahendran said his daughter worked for a firm in Singapore called Religare when he was serving overseas, and his son worked at KPMG which was the audit firm that audited HSBC when he was serving there.

He accepted the conflict of interest is comparable to the Central Bank Governor and the owner of a Stand Alone Primary Dealer living in the same house.

Justice Prasanna Jayawardena pointing out that Former Governor Ajith Nivard Cabraal’s sisters serving as director of PTL was another incident of conflict of interest, noted wrongs of the past are not an excuse for them to happen in the future.

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