Handunnetti responds to Cabraal's statements on Forensic Audit Report

Colombo (News 1st): The Economic advisor to the Prime Minister, former Central Bank Governor expressed his opinion on the Forensic Audit Report of the Central Bank Bond Issue, at a recent press briefing. Today, the newly appointed Chairman of COPE Sunil Handunetti responded to what was said. A forensic audit is an examination and evaluation of an entity's or individual's financial records to derive evidence that can be used in a legal proceeding. A forensic audit is designed to focus on reconstructing past financial transactions for a specific purpose, such as concerns of fraud, which are not covered through an external or internal audit. Accordingly, on the recommendation of the presidential commission, the Central Bank of Sri Lanka called tenders from international audit firms to conduct the forensic audit on past treasury bond transactions. On the 05th of February Senior Advisor to Prime Minister Ajith Nivard Cabraal noted that they claim my sister Shiromi Wickremesinghe was employed at Perpetual Capital Holdings. He added that she resigned from her position on the 8th of March 2015, the minute she heard about the Bond Scam. He said that she has acted in an honourable manner and has not stolen a cent. Responding to this W.A. Wijewardena said:

"Ajith Nivard Cabraal's sister, Ms. Shiromi Wickremesinghe was a director of the holding company of Perpetual Treasuries Limited, while Ajith Nivard Cabraal was the Governor of the CBSL. If Nivard Cabraal has disclosed this to the Monetary Board, and if he had refrained from any dealings with PTL, that would have been fine. But of course, I know, after my retirement, from the Central Bank, Cabraal's sister was appointed Chairperson of the HDFC Bank, one of the banks that needed to be regulated by the Central Bank and will have to examine whether the correct governor's practice had been followed by him. When the commission asked W.A. Wijewardena, for his views on whether a failure by Ajith Nivard Cabraal to disclose, to the Monetary Board, that his sister, Ms. Shiromi Wickremesinghe, was a director of the holding company of PTL, would have been in inappropriate, he replied in the affirmative. You know for the very first time in February 2015, Perpetual Treasuries did the first deal for Rs 11,303 million, and they gained a profit from the Rs 222 million loss to the EPF, from that deal. At the same time, Shiromi Wickremesinghe was the director of that holding company Arjun Aloysious was a shareholder and the director at the same time of PTL. That is the relationship. That is the conflict of interest. I think before that the HDFC Bank also had a relationship because PTL was the brokering company of HDFC. You know very well, if you are broker of any part, there will be a much more relationship. The same happened after 2015 when appointing Arjuna Mahendran as the Governor of the Central Bank, the same issue happened."

Further on the 05th of February Cabraal noted that his opinion is that this should be handed over to the Police. He noted that this inquiry should be done through the Police because they have all the details. He said the Police can question the necessary parties as they have the powers to do so. Handunnetti responded to this statement as well;

"I am saying if you want to go to the find these facts and figures in a police inquiry, the police can't take action. This is a criminal type issue. How can a police investigation find in detail about the internal relationships? I saw some statements given by the former governor, Ajith Nivard Cabraal. He said it is not needed to go to the Forensic audit, because it is a fraud. It is illegal. It is not the duty of the Central Bank or the monetary board. But he proposed to go to the police investigation. They stated very clearly, they used the CID report also. That means the Police have already given the evidence for the Forensic audit. Why are we going to the police? It is to waste time. It is a waste of time. If President Gotabaya Rajapaksa is starting a new investigation, again after using the police statement and everything. No need to waste time. Because they have done everything. The Bribery Commission has issued a statement here. Police gave a statement. The CID gave all the records. The Presidential Commission has given the report. They are using the COPE report. If there are some factors not available for the audit, then we can seek it from the court. Because this is evidence for the court. Forensic audit means like forensic medicine."

Meanwhile, Ajith Nivard Cabraal also noted that there are reports that the state lost Rs 10.4 billion by issuing treasury bonds. He said they point out that 4670 bond issues had taken place during the period, and 1105 treasury bond issues had taken place below market price and that is how the loss was incurred. He added that 2783 issues had taken place above market price, in that sense, the government should benefit from the profit. However, Cabraal noted that they do not point out this fact. He said if there is a loss, the loss must be explained, likewise, if a profit was generated, the profit too should be explained. Responding to this statement Chairman of COPE Sunil Handunnetti said:

"I mentioned several times that this is a crime, not similar to a crime like a pick-pocket. This is a white-collar crime. They are using their knowledge and status, they used every power to do this crime. I want to say the difference between audit, profit and loss. I mean, in some institutions, some companies find profit and loss. You can do your performance evaluation based on that. But the audit is different. Auditors' responsibility is, he is going to find what is the minimum loss. It is a loss investigation. It is not going to be on how they earned the profit. If you need the profit statement, you can evaluate it from the records. We can see it very clearly. But in the forensic audit, they were deeply concerned about how the loss occured."