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A nation waits in suspense as the ‘on-off’ guessing game continues over dissolution of Parliament to pave the way for general elections. The menu on this week’s political agenda is for a different course. “I can assure that a new Government will be installed by September,” declared President Maithripala Sirisena during a breakfast meeting with heads of state-run and private media. After dissolution, he noted, that it would take two weeks to call for nominations. Thereafter, elections would have to be held within five to seven weeks, he said. He avoided making any reference to the date of dissolution.

At the media conference at Sirikotha, Prime Minister and UNP leader Ranil Wickremesinghe defended the committee that probed the controversial Bond issue.

In an extreme scenario, say for a Government to be in office by the third week of September, nominations would have to be called at least by mid-July or late June. In such an event, dissolution would have to be in early or mid-June. Even if he did not explicitly say so, Sirisena’s announcement to ensconce a new Government in place in September would clearly mean there will be no 20th Amendment to the Constitution (20A). Of course, there is also the prospect of his dissolving earlier if he so wishes. But would he? Firstly, the 20A to incorporate electoral reforms still remains inconclusive and stalemated. Secondly, even in the most unlikely event of a draft 20A emerging, it would have to be gazetted and two weeks allowed for the public to study its provisions and petition the Supreme Court if they believe any provision violates the Constitution. Thirdly, and most importantly, a two thirds majority may not be available to pass it in Parliament. Sirisena has lost control of the Sri Lanka Freedom Party (SLFP) parliamentary group, though he is now the party leader. He is conscious of this reality. All this means only one thing — the next elections will be on the existing proportional representation system. During the meeting with media representatives, Sirisena conceded that “most of the MPs believe the voters need time to get accustomed to a new voting system. Political parties would require time to organise themselves under a new system. That is the general consensus.”

War crimes report and Sri Lanka’s response
Sirisena’s remarks that a new Government would be in place by September is also a message to the international community. US Secretary of State John Kerry, during his May visit to Sri Lanka, did ask Sirisena when he hoped to hold elections. He gave the same roundabout answer — a new Government would be in office by September. He was making clear that the consequences of a three-member team’s report on alleged war crimes, due before the UN Human Rights Council in September, would be tackled by the new Government. Sirisena went a step further. He told the media that a domestic inquiry on this issue would begin next month. The inquiry is to be focused only on specific acts of alleged human rights and international humanitarian law violations.

The Government wants to be in a position to tell the UNHRC the measures it took in the light of findings from the limited local probe. The remarks came in the backdrop of comments during the media briefing last week by official spokesperson Minister Rajitha Senaratne. He said the Government need not heed the demands of the United States or other western countries and hold elections. He wanted the polls delayed. The remarks came in response to a call by Foreign Minister Mangala Samaraweera for elections by July. He had during interactions with counterparts, particularly from western countries, briefed them on measures for a ‘credible’ investigation into alleged war crimes during the final stages of the separatist war. Such a mechanism was to be in place with a new Government in office, just ahead of the next UNHRC sessions. Minister Senaratne’s remarks, reported last week, were to cause a flurry of diplomatic activity. The result — the announcement of an early domestic inquiry than earlier envisaged. There was no media briefing this week. Minister Senaratne was away in Geneva attending a World Health Organisation (WHO) event.

With his remarks to the media, Sirisena has also contradicted his confidant Minister Senaratne. It was just last week Senaratne told the weekly news briefing, “There is no final decision regarding parliamentary elections being held under the existing PR system. The priority is to pass the 20th Amendment.” Not only that. Senaratne said that both, the Right to Information Bill and the National Audit Commission Bill too would be presented in Parliament. Now, Sirisena has declared dissolution will be after the Constitutional Council is set up.

Unlike previous regimes, contradictions are galore in the present one and have become a hallmark. Even if their leaders, preoccupied with their own pursuits, are blissfully unaware, the situation is contributing in no small measure to instability. There are concerns by would-be investors, not to mention the apprehensions of the local business community. That matters are on “auto pilot” in most sectors was underscored by developments in the Jaffna peninsula this week. Ironically, it was six years ago that the area was liberated after the military defeat of the Tiger guerrillas. Minister Karu Jayasuriya who was attending a racial unity conference at the Veerasingham Hall (near the main bus station in Jaffna) was asked not to travel less than a kilometre away for lunch with Governor H.M.G.S. Palihakkara at his official residence (near the Kachcheri). The engagement was cancelled. Mobs were attacking the Magistrate’s Court premises. With the Army confined to their camps, the failure of the police to maintain law and order has caused concern in the security establishment. An inquiry is now under way as some Police officers were transferred. The incident was grist to the mill for former President Mahinda Rajapaksa. In public remarks he warned of the re-emergence of Tiger guerrilla activity — a highly sensitive issue in the south. Though Rajapakasa’s claim is furthest from the truth, the Government has to take the responsibility for what happened. There is little or no ‘hands on management’ and senior officials at the Ministry of Defence and the Ministry of Public Order are not acting effectively.

That discussions over 20A remains stalemated became clearer last Monday when Sirisena chaired a meeting at the Presidential Secretariat. It was with Prime Minister Ranil Wickremesinghe and the nine member-ministerial subcommittee tasked to formulate electoral reforms. Spearheading Sirisena’s proposal for a Parliament with 255 seats was Jathika Hela Urumaya (JHU) General Secretary and Minister Patali Champika Ranawaka. In terms of this proposal, 196 seats are to be through elections on a proportional representation system on an electorate basis. The remaining 59 seats are to be on a national proportional representation system. The United National Party (UNP), on the other hand, insisted that the existing 225 seats should remain. It wants 125 seats where MPs are to be elected on the ‘First-Past-the-Post’ system while the rest are on the PR system. As revealed in these columns last week, the talks were inconclusive and the subcommittee sought a meeting with President Sirisena and Premier Wickremesinghe.

“There is no agreement. JHU’s Minister Ranawaka and a few others were trying to impose a system where the concerns of minor and minority parties were not included. Not even the UNP’s viewpoints were heeded,” said Sri Lanka Muslim Congress (SLMC) leader Rauff Hakeem, a member of the subcommittee. “It is wrong to say the minorities will be affected. This is basically a proportional representation system,” argued Minister Patali Champika Ranawaka. This meeting ended inconclusively, too.

Some UNP ministers had hoped President Sirisena would refer to the dissolution of Parliament during their weekly meeting last Wednesday. A function organised by the Ranaviru Seva Authority led to the ministerial meeting starting after 7 p.m. Sirisena Arrived late. Three different pieces of legislation dealing with Buddhist affairs and moved by Minister Karu Jayasuriya were approved. Jayasuriya told the Sunday Times, “One such legislation will empower the Venerable Mahanayake Theras to maintain discipline among members of the Sangha” or Buddhist clergy. That is the Bhikku Kathikawatha Bill. The two others are the Vihara-Devalagam Bill and the Buddhist Publications Registration Bill.

A code of conduct has been in place since 1925 but now for the first time, it will be given legal effect, said Jayasuriya. An hour or so later, with most memoranda not discussed, the sessions were adjourned. President Sirisena, Premier Wickremesinghe and their ministerial colleagues had to attend the 75th birthday party of Public Order Minister John Ameratunga at the Galle Face Hotel. It is here that Sirisena met several guests. Many of them posed him the question — when would you dissolve Parliament. He replied he would do so after the Constitutional Council was in place. From electoral reforms, the cause for a delay in dissolution now was the formation of the Constitutional Council. No easy task. A UNP minister who was at the birthday party said similar remarks were made by Sirisena when there was haggling over provisions in the 19A between the UNP and the UPFA parliamentarians. He was in his room in Parliament when behind the scene consultations were under way. When Sirisena realised that the provisions originally envisaged were being changed, he told a group of ministers (including the one who spoke) and Prime Minister Wickremesinghe that he would dissolve soon after 19A was approved. “Yet, Parliament continues to function,” he pointed out. He also pointed out that dissolution was thereafter slotted for May 5 (after Vesak) and put off on grounds that 20A had to be passed.

Moreover, once finality is reached over appointments to the Constitutional Council, it will have to convene. Its prime task then is to appoint members to different independent commissions. The process is time consuming — and long delays, if there are disagreements over names, would be inevitable. There are examples when the appointment of independent commissions has been indefinitely delayed. One instance was under the Premiership of Ranil Wickremesinghe when he nominated Nisbeth Abeydeera as the Commissioner of Elections. The then President Chandrika Kumaratunga rejected the name leading to a stalemate. The Elections Commission never functioned and she dissolved Parliament in February 2004. Therefore, is Sirisena buying more time in the hope that the Mahinda Rajapaksa campaign would lose steam? Already, behind the scene moves have been continuing to appoint more SLFP cabinet ministers in a bid to woo them away. It certainly is an uphill task for Sirisena as he keeps shifting positions and a UNP Government is preoccupied over its insistence on parliamentary elections.

SLFP as a stand-alone party
Weeks earlier, some senior SLFP stalwarts made several efforts for a meeting with Sirisena. When they met, they sounded a note of caution — that it was imperative for them to have former President Mahinda Rajapaksa on board if they were to prevent a parliamentary election victory for the UNP. They expressed fears that a division within the party was becoming inevitable. The irony for Sirisena here is the fact that the numbers that back Rajapaksa are larger than those with him. Factions with Sirisena say that Rajapaksa’s close advisors like Wimal Weerawansa and Dinesh Gunawardena are not SLFPers but are from the United People’s Freedom Alliance (UPFA) which Sirisena wants to discard. He is looking at the SLFP contesting as a stand-alone party, but the important question is how much support he could muster. This is notwithstanding the fact that he would be involved in nominating candidates.

The members of the Constitutional Council, in terms of the 19A, are the Speaker, the Prime Minister, the Leader of the Opposition in Parliament, one MP appointed by the President, Five persons to be appointed by the President, on the nomination of the Premier and the Opposition Leader of whom two are MPs and an MP nominated by majority of MPs. Speaker Chamal Rajapaksa, will request nominations this week as a prelude to making appointments. The Constitutional Council is responsible for making appointments to the Elections Commission, the Public Service Commission, the National Police Commission, the Audit Service Commission, the Human Rights Commission of Sri Lanka, the Commission Investigating Allegations of Bribery or Corruption, the Finance Commission, the Delimitation Commission and the National Procurement Commission. Even the appointment of the Chief Justice, Judges of the Supreme Court, the Court of Appeal, members of the Judicial Services Commission, the Attorney General, the Auditor General, the Inspector General of Police, the Parliamentary Commissioner for Administration (Ombudsman) and the Secretary General of Parliament are also appointed by the Council. Former President Mahinda Rajapaksa, through an 18A, had arrogated to his office appointments to such Commissions and these key appointments earlier.

Central Bank Bond issue: UNP’s nightmare
For the UNP, electoral prospects have become brighter in view of the divisions within the SLFP. Yet, there is at least one major issue that is sure to haunt it at the upcoming parliamentary elections. That is the controversial Central Bank bond issue. In layman’s terms, a bond is a debt security, similar to an IOU. When one purchases a bond, he or she is lending money, in this instance to the Central Bank. In return for that money, the Bank provides a person with a bond in which it promises to pay a specified rate of interest for a fixed length of time and to repay the face value of the bond (the principal) when it matures or comes due. The Bank issues bonds at various interest rates and sells them to the public. Investors purchase them with the understanding that the Bank will pay back their original principal by a specific date. This is called the maturity date. Meanwhile, they continue to enjoy the income from interest.

The latest bond issue came after Arjuna Mahendran, a Singapore citizen and passport holder, assumed office as Governor of the Central Bank. The original bond issue was for one billion rupees at 9 per cent interest. However, this had been raised to Rs 10 billion for 30 years at 11.73 per cent interest. The fact that Mahendran’s son-in-law Arjun Aloysius, a Director of Perpetual Treasuries, received Rs. 5 billion worth of these bonds drew accusations of ‘insider trading’ and other malpractice. As the controversy grew, Prime Minister Wickremesinghe named a committee of three party lawyers who had little or no experience in bond issues to probe the matter. The three members were Gamini Pitipana (Chairman), Mahesh Kalugampitiya and Chandimal Mendis. They were provided the technical advice of W.A. Wijewardene, a former Deputy Governor of the Central Bank. As the Committee were to suggest, they were given terms of reference which were limited in scope.

The Committee’s report, once handed over to Premier Wickremesinghe, remained in limbo for some time. Thereafter, some of its findings were included in a news release issued by the Ministry of Policy Planning and Economic Affairs. In the process a paragraph which was not contained in the report was also included in the news release. It said: “However, the committee found that Governor Arjuna Mahendran had no direct role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept up to 10 billion rupees. The PDD had projected the government’s funding requirement as at 2nd March 2015 at 13.55 billion rupees.” That this paragraph was nowhere in the three member Committee’s report emerged only when it was tabled in Parliament belatedly, at least a month after it was handed over. The Committee only said “there is no evidence at this stage to the effect that the Governor of the CBSL (Central Bank of Sri Lanka) had direct participation….”

To make matters worse, the Committee had in fact cast serious doubts. Their report notes; “Given the sanctity and the obligations vested with the CBSL in managing the lifeblood of commerce in Sri Lanka and the onerous responsibility that calls for conduct beyond reproach, the Committee observes that it is not unfair for the general public to expect a high level of integrity in the conduct of the officials of the CBSL that includes the Deputy Governors and the Governor.” The Committee has gone further to assert that a “full-scale investigation by a proper Government Authority is warranted” and noted that “the bidding pattern of Perpetual Treasuries and securing 50 per cent of the accepted bids as unusual.”

The Committee has observed that the “Bank of Ceylon being a Primary Dealer had placed bids amounting to Rs. 13 billion for and on behalf of Perpetual Treasuries. At the interviews, both the Chief Dealer of the BOC and the CEO of Perpetual Treasuries said this was the first time ever that a Primary Dealer had forwarded bids at an auction for and on behalf of another Primary Dealer to the best of their knowledge.”

The Committee report adds: “The Chief Dealer of BOC informed the Committee that no Board approval was sought in forwarding bids on behalf of another Primary Dealer amounting to Rs. 13 billion and failed to apprise the board of BOC even thereafter. He further stated that this is not a credit facility. When the Committee questioned the Chief Dealer of the BOC he further stated that Perpetual Treasuries made a call with regard to placing the said bids and mentioned that the funding for such bid is by an Insurance Company. The Chief Dealer of BOC also stated that he inquired from the CEO of Perpetual Treasuries as to the reason of high amount of yield net of tax and the reply he received from the CEO of Perpetual Treasuries was “awoth atha thamai” (The rough meaning is colossal profit, if successful.)

“However, answering questions by the Committee, the CEO of Perpetual Treasuries denied that he mentioned that their source of funding is by an Insurance Company. He also disputed that it was he who said “awoth atha thamai” and said that it is the Chief Dealer of the BOC who said “awoth atha thamai. ” Hence, the Committee concluded that:

• Though there is no legal bar, it is unusual for a Primary Dealer to forward bids through another Primary Dealer;
• The Chief Dealer of BOC has acted without Board approval and has failed and neglected to apprise the Board of BOC thereafter;
• The Chief Dealer of BOC had failed to exercise due diligence in checking the source of funding;
• The lack of transparency and display in statements of the Chief Dealer of BOC and CEO of Perpetual Treasuries;
• The discrepancy of statements made by each other.

If the Committee’s recommendations cast serious doubts over the bond issue it has probed, its report also notes that “highly confidential” statistics of the CBSL are in the public domain. The report says that “sentiments expressed by several Primary Dealers establish a conjecture that sensitive information of the Central Bank” and the secrecy may have been compromised on occasions. Taken as a whole, it was somewhat unfair to say that the committee had whitewashed the whole Treasury Bond fiasco involving the Governor and his son-in-law. On the contrary, the committee had said that the matter warranted further inquiry.

Debate in Parliament
The opposition in Parliament seized on the Committee’s findings to move a vote of no confidence. Speaker Chamal Rajapaksa, however, ruled that the matter be referred for probe by the Committee on Public Enterprises (COPE). Even if such a probe gets under way, it would become invalid in the event of a dissolution. Premier Wickremesinghe told the House, “It is better to refer the bond issue to a parliamentary committee than discuss it in the House. Recently, the consultative committee has been appointed and I have assured that I will summon the consultative committee of my Ministry to discuss the report of the committee that looked into the bond issue”. As far as this committee is concerned the officials have said there is no loss to the Treasury. If you look at the report it has said that private placements lack transparency. Most of these were done between 2012 and 2014. This is not only about the present Governor but the report says the former Governor acted without proper authorisation.

“We can bring the former Governor and ask how he acted without consulting the Tender Board. Who is going to safeguard the former Governor? I think it will do justice to the former Governor also if we don’t take this matter up for debate and refer it to a Committee. We must give officials the opportunity to respond to these allegations. These frauds happened during the time of previous regime”, the premier said.

However, on Thursday Speaker Chamal Rajapaksa allowed a two-hour debate on the CBSL bond issue. JVP leader Anura Kumara Dissanayake said, “This Government came in to fight bribery and corruption. When Ranil Wickremesinghe sits on the chair of the Prime Minisgter, he should not forget the mandate that brought him to power. The mandate was against the Greek bond fiasco and a loss caused in millions by the hedging deal. But in a short period of time this Government has shown it is going down the same road. This also shows that there is fraud and there is also a move to cover up those involved in fraud. If you are really against corruption, you should be against this. How can you try to shield this kind of happening. Tap your conscience and ask how you spoke three months ago and if this does not constitute robbery.

“This is far worse than a robbery that takes place when roads are is being built. This is a robbery that will rise up in waves. What is the need to safeguard the Governor? I am aware that many were against the appointment of Arjun Mahendran but on an undertaking personally by the Prime Minister the President gave his approval. Now you are forced to shield him. He was a handpicked person and in a short time he is involved in a fraud.”

Premier Wickremesinghe responded to the charge again at a news conference at the UNP headquarters – Siri Kotha – on Friday. He said, “We appointed a Committee on our own when there were allegations about the (Rs) 10 billion bond issue. The Committee has said that this was a public auction and the decision was taken by a tender committee and the Governor only approved the decision of the Tender Committee, but we did the correct thing. Before anybody shouted we appointed a committee. Some of the parties went to the Supreme Court to seek a Fundamental Rights order. At the preliminary stage, after hearing for four days it was dismissed by the Supreme Court.

‘We have done this to show transparency. The Speaker now said that the matter should be looked into by COPE. We have no objections because we have always said that the Parliament is the supreme body responsible for financial control. In the process the Committee has come out with a very startling discovery, that in the years 2012, 2013 and 2014 that 2.7 trillion rupees, that means 2700 billion rupees was taken into the bank by not following the proper tenders. Only the friends got the opportunity of giving money to the bank and then they sold the bonds at a very profitable rate on the market.

“This is 270 times the amount involved in the February transaction, for three years. The bulk of it was done through private placement. The private people can come and place it. The private people who got the permission were those who were friends with him can come and place it. Not anyone else. The committee itself said that the primary dealers interviewed by the Committee were of the opinion that private placement lacked transparency. It was not an equal playing field. ”

Most of the accusations the Government now faces, including allegations that its probes on opponents for bribery, corruption and malpractices were a witch hunt, could easily have been avoided. That is if a proper inquiry into the Central Bank bond scandal was conducted promptly, that too by experts in the field. The Commission Investigation Allegations of Bribery or Corruption initiated an inquiry into the matter, but the progress of that inquiry is clouded in secrecy. The Director General quotes the law not to give information to the media. That it is becoming a serious election issue is no secret. Those in the villages, not so familiar with bond issues, are also talking about the rot and quoting the slogan the JVP once made famous; unuth ekai; munuth ekai.