Financial Times

Exposing corruption in Sri Lanka


The Sunday Times this week received letters and comments on the courage of Kimarli Fernando, a former staff officer at Standard Chartered Bank (SCB), who has given more details of the hedging scam now before courts. In an affidavit to court which reads like a Hollywood movie plot about bad guys, Ms Fernando bared details of unethical doings of the bank CEO Clive Haswell and another officer, Rukshan Dias, in pushing ahead with the hedging deals. More details of the affidavit are reported in another part of this section.

It was the Sunday Times that exclusively broke the news last year of a massive $800 million bill that the Ceylon Petroleum Corporation owes five banks led by SCB in hedging contracts that were one-sided and thereby lopsided. The report created a storm and led to petitions and counter-petitions being filed in the Supreme Court. Unfortunately after the government refused to obey a court ruling to reduce fuel prices, the Court had to close the case after sharp criticism of the way the deals were manipulated and how some CPC officials were ‘taken care of.’

However until Ms Fernando’s bold revelation which has drawn admiration for her courage in exposing white collar crimes at the highest level and putting her job on the line, not much was known as to how a few honest officers in the bank urged the higher-ups to explain to the CPC in detail about the risks involved, which was not done. The CPC didn’t have the expertise to understand the technicalities of such a complex transaction and as a result signed on the dotted line and was well and truly taken for a ride, downhill.

The issue at stake is the CPC payment which is a large chunk of the country’s reserves and if it is made, the Central Bank would have a huge dent in its position despite the entry of the $2.6 billion IMF facility.
Reader Mohan Perera, in a comment that we are publishing on this page, says, “reading the affidavit of Ms. Kimarli Fernando was refreshing and restored my hopes for this country, that we may still have ways of restoring a higher standard for the conduct of business in this land. We need brave people to come out and speak against wrongdoing and some form of protection is necessary for those who do have the courage to speak out.”

Another reader in an email, noted, “whistleblowing is what we need to activate in this country. Kimarli's disclosures are like a breath of fresh air. We need more courageous people to blow.” Bravo … Ms Fernando, the Sunday Times applauds you for your courage in an era where governance, transparency and ethics in business are just talk and nothing else. Take for example the case of the former Chairman of the Ceylon Chamber of Commerce (CCC), Jayampathi Bandaranayake who said at the chamber’s AGM two weeks ago that recent Supreme Court judgments reversing privatatisation decisions could affect foreign investment.

hile this is a load of crap for anything that is crooked and wrong must be exposed, trying to hide bad deals - even if they are unearthed years after the transaction – is like saying let’s pardon a murderer because the offence was committed many years ago and now the offender is a ‘good citizen.’
We need not say more than quote from one of the letters received from a reader on this issue, “There are pontificating private sector officials who claim that exposures are bad for attracting investment and the image of Sri Lanka. This is a load of rubbish. Genuine investors will be happier with the knowledge that the judiciary would overturn corrupt deals. It is the fly by night investors who would be scared to invest.”

Furthermore Mr Bandaranayake was thrown into the deep end in the CCC fiasco over the chamber probe against John Keells Holdings (JKH) over the judgment reversing the privatisation of Lanka Marine Services, a JKH company. The former CCC chairman clearly had conflicts of interests and rather than not taking part in the proceedings, he chose to do so against a lot of opposition. When it came to his turn to provide a decisive vote on the matter, Mr Bandaranayake – who went to Singapore with JKH chairman Susantha Ratnayake as directors of Ceylon Tobacco Co while the CCC chairman was heading the probe against JKH – voted for the company! The former CCC chairman should have clearly stayed away from discussing these cases at a public forum.

The third issue we like to flag this week is the application by P.B. Jayasundera to return to the Treasury because the President needs him in the ‘national interest’. Officials at the Finance Ministry and the Treasury are very disturbed at these developments saying if the highest court of the land had penalised them for wrongdoing, they would have also faced disciplinary action. Not so in the case of Dr Jayasundera who has survived many political masters and is still powerful, even out of office. His return will not only set a bad precedent in ensuring discipline in the government service but also raise more questions on the government’s ethics, governance and transparency structures.

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