My attention was drawn to a casual, and often repeated, notice from the Central Bank last week on the future of alleged rogue bond trader Perpetual Treasuries Ltd. It said that the Monetary Board of the Central Bank of Sri Lanka has decided to extend the suspension of Perpetual Treasuries Ltd “from carrying on the [...]

Business Times

Lest we forget …


My attention was drawn to a casual, and often repeated, notice from the Central Bank last week on the future of alleged rogue bond trader Perpetual Treasuries Ltd.

It said that the Monetary Board of the Central Bank of Sri Lanka has decided to extend the suspension of Perpetual Treasuries Ltd “from carrying on the business and activities of a Primary Dealer for a further period of six months with effect from January 5, 2023, in order to continue the investigations being conducted by the Central Bank of Sri Lanka”.

This was the umpteenth time the Central Bank has issued such a ruling since the infamous Treasury bond scam exploded on February 27, 2015 causing losses totalling billions of rupees to the state. It was the largest reported financial scam in Sri Lanka and a major setback to the newly- elected government of President Maithripala Sirisena.

What has happened to the various cases and probes pertaining to this incident? Why is it taking so long – nearly eight years – for the Central Bank to complete its investigations?

This was the same question that Kalabala Silva, the often agitated academic, posed during a Thursday morning call.

“I say…..the courts have issued a strong verdict against former President Maithripala Sirisena and others in the case pertaining to the Easter Sunday terror attacks. This must be the first time such a verdict has been imposed against a former President of Sri Lanka,” he said, adding: “I wish the same speed and progress would be shown in the bond scam case.”

“Yes, the bond case and its inquiries are simply dragging on,” I said.

“The suspects in these cases have been in and out of jail and currently out on bail. And there is little media attention to this case and ongoing investigations except for a statement from the Central Bank, once in six months, on extending the suspension of Perpetual Treasuries operations for further six months,” he said.

“Another issue that has been swept under the carpet is the sugar scam during the tenure of the Gotabaya Rajapaksa administration in which the loss to the government was much more than the bond scam,” I said.

As we wound up our call after discussing the state of the country, I heard the trio under the margosa tree, discussing the former President’s case.

“Shreshtadikaranaya honda vinishchayak deela thiyenawa paasku irida naduwe. Den hitapu janadipathi thumata miliona ganan rupiyal gevanna thiyenwa wandi hatiyata. Mama kalpana karanne eya kohomada miliyana 100k hoyaganne kiyala (The Supreme Court has given a good judgment in the Easter Sunday case. Now the former President has to pay millions of rupees in compensation. I wonder how he would get Rs. 100 million),” asked Serapina.

“Mekae rasawath kathawa thama, ohu kiyana eka yaluwangen hoya gannam kiyala. Matath hitayanam loku thaen wala kattiya oya wage salli denna puluwan (What is interesting is that he says he will find the money from his friends. I wish I had friends in high places who would also give me money just like that),” laughed Mabel Rasthiyadu.

“Badu ekathu karana kattiya eyage yaluwan pitipasse yanna puluwan, kalu salli hanguwa kiyala chodanawa uda (The taxman might go after his friends accusing them of concealing black money),” added Kussi Amma Sera.

As I went back to the computer to write today’s column on the forgotten bond scam case, I recalled all the events pertaining to this case.

Then Finance Minister Basil Rajapaksa, in a budget speech in November 2021, said Rs. 8.5 billion earned by Perpetual Treasuries Ltd., would be transferred to government coffers.

He said according to a Presidential Commission of Inquiry report on the issue, Perpetual Treasuries Ltd., has made profit mainly through “price-sensitive inside information” and “market manipulation”.

“Therefore, this report identifies that Rs. 8.5 billion is received by wilfully violating the provisions of the code of conduct issued by the Central Bank of Sri Lanka under the Registered Stock and Securities Ordinance No. 07 of 1937, to the primary dealers on best practices,” Rajapaksa said.

The question that must be asked is if the Commission of Inquiry was able to conclude its findings, why is it taking so long for the Central Bank to finish its probe on Perpetual Treasuries as a primary dealer?

Perpetual Treasuries is owned by Arjun Aloysius, son-in-law of ex-Central Bank Governor Arjuna Mahendran who was accused of interfering in the bond auction in which Perpetual Treasuries gained enormous benefits. Soon after the bond scam probe began, Mr. Mahendran flew to Singapore where he is a citizen and remains there till today.

The Commission in its report passed several strictures on Mr. Mahendran, Mr. Aloysius and Perpetual Treasuries CEO Kasun Pallisena and recommended stringent action.

In an October 2016 story, the Business Times reported on an internal Central Bank investigation which faulted Perpetual Treasuries on many issues. Soon after the Business Times report appeared, the Central Bank didn’t deny the report but said it had not been authorised for public circulation. It said the Police had been asked to investigate how the report leaked.

What has happened to that police probe and what action has the Central Bank taken on this internal probe?

“The Central Bank of Sri Lanka’s internal processes within the Department of Supervision of Non-Bank Financial Institutions have not been completed and the final report has not as yet been submitted to the Monetary Board for its consideration. Arising from this unauthorised disclosure, the Central Bank of Sri Lanka is strengthening its internal control mechanisms and a complaint has also been made to law enforcement authorities to inquire into the unauthorised release of this report,” the Bank said in a statement at that time.

A Business Times email poll published on January 7, 2018 found the majority of respondents viewing positively and with optimism the long-awaited findings of the Treasury Bond Commission but were unsure as to whether the Government would actually penalise, as promised, the named offenders.

In that poll, 82 per cent of the respondents said “Yes” to the question: (1) The Bond Commission’s findings is a fair and independent view of corrupt deals in the disputed bond trades. A resounding 99 per cent said “Yes” when asked whether strong action should be taken against those named in the report as being involved in the corrupt deals, while 90 per cent agreed that the report should be speedily released to the public.

As I completed my column, Kussi Amma Sera brought my third mug of tea (I was in a mood to drink a lot of tea this morning) and said: “Hitapu janadipathi sirisenata getalu godak thiyenawa than (Former President Sirisena has many problems now).” I nodded in agreement, while wondering whether the bond scam has been consigned to the dustbin of history and may never be resurrected.

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