Sri Lanka recalls parliament to debate bond scam

ECONOMYNEXT – Speaker Karu Jayasuriya Monday announced recalling parliament two weeks ahead of schedule to discuss the multi-billion rupee bond fraud at the island’s central bank.

He said MPs were summoned for a special session on Wednesday to discuss the damning report into an insider trading scam since the current administration came to power three years ago.

"Parliament is being summoned at the request of the Prime Minister," the speaker said in a statement a day after Ranil Wickremesinghe told public rally in Colombo that he wanted MPs to debate the controversial report.

The report commissioned by President Maithripala Sirisena has caused tensions within his coalition led by Wickremesinghe who is accused of failing to act against the then governor of the central bank Arjuna Mahendran.

A Singapore national of Sri Lankan origin, Mahendran, has been accused of leaking inside information that allowed a bond dealer to make a killing by investing in government securities.

Sirisena announced last week that the commission following an 11-month investigation recommended prosecuting the then finance minister Ravi Karunanayake for graft and perjury over his links with Mahendran’s son-in-law Arjun Aloysius who headed a primary dealership.

Karunanayake said he had been unfairly accused and demanded that the President release the entire bond commission report.

"I have been accused on the basis of evidence given by a witness, but I was not allowed to cross examine that witness," Karunanayake told Economynext. "They can’t maintain a bribery charge against me because I was never in charge of the central bank or the state banks which are said to have been involved in the controversy."

The investigation conducted by two Supreme Court judges and a former auditor general found that bond dealer Aloysius made undue profits in the market.

It recommended a forensic audit of the central bank to quantify the exact losses to the state, while noting that Aloysius’ profits were at least 11.14 billion rupees ($75 million) during a five month period between 2015 and 2016.





It held Mahendran responsible for leaking sensitive information and said it wanted the state losses recovered from Aloysius and several other public officials it identified as being involved in the scam.

The complete report said to contain 1,157 pages, is yet to be made public, but Sirisena has vowed to bring in new legislation to enable the recovery of money plundered through the bond scam.

The investigation sparked tensions between Sirisena and  Wickremesinghe, who had handpicked Mahendran — a Singapore national of Sri Lankan origin — to head the central bank when the new government came to power in January 2015.

The two top men have had several clashes over economic policy, with Sirisena publicly accusing Wickremesinghe’s United National Party (UNP) of being more corrupt than the previous regime they toppled together.

The investigation has also recommended a forensic audit of the central bank to cover the period under former strongman president Mahinda Rajapakse, saying insider trading had been going on under his rule since 2008 (COLOMBO, January 8, 2018)

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