President wants Treasury Bond losses recovered

President Maithripala Sirisena issuing a special statement yesterday on the Treasury Bond Commission report reiterated his commitment to fully recover the loss to the government from the Treasury bond issue and bring the offenders to book.

He said that he “would not hesitate to take steps to recover the loss of Rs 11,145 million to the government and take legal action against the offenders and punish them.”

President Sirisena said that he has already submitted the Commission’s report to the Attorney-General. The report recommends that the criminal and civil court action must be taken through the Criminal Investigations Department and the Commission to Investigate Allegations of Bribery or Corruption.

The report observes that Prime Minister’s involvement in appointing Arjun Mahendran as the Governor to be administratively methodical.

It observes that the Prime Minister, when making a statement regarding the Treasury bond issue in Parliament,seems to have relied too much upon Arjun Mahendran and P. Samarasiri; especially on Mahendran’s promises. It suggests that the Prime Minister should not have done so.The Commission report also observes that he explained that even though the COPE Committee had enough evidence against Arjun Mahendran, no proper action was taken against him at that time.

President Sirisena stated that the Commission has observed that “The sum of Rs 8,529 million of the total losses Rs 11,145 million was the funds of the Employees Provident Fund, Mahapola Scholarship Fund, National Savings Bank and Sri Lanka Insurance Corporation.

The balance was from private institutions. Hence the loss to the public sector – EPF, Mahapola, NDB and SLIC was over Rs 8.5 billion. The Perpetual Treasuries Limited has made this profit of Rs 11,145 million within a short period of 5 months.”

President Sirisena pointed out that, according to the Commission the funds of the EPF were lost mostly during the period from 2008 onwards and based on such findings, legal action should be taken.

He further said said that he is in agreement with the Commission’s recommendation to pass a Parliamentary legislation to recover the losses to the government expeditiously. The Commission was quoted recommending that “Under normal circumstances, recovery of money can be done through civil legal action. However, it is a time consuming method. As an alternative, the Commission recommends that a Parliamentary legislation could be passed and the money could be recovered in a speedy manner following a Parliamentary approval.”

The recommendation of the Commission is that all the expenses of the Commission must be recovered from the Perpetual Treasuries Limited.

“In the auction held on 27thFebruary 2015 alone, Perpetual Treasuries Limited has made a minimum profit not less than Rs 688 million. The Commission is of the opinion that further investigations could reveal that this amount could even be more than that. As revealed during the investigations, PTL has made an undue profit of Rs 11,145 millions in the secondary market. In this, EPF and other government institutions had lost more than Rs 8,524 million or Rs 8.5 billion.” President Sirisena pointed out.

President Sirisena pointed out that the Commission has observed that the Perpetual Treasuries Limited has earned profits through means that are not legal, with the involvement of Arjun Mahendran, Bank officials and some external parties.

According to the report, the Commission believes that Arjun Mahendran has interfered in the bond issuances with a false and unconventional decision making process. It also holds Arjun Mahendran as one of the responsible persons who have divulged confidential information to outsiders. Thus, the Commission believes that such an act has been in favour of a particular party.

The Commission also recommends a Forensic Audit Examination on the Employment Provident Fund on the basis that it has been misused to find out the amount of losses the fund has incurred.

The Commission recommends the Central Bank of Sri Lanka to conduct a forensic audit with regard to the alleged fraud and corrupt practices from 2008 onwards, on which legal actions should be taken.

The report also identifies parties and individuals who were involved in misusing the EPF. It suggests legal action be taken against persons, including Arjun Aloysius and Kasun Palisena. It further suggests taking Criminal and Civil legal action taken against the responsible state officers involved in the matter while recommending taking steps to recover the losses incurred by the EPF as well.

The Commission also proposes for a new Monetary Law Act and amendments to the Registered Stocks and Securities Ordinance in order to prevent incidents in the future.

(Source: Daily News – By Amali Mallawaarachchi and Disna Mudalige)