The March of Folly Eran Wickramaratne’s tears for EPF

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By 2017-09-12

Rajiva Wijesinha

I still continue to have the highest regard for Eran Wickramaratne and I am glad that he now has a position which almost matches his talents and capacities. I say 'almost' because the position he should occupy is that of Finance Minister, and I say this because amongst his capacities is absolute financial integrity. This is obviously more important in the current context, when the integrity of most of the leadership of the United National Party has been shown to be non-existent.

I hope that Mangala Samaraweera, who understands little about Finance, will leave the bulk of the work in Eran's hands. When the ridiculous exchange between him and Ravi Karunanayake took place both selected deputies of great capacity, which I wrote then was the silver lining in the clouds that were darkening the country.

I believe both at least knew they knew little, and were willing to delegate productively – which would have been impossible in Foreign Affairs had Ranil Wickremesinghe had his way and appointed the delectable Anoma Gamage as Ravi's Deputy (I half expected him to resurrect her as Minister of Justice, but thankfully someone who represents some of the UNP's old values has got that position.

While I am happy then that Eran is in a position where he might be able to do some good, I do wonder how he can in all conscience continue working with this bunch of crooks. I say this because the manner in which the Bond Scam was perpetrated made a mockery of what he had been telling us in the Committee on Public Enterprises (COPE) over the years.

Eran had been critical of the method of Direct Placements, on the grounds that the institutions that took up the bonds offered were being exploited. Eran was an advocate of all bonds being issued by auction, because he argued that the rate of interest was kept artificially low by the method which Ajith Nivard Cabraal had adopted.

Dr. Wijewardena

Dr. Wijewardena explained to us that, that method was common practice the world over, because if issues were only by auction dealers it would push the rate of interest to high levels, but the duty of the bank was to obtain funds for the country at as low an interest as was feasible, which is why the bank, with due authorization from the Monetary Board, used the mixed system: the rate of interest was worked out from an auction for a limited amount, and then bonds were offered at marginally less than that rate, so the country benefited from low interest rates, while the institutions that purchased the bonds, such as the Employees Provident Fund (EPF), knew that the rate was not arbitrarily low, but had been fixed after a market process.

Low interest rates

I would much prefer, as a Sri Lankan who wants the country to benefit from low interest rates as feasible, the system Cabraal used and which Dr. Wijewardena favours, but I can understand a pure market oriented economist wanting to work only through auctions.

What is absolutely unacceptable is what Ranil and Arjuna Mahendran and their partners in crime did, which is to advertise an auction for a small amount, and then give large amounts to those in the know who bid at high interest rates for such unexpected
bonds.

And that there was inside information in spades is now apparent, from the manner in which Mahendran dictated appointments within the bank. Saman Kumara and his millions is only the tip of the iceberg, and that the plot was prepared very early seems clear from the fact that Arjun Aloysius resigned from his Directorship at Perpetual Treasuries just before Mahendran landed the plum job – Ranil and Mahendran thinking in their arrogant and simplistic fashion that they could claim there was no conflict of interest since in theory Aloysius was not involved in the operations of the firm. Little did they realize how thorough the investigation would be, with ample evidence of Aloysius' continued meddling through the phone records.

Manipulation of bonds

Eran therefore, is in with a crew who deliberately made the country lose millions, or perhaps trillions, through their manipulation of bonds, and as frosting as it were on the cake he is forced to eat, he knows now that the EPF which he thought to protect from the low interest rates Cabraal had offered has been outrageously exploited by having to buy bonds at inflated rates when Perpetual Treasuries wished to sell their ill gotten bonds at massive profits.

Does Eran understand the implications of all this for the citizens of this country, for the vast numbers of working people who depend on the EPF when they retire? He who complained that the EPF was getting lower interest rates than they might have got should now be addressing the fact that they not only got less, they were also contributing vast amounts to the profits that Arjun Aloysius and his cohorts were making.

United National Party

And surely Eran is not a fool, so he must realize that the United National Party also benefited from these millions that were stolen from the people. He is the Treasurer of the Party, and he knows the situation of the party funds in 2014 and how they burgeoned the following year. Of course it is possible that this was black money that did not enter his records, but he knows that UNP candidates – including himself – had more to dispose of in 2015. Surely he must realize that much of what was received was tainted.

Sadly, even Eran is not strong enough to raise his voice against such corruption, not principled enough to resign from at least the Treasurership of his party. I had thought he was a man of conscience, and would think about the implications of his continuing in that position when he knows what crookedness was perpetrated, but perhaps his religion and his convictions have to be set aside when it comes to political realities.

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