Treasury Bonds Probe PM told Aloysius to resign from PTL

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By 2017-11-21

BY Kavindya Chris Thomas

Prime Minister Ranil Wickremesinghe yesterday (20) asserted that it was he who initially observed that there was a conflict of interest between Owner of Perpetual Treasuries Limited (PTL), Arjun Aloysius and the then Central Bank Governor Arjuna Mahendran and had requested Aloysius to vacate his position at the PTL in 2015.

Making history yesterday (20), Premier Wickremesinghe became the first Prime Minister to appear and testify before a fact finding Commission. He was the last witness to testify before the Presidential Commission of Inquiry (PCoI) probing the Central Bank Treasury Bonds auctions.

Prime Minister Wickremesinghe was accompanied by his attorney President's Counsel Faisz Musthapha.

The Prime Minister was summoned to give clarifications to the answers given via an affidavit to 48 questions submitted by the Commission and the Attorney General's Department officials, assisting the Commission. The Commission further noted that 13 questions from the second questionnaire had been disallowed on the grounds of not falling within the Commission's mandate.

In his affidavit, the Premier had noted that he had insisted that Mahendran, prior to his appointment as the Governor of the Central Bank in 2015, ensure that Aloysius resigns from the directorial position of the PTL and that Aloysius would not involve himself with business activities. To which Mahendran, according to the Prime Minister, had given his assurance. The Premier had also requested Aloysius to leave the PTL due to the apparent conflict of interest and had relied on the assurance given by Mahendran.

However, Wickremesinghe accepted that he was unaware of the shareholding structure at the Perpetual group in which Aloysius had invested in. He also asserted that he was unaware that Aloysius had continued to be a director and a shareholder of the two holding companies attached to PTL, even after January 2015. The Prime Minister added that Aloysius had requested for more time to dispose of the shares at the PTL.

Despite the usual scenario where the witness would be questioned by Additional Solicitors Generals Dappula de Livera, PC and Yasantha Kodagoda PC, yesterday's proceedings saw the Attorney General Jayanath Jayasuriya PC taking the stand to question the witness.

In his second affidavit, the Prime Minister had noted that he believed that Mahendran acted in good faith with regard to the assurances given to him.

Attorney General Jayasuriya: "However, there were, at the later stages, occasions such as when MP Mahindananda Aluthgamage made a statement in Parliament regarding the continuation of the conflict of interest situation. You expected Mahendran to have honoured the assurances given to you. Was there any opportunity for you to verify whether those assurances were met with?"

Prime Minister Wickremesinghe: "This [the controversial Treasury Bonds auction] happened at the end of February 2015. And I spoke to him earlier in January 2015. And he [Aloysius] said he was going to spend his time developing the W. M. Mendis distilleries business. He did once or twice speak to me and showed me the new products when I went for some parties where such were being served (the gathering laughs). That was all that I knew. Other than that I did not know his affairs. The same thing Mahendran said. This conflict of interest issue is something we raised."

The Prime Minister noted that it was they who had raised the question that a relative of the Central Bank Governor of the previous Government had held a directorial position at the PTL. He also asserted that he had no information that Mahendran had deliberately misled him, on the matter of the conflict of interest issue.

"The Gamini Pitipana Committee did not have information to that effect and I do not think even the seventh Committee on Public Enterprises inquiry had any findings on that matter," he opined. He added that he took no steps to address the matter once it reached the Parliament which according to him had control over public finances.

The Prime Minister was also questioned regarding the transition from obtaining private placements to public auctions. According to Wickremesinghe's affidavit answers, he had informed the then Governor Mahendran to do so. This raised another follow up question as to whether this decision should have been taken by the Monetary Board to which the Premier's response was that it was constitutional to forward directives through the Cabinet in line with the Government's policies. He noted that this fiscal power lies with the Parliament.

Following this the Premier was questioned on the telephone conversations, that had taken place on 27 February 2015, between him and former Governor Mahendran as well. Asserting that he does not answer the particular phone number on which he was contacted, Wickremesinghe however noted that the conversations he had had with Mahendran during the said period led to his (Wickremesinghe) being informed about the auction and the amount that was raised from the bids.

Attorney General Jayasuriya also asked Prime Minister Wickremesinghe whether any kind of policy decision had been taken to request all State banks to bid at low yield rates during the Treasury bonds auctions. The question was put to Wickremesinghe following the evidence that was put forward earlier claiming that former Minister of Finance Ravi Karunanayake had allegedly requested State banks to bid at low yield rates.

"No, there were no policy decisions. State banks were told not to get into speculative bidding and speculative bidding was discouraged. Beyond that, we maintained the principle to let the market determine the rates," the Premier noted. He also denied awareness of Karunanayake's meetings with the State banks.

The Commission proceedings saw the presence of a large number of Ministers and Parliamentarians who accompanied the Prime Minister. Ministers P. Harrison, Gamini Jayawickrama Perera, John Amaratunga, Ajith P. Perera, Akila Viraj Kariyawasam, Tilak Marapana PC, Niroshan Perera, Arjuna Ranatunga, Nalin Bandara, Eran Wickremaratne, Mangala Samaraweera, Malik Samarawickrama, Sagala Ratnayaka, Dr. Rajitha Senaratne, Gayantha Karunatileke, Sajith Premadasa, Mano Ganesan, Kabir Hashim, Sarath Fonseka, Naveen Dissanayake, Daya Gamage and Advisor to the Prime Minister Rosy Senanayake were all present for yesterday's proceedings.

Following the conclusion of his one-hour testimony, the Premier briefly addressed the media that was gathered outside the Commission premises. "I was given an opportunity to clarify many matters before the Commission, including those of the country's economic policies and certain aspects the country is facing. We came here today in order to take forward the good governance movement. We have nothing to hide. We might have made mistakes and have shortcomings. But the drive goes forward," he opined.

The Commission of Inquiry officially closed evidence hearing and terminated the reception of evidence with the intent of engaging solely in continuing with the preparation of the final report. Accordingly, the Commission is expected to submit the final report to President Maithripala Sirisena on or before 8 December.

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