People’s court gave the verdict on those who covered up bond scam — Cabraal

His book on the cover up dissected the scam and aftermath

The Court of the people gave the verdict on those who covered up the bond scam, said former Central Bank Governor and now national list nominee for MP, Ajith Nivaard Cabraal, in a post election statement. As investigations on the bond scam gather momentum on the basis of the Prevention of Money Laundering Act, under direction of the AG’s department, Ajith Nivard Cabraal recently published an extensive work that unravels the cover up of the Bond Scam. It’s available on amazon.com and is titled ‘The Great Bond Scam Cover-Up: The Mother of All Cover-Ups.’

Cabraal’s expose does a deep-dive into the former Premier Wickremasinghe’s decision to carry out the 2015 bond issue by auction, and not direct placement. The Prime Minister’s order created a steep spike in the interest rates paid by the Government for all Treasury Bills and Bonds by over an incredible 300 basis points, enhancing the interest rates across the entire economy, and causing a series of shocks, set-backs and losses, writes Cabraal.

As a result of the Bond Scam, it is now evident that every borrower has had to suffer a premium on the interest payable, since the interest rate equilibrium that prevailed just before February 2015 was greatly disturbed, leading to higher costs and greater risk, both individually and as a society, the author points out with extensive references to the circumstances and facts that are related.

He also writes about the subsequent presidential Commission of Inquiry into the bond issue, and states that it is clear from that Supreme Court decision in a fundamental rights case regarding the Greek bond issue carried out during his tenure as Governor Central Bank (CBSL), that the Supreme Court had unambiguously exonerated all Members of the Monetary Board and the Central Bank staff from any wrong-doing whatsoever, in making the investment in the Greece Bonds.

“The Auditor General has stated though the Central Bank had incurred a loss from the investment in Greece Government Bonds, it has earned a total net profit of US$ 430.2 million on International Reserve Management during the year 2011’, Cabraal points out, citing authoritative sources.

The author also demurs with the contention that CBSL procedures and structures deteriorated in his tenure.

‘The proof is that the terrible Bond Scam came to light because of the effective procedures that were in place in the CBSL, in spite of determined attempts to conceal the Scam by the powerful vested interests including Arjuna Mahendran, the absconding former Governor of the CBSL who is now a fugitive from justice,’ he writes.

About the now much talked of forensic audit, so called, on the bond issue, Cabraal states that this procedure was ordered by the then Monetary Board that had a conflict of interests.

It appears that it is the Monetary Board itself that has commissioned the forensic audit/investigation, which is totally in conflict with the fundamentals of such probes, the author contends.

The Presidential Commission of Inquiry unbelievably failed to state that Governor Mahendran had acted specifically on the direct instructions of Prime Minister Ranil Wickremesinghe, as the latter had himself insisted, it’s also revealed.  Simple arithmetic shows that by accepting Bonds at a deliberately “bumped-up” yield rate of 12.5% (net of taxes) which was significantly higher than the yield prevailing in the secondary market of 9.3% (net of taxes), the Government cash flow had suffered a tremendous loss of Rs. 29/13 for each Rs. 100/- bond, the writer contends.

About PTL, (Perpetual Treasuries Ltd.) the Company belonging to former Governor Mahendran’s son in law, the following exposes are made:

It is abundantly clear that PTL was able to make these extraordinary profits (from the bond issue) and progress in an unbelievable manner because of the close patronage provided by Governor Arjuna Mahendran. Further even while all these matters were being aired in public, the political authorities, particularly Prime Minister Ranil Wickremesinghe continued to support Mahendran unconditionally.

The maximum amount of the bid offered by PTL before the early 2015 bond issue is Rs. 250 million. And only Rs. 27 million from the bid offered to the value of Rs.150 million had been accepted during the period of 26.02.2014 to 30.12.2014. But in contrast, from 10th March 2015 onwards, they have offered bids ranging from Rs. 300 million to Rs.3000 million and received bids in a range of Rs. 50 million to Rs. 3000 million.

Requesting former President Sirisena to place the CBSL under the Ministry of National Policies and Economic Affairs where he was the Minister, in an unprecedented allocation of institutions under Ministries, the writer further elucidates, regarding the ex premier’s role.

Among his other transgressions and resultant repercussions, the book states, were:

• Arranging for a UNP MP serving in COPE to immediately resign, and appointing vociferous MP Sujeewa Senasinghe to the COPE Committee, when it was known that COPE was to inquire into the Scam and causing a massive direct loss of approximately Rs 2 billion to the Government, by arbitrarily and suddenly changing the process of issuing Treasury Bonds issued.
• A further loss of around Rs. 145 billion caused as a result of higher interest payments over the next 30 years.

The knock-on effects caused the increase in the country’s public debt by a staggering Rs. 285 billion through the depreciation of the currency as a result of his gross malpractice, the author writes.

The book is much sought after reading, especially in the grip of the current elections cycle, when the bond issue is grist to the mill of many political pundits.