Last week, the focus of attention in political circles was President Maithripala Sirisena’s special address to the nation regarding the report of the Presidential Commission of Inquiry into the sale of Central Bank bonds and the possible political fallout from the issue.
The hearings of the Commission were held in public and received wide coverage in the print and electronic media. It had already led to the resignation of Foreign Minister Ravi Karunanayake who was previously Finance Minister, whose position in the Cabinet became untenable after it transpired that the rental for his apartment had been paid by Perpetual Treasuries Limited (PTL) Director Arjun Aloysius who is a key person of interest in the inquiry.
In that sense, it was unlikely that there would be startling new revelations in the report of the Commission of Inquiry. Nevertheless, the President’s address was much awaited in that it was expected to indicate what actions would follow- and the potential political implications of any such actions.
The President outlined the key findings of the Commission. It revealed that the loss to state institutions amounted to over Rs. 8.5 billion. The losses were incurred mostly by the Employees’ Provident Fund (EPF), the Mahapola Scholarship Trust Fund, the National Savings Bank Fund and the Sri Lanka Insurance Corporation.
The report has identified PTL, its Director Aloysius and its Chief Executive Officer Kasun Palisena as those responsible and recommended civil and criminal actions against all of them for losses caused to the government.
The Commission found that former Central Bank Governor Arjun Mahendran has interfered in the bond issuances with a false and unconventional decision making process. It held Mahendran responsible for divulging confidential information to outsiders.
Bond transactions
The Commission has also recommended that cases be filed against Karunanayake under the provisions of the Bribery and Corruption Act and that action be taken against him under the provisions of the Penal Code for giving false evidence before a Presidential Commission.
The Commission found that Prime Minister Ranil Wickremesinghe had done nothing irregular in appointing Mahendran to the post of Governor of the Central Bank, noting that Prime Minister’s statements to Parliament indicated that he had reposed his trust in Mahendran. The report however said that the Prime Minister should not have done so.
In his address to the nation, the President pledged to recover the losses incurred from the bond transactions. “The recovery could be done by following the normal legal procedure, but since it would take a longer time, the commission has suggested the presenting of a special bill to Parliament to bring about laws for the speedy recovery of the loss,” the President said.
The President made use of the opportunity to address the nation to note that he had also received reports from the Presidential Commission of Inquiry to Investigate and Inquire into Serious Acts of Fraud, Corruption and Abuse of Power, State Resources and Privileges (PRECIFAC).
“I have received 34 reports from PRECIFAC. I have recently received 17 reports. I have received 17 reports earlier. The reports that I have received were handed over to the Attorney General. Action will be taken in respect of these reports,” President Sirisena said, noting that PRECIFAC had made several major recommendations and it is the responsibility of the government to implement them.
Prior to the President’s address, there were several requests made to the President to publish the report amidst concerns raised mostly by the opposition that it may not become a public document. However, President Sirisena laid any such anxieties to rest, stating that it would be presented to Parliament and thereby be available for public perusal.
That the President chose to publicly announce the recommendations and endorse them in the strongest possible terms indicate that he intends to follow-up on the recommendations assertively. It will underscore the emphasis the government has placed on good governance and enable it to take the moral high ground.
Commissions’ findings
What is being keenly observed however is the impact this would have on relations between the President and the United National Party (UNP) where Ravi Karunanayake is one of its stalwarts.
At its 70th anniversary celebrations at Campbell Park earlier this week, the UNP provided with what might be construed as its response. Prime Minister Wickremesinghe was quite categorical in his stance. He readily endorsed a call by opposition political parties to reconvene Parliament early to discuss the Commissions’ findings. He also suggested a forensic audit in relation to the Central Bank and requested that transactions in the Central Bank during the previous government be also probed.
Karunanayake meanwhile has protested his innocence and maintained that he is ready to face any proceedings. On Tuesday, he was at the Presidential Secretariat, requesting a copy of the Commission report under the Right to Information (RTI) Act, stating that he wished to clear his name.
Understandably, sections of the UNP are unhappy that the President has made a very public announcement regarding the findings of the Commission of Inquiry. Some of them accuse the President of deliberately timing his announcement, with an eye on the local government elections.
They are concerned that the President’s statement will have a negative impact on the party’s chances at the forthcoming polls. Indications are that the findings will not be favourable for the UNP, but the extent of this impact cannot be predicted.
However, if there was an expectation that the President’s announcement indicated a parting of ways between the UNP and President Sirisena and the mainstream Sri Lanka Freedom Party (SLFP) as hoped for by the Joint Opposition (JO), that has not materialised. The President and the Prime Minister were seen together in public at the openings of the Rajagiriya flyover and the Moragahakanda project on Monday and there was no hint that there was any discontent between the two.
National Unity government
Prime Minister Wickremesinghe also used the third anniversary of President Sirisena’s inauguration on January 8 to underscore the importance of the National Unity government continuing to work together. “The allies of the government should get together in celebrating what we have achieved but we should also overcome obstacles before us when delivering what we promised to the people”, the Prime Minister said.
As it is only to be expected, both the JO and the Janatha Vimukthi Peramuna (JVP) will try to gain maximum political mileage out of the findings of the Commission. The JO however has a difficulty in doing so: it would have to necessarily acknowledge President Sirisena’s role in taking the initiative to inquire into the sale of Central Bank bonds by setting up a Commission of Inquiry, thereby conceding that the government has been transparent on this issue.
Therefore it resorted to another tactic. JO stalwart and Chairman of the newly established Sri Lanka Podujana Peramuna (SLPP) G.L. Peiris called for the removal of Prime Minister Wickremesinghe because, he argued, there cannot be a ‘fair trial’ while the Prime Minister held office.
Of course, being a former Professor of Law, Peiris must know that it is the courts that conduct a fair trial and that under this government, unlike its predecessor, interference with the judiciary is not the norm. However his rhetoric indicates that the JO and the SLPP will try and milk the Central Bank bond issue for maximum political gain.
With less than a month to go for the local government election, it is the outcome of the poll that would determine the future political direction of the National Unity government. While the results of the election remains uncertain, what is certain is that Central Bank bond issue will be a prominent theme in the election campaign- particularly for the opposition.
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