Sunday Island Editorial

COPE and the bonds

30 October 2016
 

Predictably, Prime Minister Ranil Wickremesinghe has attempted to put the best spin possible on the COPE report on the Central Bank bond scam that has seriously embarrassed both him personally and the UNP. But he is right when he says that such a report would not have been possible under the previous dispensation. That is why the majority of the country’s voters ousted the Mahinda Rajapaksa regime and replaced it with the Maithripala Sirisena presidency. But while the existing order may be arguably better than what preceded it, there is no debate on the fact that it has woefully fallen short of expectations. Public opinion has absolved President Sirisena from the goings on in the Central Bank because he dug in his heels and refused to reappoint Arjuna Mahendran as Governor of the Bank despite the prime minister’s best efforts. It is fortunate for this country which sadly lacks good people for the jobs that must be done that Dr. Indrajit Commaraswamy, albeit reluctantly, accepted the position.

Whatever the connections, Mahendran should not have been appointed Governor in the first instance. If his son-in-law owned a company dealing in the bond market regulated by the Central Bank, there was a clear conflict of interest in such an appointment. Saying that former Governor Ajith Nivard Cabraal’s sister was a director of Perpetual Treasuries owned by Arjun Aloysious, Mahendran’s son-in-law, does not in any way mitigate the offence. It merely demonstrates that bad appointments, unfortunately, have a long history in this country and both Tweedledum and Tweedledee must equally bear responsibility for that reality. Eventually the already overburdened taxpayer must pick up the tab for what their rulers, coming to office solemnly pledging to serve the people, do. Whatever the heat generated and hijinks that preceded the eventual presentation of the COPE report, the silver lining is that the oversight committee was chaired by an opposition MP. That was in the best tradition of parliamentary government - something that had been too often overlooked in the past.

Whether the promised debate on the COPE report will be possible before the presentation of the 2017 budget on November 10 is uncertain. The so-called joint opposition has pressed for this but whether it would be forthcoming remains to be seen. The country is only too well aware of the ongoing foot dragging on the long overdue local government elections and the skills of their leaders, of whatever political hue, in putting off what they’d rather not confront is very well known. Once the budget debate begins and it goes through all its stages with the prolonged discussions, a lot of time will pass. By then much of the heat generated in final stages of the COPE proceedings and the presentation of the report would have dissipated. According to yesterday’s newspapers, Mahendran has been held "directly responsible" for what happened. The recommendations, apparently, have been unanimously approved though the UNP members of the committee have included various footnotes that are part of the report. They have been accused of attempting to dilute the report by this device. Given their anxiety to protect Mahendran, this is not unlikely.

The prime minister said that the COPE report must be sent to the Attorney General and his advice on what must follow be obtained. There has been at least one complaint on the bond issue to one of the special bodies set up to investigate various frauds. But it is doubtful that the agency concerned acted with the same alacrity in this matter as it did in others involving personalities of the previous dispensation where statements were recorded, suspects arrested, taken to courts and remanded. Functionaries of the previous regime have alleged witch hunts against them and posed for the cameras displaying their manacles and broad smiles. Most of them have been bailed out after a few days in remand. While it was reported that Mahendran appeared before COPE and answered questions put to him, we do not know whether he was summoned by any other investigatory agency although a complaint had been made about the bond matter. He was certainly not arrested, manacled and remanded as were loyalists of the previous regime.

The COPE report will now be published and will include the Auditor General’s (AG) report on the bond issues. There have been allegations that there were attempt to pressure the AG to make changes in his report which was denied. In any event it is clear that there have been no changes in that report and the original stands. There are questions in the public mind on how billions of rupees had been loaned to Perpetual Treasuries without security to enable the company to purchase large tranches of government bonds to be re-sold very quickly in the secondary market. How this happened would have hopefully been explained in the COPE report. Whether the company had insider information or not will be very hard to establish. Patterns of purchases may be indicators but not conclusive proof. But the slightest doubt existing on these matters is unacceptable and that is why Mahendran’s appointment as Governor, while his son-in-law’s firm was a bond dealer, was highly improper. As threadbare as the cliché may be, justice must not only be done but be seen to be done. Given the published figures of the magnitude of the profits made by Perpetual running into the billions, suspicions are inevitable.

The media has been faulted for publishing details of proceedings of a parliamentary committee before its report had been released. There is no doubt that such information has been released by members of the committee itself. Before rapping the Press for publishing such reports, it would be useful for critics to turn the lamp inwards and deal with the sources of the ‘leaks’ who are no less than ‘honorable’ Members of Parliament. There has been talk that proceedings of parliamentary committees, like the proceedings of the House itself, will be opened to the press. But nothing tangible in this regard has happened. There are pros and cons on both sides of this matter that merits careful examination before any final decision is made.