The Island Editorial

Bond theft and ‘Foot and mouth’ disease

31 October 2016

 

Bogus champions of good governance, all out to save the Treasury bond thieves, are suffering from the ‘foot and mouth’ disease as it were. They are trying to defend the indefensible by shouting at the top of their voices and through footnotes in the COPE (Committee on Public Enterprises) report on the bond scam.

Prime Minister Ranil Wickremesinghe has sought to describe the recently released COPE report as a victory for his government. He is only making a virtue of necessity. It would certainly have been a huge victory for the incumbent administration if the committee of UNP lawyers he first appointed, of course under political pressure, to probe the bond scam, had exposed the fraud. The UNP, has, as is known to one and all, gone flat out to cover up the scam and save the then Central Bank Governor Arjuna Mahendran.

As for the COPE report, the government MPs’ footnotes stand on a foundation of sand. We intend to discuss them all, but for want of space, let only the footnote No. 2, the linchpin of the government’s defence, be examined. It claims, quoting a letter issued by an individual officer of the Central Bank, that the direct placement of Treasury bonds has not been valid since Dec. 2008.

This footnote has suppressed the fact that the Monetary Board (MB), on Oct. 07, 2008, approved direct/private placements for all captive sources without any time limit. It found the rate structure not feasible because the rates were dynamic and, therefore, the Central Bank (CB) could not make direct or private placements. The MB issued guidance as to how the rate structure for direct/private placements should be determined; it stipulated that the Treasury bonds be placed at a rate not exceeding five basis points above the existing secondary market rates. This guidance takes precedence over the previous rate structures approved by the MB and has been valid to date.

Thus, it may be seen that the aforesaid footnote contains a half truth, which has been misinterpreted in favour of the bond thieves. Interestingly, it has led to some gender confusion in that the official concerned is referred to first as a directress and then as a male superintendent in the same paragraph! The letter referred to in the footnote, was sent to the COPE without approval of the MB, which has submitted all other CB documents to the watchdog committee in keeping with proper procedure. The official has, therefore, acted in a high-handed manner presumably for political reasons.

It should be noted that out of 26 COPE members, 16 MPs, representing the UPFA, the TNA, the SLMC and the JVP, have rejected the footnotes inserted at the behest of nine UNP members. (UNP MP Ranjan Ramanayake has remained noncommittal.) Here is an instance where the government has been ditched by its ‘yahapalana’ allies!

The government has, in a bid to protect the bond thieves, adopted the same ruse as pickpockets. When a pickpocket gets caught his confederates join his irate pursuers in beating him and then remove him from the scene, vowing to take him to the police. The thief thus goes scot free with a few bumps and bruises. It will be a mistake for the government to be entrusted with the task of prosecuting the bond thieves.

No sooner had the COPE report on the bond scam been tabled in Parliament than Prime Minister Ranil Wickremesinghe made a suo motu statement that the Attorney General (AG) would be consulted on what should be done next.

The Attorney General’s Department has been reduced to a mere appendage of the government and what its opinion on the issue will be is not difficult to guess. Before consulting the AG, the government ought to explain what has become of the CID file on the bond scam it referred to him in June last year to look into the criminal aspects thereof. We are reliably informed that it was converted into a civil file and shelved. The COPE report is sure to face a similar fate if it is referred to the AG. Madness has been defined as doing the same thing over and over again expecting a different result!

We could have reposed our trust in the Attorney General’s Department if there had been an independent, intrepid official of the calibre of incumbent Auditor General Gamini Wijesinghe at its helm.

We hope that President Maithripala Sirisena, who has taken a principled stand on the bond scam, will live up to public expectations and appoint a special presidential commission headed by a sitting judge to investigate the issue. Given the politicisation of the AG’s Department and the police, the government in power is capable of manipulating the legal process and taking the culprits off the hook.

We believe that it won’t be possible to bring the bond thieves to justice and recover the losses the public has suffered to the tune of billions of rupees so long as the present government is in power. It may be recalled that the murder of Thajudeen would have been treated as a road accident death but for the change of government last year.

Meanwhile, will COPE Chairman Sunil Handunnetti, who has hogged the limelight, or the JVP, which is basking in reflected glory, explain why the COPE report has chosen to black out the statement Mahendran made under oath before the watchdog committee that as regards the questionable bond auctions, he had acted on Prime Minister Wickremesinghe’s instructions? This is a glaring omission which has taken the gloss off the report to a considerable extent.