Ravi K and the Penthouse: The acid test for Yahapalana integrity

This government has routinely blamed the corruption of the former regime for the current economic hardships in the country. Now, how on earth did it manage to behave like nothing had happened after recent jaw-dropping allegations against its former Finance Minister cum incumbent Foreign Minister? 

Last week, Anika Wijesuriya, a directress of a construction company told the Presidential Commission of Inquiry into the alleged bond scam that Arjun Aloysius, director of Perpetual Treasuries Ltd., had paid the rental of a penthouse lease of Ravi Karunanayake, while the latter was the Finance Minister in 2016. Ms. Wijesuriya, who was the original owner of the house at Monarch Residencies, said Minister Karunanayake and his family leased out the penthouse for eight months with the monthly lease rental Rs.1.45 million being paid by Mr. Aloysius. She said Rs.7.3 million was transferred by the Perpetual Capital Holdings Pvt. Ltd. to Walt and Row Pvt. Ltd., with which she had entered into a lease agreement. Another Rs. 1.4 million was paid to her in cash. Later in September 2016, the house had been bought for Rs. 165 million by a company, Global Transportation and Logistics Pvt. Ltd., in which Mr. Karunanayake’s wife and daughter were directresses. 

Later in the week, a second witness, Chief Financial Officer of the Global Transportation and Logistics Pvt. Ltd., B.R. Chinnaiya who gave evidence before the commission could not explain the origin of money that had been used to purchase the house. He revealed that the money was obtained from the chairman’s safe, into which the company’s London based chairman had dumped Rs. 145 million on two occasions, when he arrived in Sri  Lanka during 2016 and 2017. Nor did the company’s statements of accounts make any reference to the origin of the said funds. 

This is not some bad joke. This is a damning exposé, which has been revealed before an independent Presidential Commission, which is definitely not a kangaroo court of the former regime. By trying to downplay them, the government is undermining the independence and legitimacy of the country’s judiciary. Funny enough, there were even some vain attempts to blame the Rajapaksas for this debacle too – no matter how improbable that would really sound.

Minister Karunanayake failed to appear before the Presidential Commission of Inquiry on two days during last week. The commission was told he was attending the Cabinet meeting, and on the other occasion, that he was at the defence council meeting. He has now raised Parliamentary privileges over his being summoned by the commission on those two days, while Parliament was in sessions. He cited Parliamentary privileges in the UK, the Commonwealth and Sri Lanka to justify his claim. However, there is another point. If Minister Karunanayake were in the House of Commons or any other legislature in a civilized place, he was unlikely to cling onto his portfolio after those sickening allegations. Those are the countries where MPs are expelled from parties and ministers reign over the slightest violation of code of ethics; for instance, misappropriating parliamentary expenses allowances, which viewed in our context, is no different from selling the duty free vehicle permit. That may be a scale of maturity of those legislatures. Yet, equal privileges to MPs do not necessarily translate into similar level of dignity and integrity of high political offices. 

  • Government undermining independence and legitimacy of judiciary

  • Damage already done to his persona and integrity of government

  • Witnesses reveal CB Governor visited Debt Dept. on day of controversial bond sale

However, the recent revelations have now raised a serious case of conflict of interest which, needless to say, would compromise Foreign Minister Karunanayake. The country would know his side of the story if he gives evidence, as he has now promised, on August 2. But, quite a lot of damage is already done to his persona, and more than that, to the integrity of the government. 

Minister Karunanayake is also a close confidante of Prime Minister Ranil Wickremesinghe. He stood by Mr. Wickremesinghe during those not so distant turbulent days in the UNP. The Prime Minister is thus constrained by old loyalties. In fact, both messrs. Wickremesinghe and Karunanayake defended former Central Bank Governor Arjun Mahendran, who is also the father-in-law of Mr. Aloysius from allegations of foul play in Central Bank bond sales.

The UNP members of the Committee on Public Enterprise (COPE) attempted to influence a COPE report that held Mr. Mahendran responsible for the extensive financial losses incurred due to dodgy bond sales. The UNP MPs threatened to table a dissenting report. When it was found out that the Standing Orders do not allow for a dissenting report, they inserted footnotes in the main report. The thrust of the footnotes were to absolve Mr. Mahendran from allegations of irregularities. Some of the footnotes read as thus: “The decision to increase the sum to be raised from Rs. one billion to Rs. 10 billion was taken based on a professional decision by a team, according to Chairman of the tender committee P. Samarasiri.” “According to Superintendent of the Public Debt Department, the former Central Bank Governor had not said ‘Do it,’ but instead had given the idea ‘why don’t you go for ten?” Even in the Auditor General report it is mentioned that the former Central Bank Governor had told Ms. Seneviratne ‘Why don’t you go for ten ?” and there is no other evidence contrary to that” (Page 24). 

“There is no evidence that former Central Bank Governor Arjuna Mahendran or Deputy Governors Dr. Nandalal Weerasinghe and Ananda Silva made inquiries or intervened in the particular auction” ( Page 37). 

Since then, a host of witnesses who gave evidence before the Presidential Commission of Inquiry have revealed scandalous details including the CB Governor visiting the Debt Department on the day of controversial bond sale and instructing a many-fold increase of bond sales on the particular day. 

Later, a leaked Central Bank report revealed that the controversial bond trader Perpetual Treasuries owned by Mr. Mahendran’s family had reported an after-tax profit of as much as Rs.10.1 billion for the 14 months from April 2015 to May 2016, the period during which Mr. Mahendran was the CB Governor. To put things into context, during the same period, the cumulative profit after-tax of its peers was just Rs.544 million. Now a key witness tells the Presidential Commission of Inquiry that Mr. Aloysius paid the lease of the then Finance Minister’s penthouse. 

Some time back, President Maithripala Sirisena complained about a nexus of political heavyweights in his own government who had been defending the suspects of the former regime from being investigated for corruption. Does this one too sound like a nexus? 

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