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Malik, Kabir grilled by Bond Commission

Malik, Kabir grilled by Bond Commission

Two senior Cabinet Ministers yesterday told the Presidential Commission of Inquiry on the controversial bond issuance that at a meeting held on 26 February 2015, a fund requirement of Rs. 18 billion had been discussed for stalled road development work initiated by the previous administration.

Ministers Kabir Hashim and Malik Samarawickrama, testifying before the commission, appeared to confirm evidence previously given by former Central Bank Governor Arjuna Mahendran that a meeting had taken place in the morning of 26 February, the day before the controversial bond auction, attended by Mahendran, the two ministers, former Finance Minister Ravi Karunanayake, officials of the Central Bank of Sri Lanka (CBSL) and the Treasury, the Director General of the Road Development Authority (RDA) and officials from the Ministry of Highways and others, where urgent fund requirements for road development work was discussed.

In evidence given to the commission last month, it was mentioned that a request had been made to the former Governor at the 26 February meeting to raise a sum of Rs. 75 billion within a month for urgent road construction work, as substantiated by a letter purportedly written by the former Finance Minister that was furnished to the Bond Commission as evidence (document No. AM22). The Prime Minister, however, in a statement to Parliament on 17 March 2015, had made reference to an urgent requirement of Rs. 15 billion only. This was later clarified by Mahendran as an initial requirement of Rs. 15 billion needed immediately, followed by a further Rs. 75 billion.

Hashim had taken part in the 26 February meeting in his capacity as then Minister of Highways and Investment Promotion while Samarawickrama had attended as then Senior Adviser to the Prime Minister.

Responding to questions raised by the Chairman of the Commission Justice K. T. Chitrasiri, Hashim testified that road construction work initiated by the Rajapaksa government had stalled, due to unpaid bills from 2013 and 2014 and contractors had stopped work, leading to what he called social unrest. There was an urgent need for funds, he said, recalling that the Secretary to his Ministry had written to the Treasury Secretary about said unpaid bills.

There had been Rs. 18 billion outstanding, Rs. 3 billion of which had been allocated by the Ministry of Highways, said Hashim. This meant that Rs. 15 billion was needed immediately, as had been communicated to the Treasury Secretary.

According to the Minister, the matter had previously been taken up at a Cabinet Committee on Economic Management meeting held on 24 February. Two days later, he and other officials of the Ministry had been asked to come to the CBSL premises for a discussion where the requirement for Rs. 18 billion had been submitted.

“I think my accountant had certified that we had allocated Rs. 3 billion,” said Hashim, responding to a question, adding that the figures were not exact, as bills had been coming in sporadically. However, he said, the focus had been on the Rs. 18 billion requirement.

Samarawickrama, too, provided a similar answer in his testimony: “It was found at the meeting, as I recollect, about Rs. 18 billion of funds were required to pay these outstanding contractors. The Ministry had allocated about Rs. 3 billion. There was a deficit of about Rs. 15 billion.”

Minister Hashim told the commission that the Finance Ministry and Treasury officials had said they would “look at a way of helping us get the funds.”

Commissioner Justice Prasanna Jayawardena asked Hashim if the CBSL had been asked to do anything at the meeting.

“Not anything I’m aware of,” said the Minister.

Asked about any follow-up action, Minister Samarawickrama said there had been “no discussion whatsoever” on how to raise the funds, nor had there been any discussion at the meeting about issuing bonds or about the bond auction to be held the following day. The purpose of the meeting had been solely to find how much money was required, he said.

According to Hashim, his Ministry had received Rs. 8.3 billion from the Treasury. Around 16 March, a new requisition had been sent asking for the remaining Rs. 10 billion.

At this point, Justice Jayawardena noted that the requirement of Rs. 18 billion had remained unchanged in the month of March. Hashim agreed.

Samarawickrama said he did not meet or speak to the former Governor over the telephone after the meeting or on the day of the auction. Hashim, too, could not recollect having done so.

Both Hashim and Samarawickrama said that neither Perpetual Treasuries Ltd. (PTL) nor its former Director Arjun Aloysius, his father Geoffrey Aloysius nor any of their immediate families had made any fund contributions to the United National Party (UNP) during the period which the two senior UNPers had served as the party’s Chairman and General Secretary respectively.

The Attorney General’s Department had no questions for either witness.

Attorney-at-law Neranjan Arulpragasam, representing PTL, asked Minister Hashim, under whose purview state banks came following the August 2015 general election, if the National Savings Bank (NSB) had made a loss or a profit.

“I think they haven’t made a loss during that time. They have been making profits,” he said.

Asked if these were substantial profits compared to previous years, the Minister said: “Yes, I think, because the dividends that we transferred to the Treasury were of record levels in 2015 and 2016.”

Arulpragasam then asked the witness if he thought former NSB Chief Dealer Naveen Anuradha was a good performer. Said the Minister: “I can’t specifically say about a person, but overall we monitor operations of the bank and look at the overall performance. There’s a team that works there in the Treasury unit.”

Meanwhile, Personal Assistant to Arjun Aloysius Steve Samuel, who was supposed to testify before the commission yesterday, according to his attorney, was admitted to the emergency ward of a private hospital due to cardiac problems. An affidavit, along with medical records, is to be submitted to the commission today.

Samuel’s testimony was sought seeking clarification on files said to be maintained by PTL under the initials of RK and AM. Former Governor Mahendran had previously denied any knowledge of who RK and AM might have referred to.

Justice Jayawardena noted that, even if the witness was not present, the files could be produced.

“We have also endeavoured to serve summons on [Arjun Aloysius] and [Geoffrey Aloysius] who apparently are difficult to locate,” he said.

Noting the presence of the company’s counsel, Justice Jayawardena added: “We will not look at a failure to produce those files very kindly.”

According to Samuel’s lawyer, his client was not in possession of any of those files. However, an affidavit will be filed today pertaining to the documents requested as well as medical records indicating his client’s health.

Former Governor Mahendran is to be re-examined by President’s Counsel Romesh De Silva today.

(FT)

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