Former Central Bank Governor Arjuna Mahendran was yesterday quizzed on text messages sent to his son-in-law Arjun Aloysius and over 500 internal staff transfers of Central Bank officials said to have taken place on his watch, as the presidential inquiry cross examination continued into its second week.
Responding to questions raised by Senior Additional Solicitor General Dappula de Livera, Mahendran denied having any involvement with the business affairs of his son-in-law’s company Perpetual Treasuries Ltd. (PTL) once he left CBSL, barring a one-time correspondence regarding a curtailment of PTL’s business activities by the Central Bank.
Mahendran insisted that he did not offer Aloysius any advice per se, as he was not in a position to do so, but rather recommended that he seek legal advice.
The former Governor also denied having any official dealings with the Finance Minister or former Finance Minister Ravi Karunanayake, but conceded that he continues to visit the ministry premises to “keep abreast of what’s going on” there and that Karunanayake is a personal friend.
ASG de Livera at this brought to the witness’ attention text messages purportedly sent to Aloysius’s mobile phone from his personal assistant Steve Samuel on matters pertaining to the former’s daily schedule.
One of the text messages sent on 22 November 2016, according to de Livera, reads: “Also, we have the A. Mahendran to-do list.”
Asked if the ‘A. Mahendran’ referred to here was him, the former Governor said it could have been anyone, as even his two children, Arvind and Anjalie, were A. Mahendrans. He also questioned the authenticity of the document containing the text messages.
A second message, sent on the same day between the same parties reads: “Chairman, awaiting an update on to-do list for Arjuna M and RK.”
Again, Mahendran claimed ignorance on who ‘Arjuna M’ might have been.
When de Livera suggested that Mahendran had lied to the commission about his involvement with PTL following his resignation from CBSL, the former Governor reiterated that Aloysius had merely informed him about PTL being curtailed by CBSL to which he had simply recommended seeking legal advice.
“I have never heard [Minister Ravi Karunanayake] being referred to as RK,” Mahendran went on to say, adding that he calls the former Finance Minister ‘Ravi K.’
At this point, ASG de Livera pointed out that the Minister himself had previously denied in his testimony before the commission that ‘Ravi K’ was any reference to him.
A third message sent in January this year, according to the senior legal official, reads:”I’m just leaving office. Going to your Flower Road residence to deliver both AM and RK files and to try to catch Dilshan at the Ministry. TQ.”
Mahendran, once again, denied any knowledge of these files.
“This is fiction,” he said.
Three other messages were read out by de Livera, again between the same parties:
“Reminder: Meeting at 10pm with RK. New to-do list file and AM to-do list file will be sent home.”
“Update: Asela is just bringing that document to me. Do you want me to bring it to Flower Road for AM?”
“Good luck with RK meeting. I hope Mr. Arjuna has a good evening too this evening. I saw Gov Coomaraswamy and Lasantha at the Ministry waiting for the meeting with RK. And then I saw Mr. Arjuna getting into the lift when I was stepping out of the ground floor.”
Mahendran claimed not to recall the event referred to in the text and also claimed that he did not know Samuel.
“I wouldn’t even know him if I saw him,” he said.
A seventh message said: “Reminder: 5.30pm with AM and Lasantha at Flower Road Residence.”
Standing his ground, Mahendran reiterated that he didn’t recall the meeting and also denied any knowledge of who the ‘AM’ referred to in the texts might’ve been.
At this point, Commissioner Justice Prasanna Jayawardena quipped: “Is your son-in-law a friend of Angelo Mathews’?”
ASG de Livera suggested to Mahendran that he was, in fact, “fully involved” with Aloysius and PTL throughout and beyond his tenure.
Denying this, the former Governor said the document containing the texts were a “very curious document” with its serial numbers not even in order.
“I question the provenance of how this data was extracted. [It’s a] very unprofessional job,” he said.
“Just like the bond auction,” offered Additional Solicitor General Yasantha Kodagoda.
Referring to recorded telephone conversations said to have taken place between Aloysius and PTL CEO Kasun Palisena on 29 March 2016, ASG de Livera questioned Mahendran on whether the information relayed to Palisena by Aloysius had been of a price or market-sensitive nature. (Palisena was previously questioned on state bank bids, cutoff rates and volumes and it was suggested to him before the Commission that the information relayed to him was what had actually transpired at the relevant auction).
Mahendran responded that he didn’t have enough material to answer that question, adding that a lot of “false bravado” and exaggerations are typically heard in dealer room conversations. The data was unreliable and inaccurate, he said.
At this point, Justice Jayawardena asked, whether or not Mahendran would consider, irrespective of accuracy, a primary dealer obtaining information with regard to the levels at which state banks would bid, the quantum of those bids and any proposed rate cut or absence of a rate cut, at an auction to be price sensitive information. The former Governor responded in the affirmative.
However, when de Livera recommenced his questioning, Mahendran maintained that the information, as previously demonstrated by his counsel, had been incorrect.
“It was a very weird conversation,” he said, referring to the call.
Mahendran once again denied providing information, price-sensitive or otherwise, to his son-in-law.
“I never provided any information of any sort to anybody,” he said.
The questioning then moved to internal transfers purportedly made by Mahendran at CBSL during his tenure as Governor. ASG de Livera suggested that he had, among other key positions, a “greenhorn” as head of the Public Debt Department.
Mahendran resolutely denied this allegation, insisting that then Superintendent of Public Debt Deepa Seneviratne was a person of the highest standing with an excellent track record and tremendous experience in the bond market, adding that nothing stated by de Livera had contradicted that.
“You thought she would be easy for you to play your game in the PDD,” said de Livera.
“I totally disagree,” said Mahendran.
The Additional Solicitor General then recalled that Mahendran had transferred Seneviratne in September 2015, suggesting that he did this after Seneviratne had proved to be a “woman of steel.” He further suggested that Mahendran had realised it was difficult to “achieve his objective” with Seneviratne in that position.
Mahendran responded that while it was the Governor’s prerogative to make appointments as he saw fit, Seneviratne had not been happy in her position and had left to another department.
The next appointment as Head of the PDD, said de Livera, was another man that Mahendran had thought could be swayed. The former Governor vehemently disagreed, calling the appointee a man of integrity that he held in the highest regard.
When de Livera continued to question the competence of several other appointments, Mahendran expressed his displeasure at the line of questioning, stating: “I find it distasteful that people’s reputations are being publicly shredded in front of the media.”
His counsel Attorney-at-Law Chanaka De Silva protested: “According to this line of questioning, 50% of the senior officials of CBSL are incompetent.”
ASG de Livera then said: “Without any assessment of relevant competency and suitability, you chose to make these transfers on criteria best known to you.”
Mahendran rejected the suggestion, stating that the transfers were done on an objective basis with consultations held with the candidates themselves, their superiors and the HR department of the CBSL.
De Livera pointed out that in 2015, a total of 501 transfers had been made, a significantly high number compared to the 260 in 2014 and 228 in 2013.
Mahendran agreed, but explained it thus: In CBSL, he said, there is an annual in the middle of year where employees who had served over five years are rotated - standard practice. Mahendran claimed he wished to reduce it to three years, and the Monetary Board had agreed. Therefore, he said, employees eligible for this rotation increased in number.
New departments in areas of risk management, regional development, etc. had also been created, resulting in the unusually high number. No one was intimidated, said Mahendran.
“They were just moved from one air conditioned office to another. There was no victimisation,” he said.
De Livera then suggested that Mahendran had created an “effective platform” for him and his son-in-law to “manipulate the market” and enable PTL to make phenomenal profits during his tenure.
However, the former Governor countered that PTL, from what he had heard in evidence given before the commission, that PTL had been making phenomenal profits even before he was appointed Governor of CBSL. The company did not need his help, he said.
“I had absolutely nothing to do with trying to make it easy for them or give them any type of advantage,” he said.
He added that PTL would have continued making high profits had their business not been curtailed.