Treasury Bond Commission easily took the center of attention last week as it summoned two Cabinet Ministers of the government to give evidence on the Treasury bond issue.
Minister of Development Strategies and International Trade Malik Samarawickreme and Minister of State Enterprises Development Kabir Hashim testified before the Presidential Commission of Inquiry investigating into the Treasury bond issue.
Commission’s witnesses
At the very outset the Commission informed that the two Ministers were summoned by them and not by the Attorney General’s Department.
The Tribunal questioned both Ministers on matters pertaining to the Breakfast meeting held at the Central Bank on February 26 2015 and on the urgent borrowing requirement in February and March 2015.
Minister Samarawickreme
Chairman of the Commission Justice K.T. Chitrasiri questioned Minister Samarawickreme on the Breakfast meeting held at the CBSL.
According to evidence led, the discussion at the Breakfast meeting was in relation to the emergency borrowing requirement of Rs. 15 billion for certain road development projects, already completed. Minister Samarawickreme said the emergency borrowing requirement of Rs. 15 billion was for certain road development projects which were not settled by the previous regime.
Chairman Justice K.T. Chitrasiri: Did you attend the February 26 2015 Breakfast meeting held at the Central Bank?
Minister Samarawickreme: Yes.
JC: In what capacity?
MS: As a senior advisor
JC: Who attended this meeting?
JC: Then Finance Minister Ravi Karunanayake, Minister Kabeer Hasheem, then Governor of the Central Bank Arjun Mahendran, Officials from the Treasury and the Central Bank.
JC: What was the purpose of this meeting?
MS: Finance Minister and the CBSL Governor suggested it to discuss the RDA projects. Some had not been paid by the previous regime and some projects were stuck. So the discussion was on requirements for financing these projects.
JC: What was the borrowing requirement?
MS: Rs. 18 billion and with 3 billion in hand, the immediate requirement was Rs. 15 billion.
JC: Was there a discussion on how to raise funds for this requirement?
MS: There was no discussion on how to raise funds, to my knowledge.
JC: Was there a discussion on the auction to be held on February 27 2015?
MS: No, there was no discussion about the auction.
JC: No discussion?
MS: No.
JC: No decision?
MS: No.
Minister Samarawickreme was then asked if he ever contacted former Governor of the Central Bank Arjun Mahendran, after the Breakfast meeting or on February 27 2015.
JC: Did you meet or speak on the telephone with Arjun Mahendran after the Breakfast meeting on February 26 2015? Or during the course of the following day?
MS: Not as far as I can remember.
Minister Samarawickreme was then questioned on the position he held in the United National Party.
JC: What is the position you held in 2015 and 2016, in the United National Party?
MS: I was the Chairman of the UNP.
JC: During that period, 2015 to 2016, can you say that Perpetual Treasuries Limited or any member of Perpetual Capital group or Free Lanka or Arjun Aloysius or Geoffrey Aloysius or an immediate member of their family, made any fund contribution or payment to the United National Party?
MS: No. I am not aware of such a payment.
Minister Hashim
Minister of State Enterprises Development Kabir Hashim then took the witness box. The Tribunal questioned him on similar subject areas. Minister Hashim gave a detailed explanation on the emergency borrowing requirement of Rs. 15 billion to fund several completed Road Development Projects. He was Minister of Highways and Investment Promotion in 2015.
Chairman Justice K.T. Chitrasiri: Are you aware of a Breakfast meeting held at the Central Bank on February 26 2015?
Minister Kabir Hashim: Yes.
JC: Did you attend the meeting?
KH: Yes.
JC: In what capacity did you attend the meeting?
KH: As Minister of Highways.
JC: Who were the other participants of the meeting?
KH: Then Finance Minister Ravi Karunanayake, Minister Malik Samarawickreme, then Governor Arjun Mahendran, the accountant of my Ministry, the Treasury and Central Bank officials.
JC: What was the purpose of this meeting?
KH: I was there because, I had just taken over the Ministry and some highway projects started by the previous regime were stopped halfway. We had made a request for funds from the Economic Management Committee. If you permit me, I can refer to the documents my Ministry referred to at that time. (Permission granted.) On February 6 2015 my Accountant wrote to the Treasury Secretary saying that certain contractors had stopped work and we needed urgent funds to clear the Rs. 18 billion outstanding, of which we had an allocation of Rs 3 billion. So basically we needed Rs 15 billion for immediate purposes.
KH: (Continues) Subsequently, at a meeting held on February 24 2015 at Temple Trees with the Economic Management Committee, these road development projects were taken up and the fund requirement emphasized. We were then asked to come to the Central Bank on February 26 2015. My Accountant certified that Rs. 3 billion was available. However, these numbers were uncertain. Unpaid bills were coming from projects done by the previous regime.
JC: So what were the decisions taken at this discussion?
KH: We submitted our requirement to pay the unpaid bills. The Finance Ministry and the Treasury informed they would help us with the funds.
Justice P.S. Jayawardena: Was the Central Bank asked to do anything?
KH: Not that I am aware of.
JC: So what was done after the meeting?
KH: Subsequently we got Rs 8.3 billion in March 2015 from the Treasury. Then again we sent a requisition on March 16 2015 requesting Rs 15 billion. We said we received 8 billion, and needed the balance 10 billion. We got the money in the month of March.
Justice Jayawardena: In the month of March, the Ministry requirement was 18 billion and the requirement remained in March? You wanted 18 billion. Then you got 8 billion. You asked for the balance of 10 billion. Which means, your requirement remained the same?
KH: I can’t say they transferred in March exactly.
JC: Was the February 27 2015 auction discussed at the meeting?
KH: No.
JC: Did you meet or speak on the telephone with Arjun Mahendran after the Breakfast meeting on February 26 2015? Or during the course of the following day?
KH: I cannot remember but I do not think so.
JC: What is the position you held in 2015 to 2016, in the United National Party?
KH: The General Secretary.
JC: During that period from 2015 to 2016, can you say that Perpetual Treasuries Limited or any member of Perpetual Capital group or Free Lanka or Arjun Aloysius or Geoffrey Aloysius or an immediate member of their family, made any fund contribution or payment to the United National Party?
KH: No, not to my recollection.
The Attorney General’s panel assisting the Commission did not question either of the Ministers. Commissioner Supreme Court Judge Justice P.S. Jayawardena following the questions from the Tribunal to the two witnesses, inquired from the AG’s panel head Senior Additional Solicitor General Dappula de Livera if they have any questions to be asked from the two Ministers. SASG de Livera on both occasions informed the Commission that they have no questions to ask.
Good Governance
Meanwhile, addressing media outside the court room, Minister Kabir Hashim said he willingly came before the Commission as a responsible citizen who wanted to be of assistance to an ongoing investigation.
He also said, former President Mahinda Rajapaksa, who was the then Minister of Highways, has treated the Ministry as a “play house” and left behind a series of unpaid bills amounting to millions.
Minister Hashim reprimanded certain groups who have said that Minister Samarawickreme and he had requested President Maithripala Sirisena to postpone the hearing in an attempt to dodge giving evidence.
He said, it is the responsibility of a good citizen of a country to appear before a court to give evidence when summoned.
Cross examination
The cross examination of the former Governor of the Central Bank Arjun Mahendran was also completed last week.
Mahendran was extensively questioned on his involvement in an on sight investigation on Perpetual Treasuries Limited and Employees Provident Fund over several transactions done in the Treasury bond market.
DSG MG: Are you aware that when you were the Governor, there was this regulatory process continued somewhere in September 2016 on PTL?
AM: Arjun Aloysius contacted me and said the activities of his company have been suspended.
DSG MG: Are you aware of a report making it to the press regarding the report on PTL?
AM: Yes there was a leakage of report.
DSG MG: Belonging to Perpetual Treasuries Limited?
AM: Yes. All I know is that there was an ongoing investigation. Not only on PTL but also on several other Primary Dealers.
DSG MG: Are you talking about the MB paper on Entrust? (A Primary Dealer)
AM: Yes we were very much concerned about the sanctity and confidence of investors in the market affected by Entrust which had gone under serious systematic events.
DSG MG: Entrust was restricted in November 2016?
AM: Yes, I heard so.
DSG MG: Are you aware that somewhere in July 2016, PTL’s licence was cancelled?
AM: Yes I am aware.
DSG MG: Would it be possible that this whole process which culminated in PTL being suspended would have happened in January 2016 if that examination on PTL was conducted in January 2016?
AM: Not at all my lord. There were more PDs with whom we had similar issues of a similar nature and attitude. I can bring those documents. There were more aggravating issues at that time. So we had to have our acts together. And all the supervisory reports were gathered.
DSG MG: You said compared to what went on in the market, what PTL had done was a minor offence?
AM: No, I am not saying that. There was a shortage of officers as well to carry out all these investigations. The priority was to solve the Entrust issue.
DSG MG: My question was, why you took so long to transfer the regulatory functions of PDD to the supervision department?
AM:We had an emergency MB meeting on January 1 2016 and discuss this matter.
DSG MG: How are you in a position to judge that PTL’s offence was less important than or more important than other investigation?
AM:It was not brought to my attention my lord by the officers. They did not tell me that PTL’s investigation is more important than the issue with Entrust.
DSG MG: The on-sight examination clearly raises alarm about some serious violations on the part of PTL in January. If that investigation had been done vigorously, perhaps this Commission will not be sitting today?
AM: I completely disagree.