Hatton National Bank & Central Bank Must Come Clean On “Grand Tax Evasion” Allegation
Amrit Muttukumaru
Managing Director/CEO – Jonathan Alles and just retired CBSL Governor – Dr. Indrajit Coomaraswamy have not thought it fit to touch even with a barge pole the damning allegations in the exposé “HNB’s grand tax evasion” published in a well-known website (not Colombo Telegraph) at the time Dr. Ranee Jayamaha was HNB Chairman.
These allegations if credible (Ranee Jayamaha apparently thinks so) have huge implications to the integrity of Sri Lanka’s banking system, fiscal consolidation, CBSL’s ‘bank supervision’ and the already battered chartered accountancy profession. True to form the mainstream media would have none of it.
It is alleged:
1) “HNB has been engaged in the tax evasion process for the past 5 to 6 years with the assistance of the officers attached to Inland Revenue Department”
2) “The bank has allegedly evaded around Rs 600 million of company tax”
3) “The tax advisor to the bank Charted Accountant——–is said to be a main partner in this fraud”
4) “In its preliminary investigations, the Central Bank has revealed that half of the evaded tax has been divided between the tax advising company and the officers at the Revenue Department involved”
5) “The current chairman of the bank Rani Jayamaha has also been able to identify the wrongdoing through an internal probe”
Jonathan Alles and Coomaraswamy were given the link to the website as far back as 25 September 2017. It was to no avail.
Jonathan Alles
I followed up my 10 November 2017 e-mail to Jonathan Alles which was ignored with my e-mail of 18 December 2019 which was also ignored.
In the context of the allegation that then “chairman of the bank Rani Jayamaha has also been able to identify the wrongdoing through an internal probe” I requested Jonathan Alles to clarify:
“(i) whether an “internal probe” took place? (ii) whether it identified any “wrongdoing”? (iii) if so, what were the specific instances of “wrongdoing”? (iv) what action was taken against those responsible for any “wrongdoing”?”
His silence speaks louder than words.
It was my ‘Reminder’ to Jonathan Alles on 23 December 2019 that elicited a response for the first time from HNB on 24 December from Marina Clarenton on behalf of Dilshan Rodrigo – Chief Operating Officer. It was to invite me for a meeting with Rodrigo and Thushari Ranaweera – HNB Board Secretary on 27 December to “discuss” this matter.
I promptly responded the same day (24 December) to Dilshan Rodrigo with a copy to Jonathan Alles inter alia as follows:
“I re-iterate that under the circumstances, any meeting with me to “discuss” this matter will serve no useful purpose. All what HNB has to do and what it apparently is refusing to do is respond in writing to the allegations in the ‘Sri Lanka Mirror’.
I trust HNB will do so in the best interest of all concerned as this matter has already been delayed long enough.”
Former Governor Coomaraswamy
The allegations include:
“In its preliminary investigations, the Central Bank has revealed that half of the evaded tax has been divided between the tax advising company and the officers at the Revenue Department involved.”
After I brought it to the attention of former Governor Coomaraswamy on 25 September 2017, it took the CBSL 42 days to advise me (i)“CBSL has not carried out any investigations” (ii) “the statements” in the article “are factually incorrect” (iii) “The matter is being brought to the attention of the Inland Revenue Department.”
It begs the questions:
i) How “the statements” contained in the article could be “factually incorrect” if “CBSL has not carried out any investigations”?
ii) Why it took CBSL 42 days (from my e-mail of 25 September) to belatedly state “The matter is being brought to the attention of the Inland Revenue Department.”?
iii) Has CBSL brought it “to the attention of the Inland Revenue Department” even now? If not why?
In my said e-mail of 25 September 2017 to former Governor Coomaraswamy also copied to Jonathan Alles I inter alia wrote:
“Dr. Ranee Jayamaha – Confirms Wrongdoing
Dr. Ranee Jayamaha when serving as HNB Chairman confirmed wrongdoing on the phone while indicating the ‘Rs 600 million’ mentioned was an exaggeration.
Mr. Jonathan Alles – incumbent HNB Managing Director cannot be unaware if an “internal probe” took place identifying “wrongdoing” during Dr. Jayamaha’s tenure as chairman since during her tenure (April 2011 – April 2015) he was (i) Deputy CEO (November 2011 – April 2013) (ii) Acting CEO (May – June 2013) (iii) MD/CEO from 1 July 2013.
I kindly request Mr. Alles to forward this e-mail to Dr. Ranee Jayamaha.”
Neither former Governor Coomaraswamy nor Jonathan Alles have refuted “Dr. Ranee Jayamaha – Confirms Wrongdoing”
I ask Jonathan Alles:
1) Did you forward the e-mail to Dr. Jayamaha? If not why?
2) If forwarded what was Dr. Jayamaha’s response?
3) If in your view the website has been hallucinating, has punitive action been taken against the website? If not why?
I ask former Governor Coomaraswamy:
1) You have flatly denied the allegation “In its preliminary investigations, the Central Bank has revealed that half of the evaded tax has been divided between the tax advising company and the officers at the Revenue Department involved”. If in your view the website has been hallucinating, has punitive action been taken against the website? If not why?
2) To establish the truth or otherwise of this alleged scam, did you at the very least seek the clarification of Dr. Ranee Jayamaha who was previously CBSL Deputy Governor? If not why?
Awards
HNB over the years has been the recipient of a cartload of purported ‘prestigious’ awards. The ‘Daily FT’ in its front page news item of 19 July 2019 HNB shines at Euromoney, Asian Banker Awards reports the following 2019 awards:
‘Best Bank in Sri Lanka’ 2019 – ‘Euromoney’ Magazine
‘Best Managed Bank in Sri Lanka’ 2019 – ‘Asian Banker’ Magazine
To cap it all off Jonathan Alles was the recipient of ‘CEO Leadership Achievement’ 2019 from ‘Asian Banker’.
Conclusion
Dinesh Weerakkody the incumbent HNB Chairman is in the best position to handle this ‘hot potato’. He seems to be the country’s most sought after and hence experienced bank and company director. He was previously Chairman, Commercial Bank and director of DFCC Bank. Described as a ‘thought leader’ by ‘Daily FT’, he should be more than capable to get to the bottom of this saga without depleting his vast reservoir of ‘thoughts’.
I trust Dinesh Weerakkody and Jonathan Alles will also clarify matters in regard to the alleged shocking customer injustice exposed in ‘Colombo Telegraph’
All what this writer is seeking in the public interest is a robust and transparent investigation to determine the truth or otherwise of these allegations.
