Parliament failed in its duty to foil massive scams

‘Technology enabled auditors to recover almost all deleted data’

By Shamindra Ferdinando-February 2, 2020, 9:59 pm

 MP Dr. Harsha de Silva yesterday, told a media conference at the Opposition Leader’s Office that the Parliament had failed in some of its primary obligations.

Former member of the parliamentary Committee on Public Enterprises (COPE) said so when The Island asked him whether frauds perpetrated during 2010-2011 period as well as 2015-2016 as highlighted by costly Forensic Audits undertaken by the government proved the failure on the part of the government as regards financial responsibilities.

The UNPer said that in spite of his political affiliations, he was quite happy forensic audits undertaken by BDO India LLP and KPMG had exposed the actual situation.

Responding to another query by The Island, the lawmaker admitted that there had been instances where Parliament meekly gave in to outside interventions. "Yes, there were people above the parliament," MP de Silva.

The UNPer side-stepped The Island query how such a House could be placed among the world’s best parliaments as recently announced by Speaker Karu Jayasuriya and whether it would be fair by the electorate for the same MPs to contest the forthcoming parliamentary polls expected in April 2020.

Parliament is scheduled to debate the audit reports on Feb 18 and 19.

At the outset of the briefing, the MP, having asserted that none had really examined the forensic audit reports submitted by the two firms, claimed that he studied them till 3.30 am, Sunday, before meeting the print and electronic media. Lawmaker de Silva emphasised the pivotal importance in giving an opportunity to the public to understand the seriousness of the situation.

Reiterating his faith in the two audit firms, the UNPer explained that forensic investigations comprehensively dealt with the treasury bond market (2015-2016) and transactions at the Colombo Stock Exchange (CSE) during (2010-2011) period.

Displaying parliament copies of the forensic audit reports, de Silva questioned whether those who had been involved in fraudulent transactions during the UPFA administration were also involved in treasury bond scams as pointed out in forensic audit reports.

Contrary to what he termed despicable efforts to question the expertise and integrity of the two firms, Dr. de Silva said they had achieved objectives in spite efforts at undermining the process.

Commenting on the probe on treasury bond scams perpetrated during the UNP-led yahapalana administration, lawmaker de Silva said primary dealer Perpetual Treasuries Limited (PTL) had earned massive profits at the expense of the national economy (2015.2.1 to 2016.3.31). The UNPer pointed out the investigation dealt with the losses suffered by yahapalana government and the undue profits received by the PTL.

The UNPer admitted that the government in which he served as a Deputy Minister couldn’t absolve itself of the responsibility for the massive losses the country incurred at that time.

There had never been a previous instance of a UNP MP publicly admitting Treasury bond scams were perpetrated during their administration.

De Silva said that vital information denied to Parliament over the years had been made available to the auditors. He said the Central Bank had turned down his requests for specific information.

A smiling de Silva said that the auditors had been able to recover those deleted SMS, Whatsapp. etc., from a range of devices belonging to Central Bank Governor Singaporean Arjuna Mahendran, his son-in-law Arjuna Aloysius and others involved in the transactions. As the evidence had been gathered in accordance with the Evidence Ordinance, evidence could be used directly in court, the MP said. Those who believed fraudulent transactions could be swept under the carpet by deleting/removing information were mistaken, the MP said. Technology available to the auditors was such, they could recover everything, the UNPer said. "I was astonished," the MP said, adding that exact number of deletions and related information was available.

De Silva said that the failure on the part of the auditors had not really undermined the forensic investigation.

The former Deputy Minister revealed that there were some recordings which were beyond the grasp of UNP colleague Ranjan Ramanayake.

The print and electronic media reportage of the treasury bond scams had been carefully examined, the UNPer said, while naming some of those interviewed by the auditors.

Referring to the reports, de Silva said that auditors hadn’t been successful in securing an interview from Arjuna Mahendran’s predecessor, Ajith Nivard Cabraal, though the investigation was not really affected by that. According to the auditors, the requests to Cabraal had been made through Mahendran’s successor, Indrajith Coomaraswamy and senior Finance Ministry official S. R. Attygalle, the incumbent Secretary to the Finance Ministry. The auditors said they hadn’t been able to obtain a video conference as Cabraal was engaged in the 2019 presidential election campaign.

De Silva said that as he didn’t want to engage in cheap politics the truth needed to be placed before the people. The UNPer said that he wouldn’t hesitate to suppress the truth regardless of the consequences.

The MP admitted that in spite of Auditor General’s findings, COPE reports, Presidential Commission report on treasury bond scams, they (members of parliament) knew just a fraction of the sordid operations. The UNPer said that there was a vast difference between what they knew of treasury bond scams and going on at the CSE prior to the releasing of the forensic audit reports and now.

Referring to the Feb 27, 2015 treasury bond scam, the UNPer, quoting a particular forensic audit report placed the minimum and maximum losses suffered by the government at Rs. 1,106 mn and Rs 1,114 mn, respectively.

Pointing at multiple treasury bond transactions in March 2016, MP de Silva, on the basis of forensic audit reports placed minimum and maximum losses at Rs 2,098 mn and Rs 2,872 mn, respectively.

Having dealt with mega treasury bond scams, de Silva said that he couldn’t turn a blind eye to what was going on though he, too, was engaged in party politics. "I will not try to clear anyone."

All those responsible for treasury bond scams should be severely dealt with, the MP said, adding that he expected the toughest possible punitive action against them.

An irate MP said that he felt like throwing up when they were told in uncertain terms the treasury bond scams continued even after the exposure of the opening fraud on Feb 27, 2015. The MP gave a list of dates as revealed by the auditors.

Declaring that those directly involved in the fraudulent transactions were now in the public domain, the MP stressed the need to establish what happened to the ill-gotten money.

The Criminal Investigation Department (CID) could inquire into the funds and those indirectly and directly involved with deals, the MP said.

The UNPer pointed out how a spate of auctions had been deliberately cancelled to create a massive requirement for money leading to the Feb 27, 2015 transactions immensely beneficial to the PTL.

MP de Silva quoted a conversation between PTL proprietor Arjun Aloysius and Kasun Palisena, Chief Executive Officer of PTL to prove that they had access to confidential Central Bank information pertaining to issuance of treasury bonds.

Before 2015 presidential poll, the same lot had brazenly manipulated the CSE, MP de Silva alleged, asserting that having milked the CSE, they moved to the treasury bond market, in a big way.

Lawmaker de Silva explained the circumstances under which the massive losses were inflicted on those listed on the CSE, with the focus on the EPF (Employees Provident Fund) transactions between 2010 and 2011. The losses suffered by the EPF alone during this period were placed at Rs. 9,469 mn on the basis of forensic audit findings.

The UNPer pointed out how specific guidelines pertaining to investments were violated by those who were supposed to guarantee viability of large scale investments. The MP named well over a dozen listed companies whose stocks were exploited by unscrupulous persons who robbed workers’ hard earnings.

The UNPer said funds had been invested in even in an unlisted company belonging to a close relative of a top Central Bank official.

The MP said that against the backdrop of forensic audits a separate investigation was required into the conduct of a blue chip company.