PM’s responses to AG Dept. queries – Part 03

PM on Mahindanada’s allegation on Monarch Residencies apartment.

[25] Question Number 25 is as follows-

“In 2015 and 2016, were the Minutes of Meetings of the Monetary Board, Board Papers and Reports considered by the Monetary Board and other Reports of the CBSL, submitted to the Ministry of National Policies and Economic Affairs (which is the Ministry under which the CBSL is placed), on a daily, weekly, monthly, quarterly, half yearly or annual basis?

If so, what was the information that was provided and how often was such information provided?”

My reply is as follows-

The Minutes of meetings of the Monetary Board, Board Papers and Reports considered by the Monetary Board and other Reports of the CBSL are not submitted to the Ministry’ of National Policies and Economic Affairs. The Governor of the CBSL would keep me informed of important decisions and matters relevant to the Monetary Board and CBSL at weekly meetings.

[26] Question Number 26 is as follows-

“A copy of a text message said to have been sent to Mr Arjuna Aloysius by his Personal Assistant [Mr Steve Samuel] on 28th November 2016 and which states ‘Reminder – to request Hon. PM & RK to get a copy of Monetary Board meeting/papers need to be submitted today 28.11.16″, has been produced in evidence before this Commission of Inquiry.

Have you ever provided or agreed to provide copies of Minutes of Meetings of the Monetary Board or any other documents or reports of the CBSL, to Mr Arjuna Aloysius or to any representative of Perpetual Treasuries (Pvt) Ltd.?”

My reply is as follows-

I deny that I had agreed to provide or provided copies of Minutes of meetings of the Monetary Board meetings/papers to Mr Aloysius or any other person. I resent the insinuation.

[27] Question Number 27 is as follows-

“There is evidence before this Commission of Inquiry which suggests that, on 28th March 2016 and 30th March 2016, the then Hon. Minister of Finance met senior officers of the Bank of Ceylon, the People’s Bank and the National Savings Bank and instructed that these three Banks submit Bids at specified Rates at the Treasury Bond Auctions to be held on 29th March 2016 and 31st March 2016. The evidence also suggests that, at these two meetings, the then Hon. Minister of Finance indicated to the officers of these Banks that, the CBSL would not accept Bids at Rates which were higher than the Rates specified by him and that, accordingly, the three Banks submitted Bids at the specified Rates. However, the evidence suggests that, in fact, when these two Treasury Bond Auctions were held, the CBSL had accepted Bids at Rates which were considerably higher than the Rates at which these Banks had placed Bids based on the instructions given by the then Hon. Minister of Finance.

Were you aware, in March or April 2016, of the aforesaid meetings and events?”

My reply is as follows-

I am unaware of the meetings referred to in paragraph 27.

[28] Question Number 28 is as follows-

“Are there any observations, comments or information which you consider will be relevant or useful to this Commission of Inquiry in carrying out its Mandate.

If so please state such observations, comments or information.”

My reply thereto is as follows-

i. The Commission may recommend measures to ensure further transparency in transactions in the Primary and Secondary Government Securities markets.

ii. It may also recommend measures to address the conflict of interest that currently exists in the CBSL due to the Public Debt Department acting as Agent of the Government for its borrowing requirements while the EPF Department of the CBSL being the largest lender to the Government.

iii. The Commission may determine whether the prevalence of insider trading in securities markets is wide spread and if so, suggest remedial measures.

Affirmed to on this 20th

day of October 2017, at



I, Ranil Wickremesinghe, the Prime Minister and Minister of National Policies & Economic Affairs, of “Temple Trees”, Colombo 3, being a Buddhist do hereby solemnly, sincerely and truly, declare and affirm as follws.

1. I am the affirmant above-named.

2. The Presidential Commission of Inquiry to Investigate, Inquire and Report on the Issuance of Treasury Bonds during the period I” February 2015 to 31st March 2016, by letter dated 10th November 2017 has sought my replies to the questions 2, 7, 11, 14, 16, 17, 18, 19, 21, 24, 25, 26, 27, 28, 29, 30, 32, 33, 34 and 35 contained in the annexure thereto. Accordingly, in response to the said questions, I have set out herein my answers, from my personal knowledge and a perusal of the relevant documents.

3. The said questions and my replies thereto are as follows.

4. Question number [21 is as follows:

“[2] Why didn’t you take steps to fill the two Monetary Board vacancies no sooner you filled the Governor’s post? Wasn’t it important and critical to make these appointments without delay?”

My reply is as follows-

There was a general consensus in the new Government, that the several vacancies in statutory boards and corporations should be filled to the extent required to ensure a quorum, and that further appointments be made after an even more thorough vetting process, which would ensure the appointment of the most suited individuals.

In addition to the ex officio office bearers of the Monetary Board, the other Members are appointed by His Excellency the President on the recommendation of the Minister of Finance, with the concurrence of the Constitutional Council. However, with regard to these appointments the Minister of Finance acted on my advise in making his recommendations.

5. Question numbers [7], [27] and [30] are as follows-

“[7] Please see Cabinet Sub-Committee on Economic Affairs Meeting Minutes of 24.02.2015 & 03.03.2015.

(a) In terms of RDA Projects the decision was that all road projects to be prioritized and implemented with available funds? A list to be prepared and finalised next week. (Vide Minutes of Meeting 24.02.2015).

(b) At the next meeting as far as RDA Projects were concerned it had been decided only to evaluate and re-negotiate with the funding agents (Vide Minutes of Meeting on 03.03.2015).

Therefore, having regard to the above there was no urgent funding requirement which was discussed or agreed upon?”

“[27] In response to question No.12, you have stated that it is incorrect to state that funds for payment of contractors for roadworks was not required to be raised in February or March 2015. However, documents in evidence before this Commission, including the relevant monthly cash flows and the minutes of the meeting of the Cabinet Sub Committee on Economic Management in February 2015 indicate that there was no such requirement. The said Cabinet Sub Committee has in fact decided that these payments should be met with available funds. So, on what basis do you substantiate your position?”

“[30] The briefing note you have produced at X1 does not refer to an urgent funding requirement of Rs.15 billion for payment of contractors for roadworks nor the breakfast meeting held on 26.02.2015. It only refers to the Rs.13.5 billion which was already in the cash flow for the week ending 02.03.2015. In this background, can you explain why you have in your response to question No.12 and in your Statement in Parliament on 17.03.2015 linked the Rs.15 billion for payment of contractors for roadworks and the breakfast meeting held on 26.02.2015 with the funds raised via the treasury bond auction of 27.02.2015?”

My reply is as follows-

Although at the meeting of the Cabinet Sub Committee on Economic Affairs held on 24th February 2015 it is recorded that “All road projects to be prioritized and implemented with available funds”, I was subsequently informed by the Minister of Highways that only about Rupees One Billion was in fact available to make payments for these projects.

I requested the concerned Ministers and officials of the Treasury and CBSL to give priority to sorting out how the funds could be obtained.

Therefore when the meeting of 26th February 2015 was held they had decided that Rs. 15 Billion was urgently required.

y the next meeting of the Cabinet Sub Committee on Economic Affairs of 3rd March 2015, the money raised at the Auction of 27th February 2015 was available. It was decided to “expedite and finish the ongoing rural road projects in order to uplift the rural economy” and also that the “cost of highways to be evaluated in a scientific manner and renegotiated with the funding agencies”.

At the Cabinet Sub Committee on Economic Affairs Meeting on 10th March 2015 it was noted that “A list of outstanding payments on road projects has already been prepared. It was advised to obtain the outstanding lump sum to be paid from Line Ministries. A committee has been appointed to look in to this and approve the payments. Payments related to ongoing work on multilateral, Bilateral Projects and rural roads to be released with immediate effect.”

The Minutes of the Cabinet Sub Committee on Economic Affairs Meeting on 10th March 2015 states that “It was explained that Highway Review Committee is finalizing the evaluations and negotiations to make the Contract Price of these contracts to the lowest possible sums by optimizing engineering designs and reducing excessive costs from other areas. Considerable amount have been reduced by the negotiations made so far with OCH III contractor. Possible areas of reduction of costs are explored and negotiations has commenced with the Southern Expressway extension Contractor. Minister of Highways to make an announcement in the Parliament once the cost benefit calculations are completed in these two expressways.

It was also explained that both JICA and ADB has shown their interest to fund the Central Expressway (Formally known as Northern Expressway) on concessional terms. Possibilities were explored to obtain funding on concessional terms from other multi-lateral and bi–lateral donor agencies.”

The Ministry of Highways, Higher Education and Investment Promotion confirmed that the cash imprest requirement for February 2015 was Rs.18,445,700,000, and that the allocation available was only Rs.3,000,000. Thus a sum in excess of Rs. 15 billion was required in respect of pending payments due to contractors in respect of highway constructions.

I annex a copy of letter dated 16th February 2015 sent by the Secretary, Ministry of Highways, Higher Education and Investment Promotion (including the annexure thereto) as X1.

Additionally there were numerous other urgent funding requirements of the Republic of Sri Lanka, some of which I adverted to in my speech in Parliament reported at column 73 of the Hansard of 17th March 2015, the relevant portion of which I annex hereto as X2.

The entirety of the sums due to various other contractors for work done prior to January 2015 was not immediately known by February 2015. Cabinet Papers are presented from time to time with regard to monies due in respect of contractual dues arising from work done during the period 1St January 2011 to 31st December 2014. In early November this year a Cabinet Paper was presented with regard to the debts of SriLankan Airlines.

I also annex as X3 a copy of the projected Govt. Daily Cash Flow Statement for the period 16th February 2015 – 27th February 2015 issued by the Cash Management Division, Department of Treasury Operations. In the last column thereof demonstrates the deficit at the end of 27th February 2015.

I annex as X4(a)-X4(c) the Minutes of the Meetings of the Cabinet Sub Committee on Economic Affairs of 24th February 2015, 3rd March 2015 and 10th March 2015.

I also annex as X5 letter dated 13th February 2015 sent by the National Water Supply and Drainage Board with regard to its funding requirements, as an example of some of the other liabilities which were known to us at the time.

6. Question number [11] is as follows-

“[11] Were you aware that Finance Minister Mr. Ravi Karunanayaka and his family were occupying and living a penthouse apartment at Monarch residencies which was paid for by Arjun Aloysius?

(a) This issue was brought up in Parliament by Mr. Mahindanada Aluthgamage, MP who made a statement in this regard?

(b) Do you acknowledge any wrong doing (the Minister of Finance being the Issuer of Government Securities and Arjuna Aloysius being the owner of a Primary Dealer Company trading in Government Securities) on the part of the minister in this regard?

(c) What action did you take in this regard?”

My reply to questions 11 (a) and (c) is as follows:

I was aware that Mr. Ravi Karunanayake, MP was occupying an apartment at Monarch Residences, as he had informed me that he had shifted pending renovations to his residence.

It is correct that allegations were made by Mr. Mahindananda Aluthgamage, MP.

Mr. Ravi Karunanayake, MP countered by denial and there was no material furnished to substantiate the allegation at that point of time.

However, I inquired from Mr. Ravi Karunanayake, MP whether there was any truth in the allegation made that he was occupying an apartment at Monarch Residences which was paid for by Mr. Aloysius. He informed me that the apartment he was occupying was not paid for by Mr. Aloysius.

My reply to questions 11 (b) is as follows:

I am not privy to all the evidence led in this regard. This matter is now pending before the Commission. Therefore, it would not be appropriate for me to express an opinion in this regard.

7. Question number [14] is as follows-

“[14] Did Mr. C.P.R. Perera meet you with Mr. Arjuna Mahendran on 01.04.2016 to inform you of concerns relating to treasury bond dealings by EPF?

(a) If the answer to the above is in the affirmative, did Mr. C.P.R. Perera specifically inform you that EPF was buying treasury bonds in the secondary market from Perpetual Treasuries Ltd. instead of buying directly in the primary market?

(b) What was your response?”

My reply is as follows-

The meeting on the 01st of April 2016 was not a meeting I had with only Mr C P R Perera and Mr Arjuna Mahendran. It was a meeting to discuss Government Securities the request of which came from Mr C P R Perera. The meeting had a number of officials together with other Ministers.

At that meeting concerns were expressed as to how we can improve the system of marketing of government securities. In the course of the meeting reference was also made to the fact that EPF was purchasing excessive securities from the secondary market and not in the primary transactions. I requested them to go into the matters raised at the meeting.

8. Question number [16] is as follows-

“[16] Did you or the United National Party or any member of your party receive any donation or contributions from Arjun Aloysius or any Company of the Perpetual Group of Companies or from Free Lanka Trading Company or W.M. Mendis and Company in the years 2014,2015 & 2016 directly or indirectly?”

My reply is as follows –

Neither I nor the Party received any donations or contributions from Arjun Aloysius or any other entity mentioned therein.

I am unaware whether any other individuals received donations or contributions from the said Aloysius or the specified entities.

9. Question numbers [17], [18] and [19] are as follows –

“[17] A text message sent on 14.01.2017 by Mr. Aloysius’s Personal Assistant Steve Samuel appears to be reminding Mr. Aloysius of a meeting with you regarding the US Treasury. Was there a meeting scheduled between you and Mr. Aloysius on that date?”

“[18] If the answer to the above is in the affirmative, did you in fact meet Mr. Aloysius on 14.01.2017 regarding the US Treasury or any other matter?”

“[19] Have you and, if so, how many times have you, met Mr. Aloysius regarding PTL business-related matters?”

My reply is as follows-

There was no meeting scheduled between Mr. Aloysius and myself, nor did I meet Mr Aloysius, on 14 January 2017, regarding the US Treasury or any other matter.

I have met Mr Aloysius regarding PTL business related matters only in connection with what I have previously stated in answer to Question 5 in my Affidavit dated 20th October 2017 and in answer to Question 35 herein.

10. Question number [21] is as follows-

“[21] There is undisputed evidence before the Commission, including that of several witnesses from Perpetual Treasuries Ltd., that Mr. Aloysius continued to run the business activities of this company throughout the tenure of Mr. Mahendran’s Governorship. In this context –

(a) Do you consider the assurance given to you Mr. Mahendran as having been false?

(b) What action would you recommend against misleading and false statements made to the Prime Minister of the country?”

My reply is as follows-

I believed that Mr Mahendran acted in good faith.

I am not privy to the  Commission, and am unable to comment thereon.

The Commission will have to take and / or recommend action according to the evidence placed before it, and the conclusions it reaches thereon.

11. Question number [24] is as follows-

“[24] In response to question No. 10, you have stated that you advocated a system where Treasury Bonds were ‘mainly’ accepted through Public Auctions. You have also state that that you insisted that Mr. Arjuna Mahendran should ‘consider’ issuance of bonds through Public Auctions in accordance with the economic policy of the Government and that you expected him to comply with due procedure. In this context –

(a) When you said ‘mainly’, did you in fact have in mind a hybrid system?

(b) If so, did you satisfy yourself that this was implemented?”

My reply is as follows-

My primary concern was to ensure that Treasury Bonds are raised mainly on public auctions.

The proportion of public auctions and private placements with captive funds was a matter for the Governor to decide as it involves technical issues which, in my opinion, is a matter to be decided by experts.

12. Question number [25] is as follows-

“[25] In response to questions Nos. 10 and 11, you have stated that you expected Mr. Mahendran to follow due procedure to comply with your direction to issue treasury bonds via auctions. In this context –

(a) In your opinion, particularly as lawyer yourself, what should have been that ‘due procedure’?

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