Former Superintendent of the Employee’s Provident Fund, Assistant Governor R.A. Jayalath yesterday revealed to the Treasury Bond Commission that former Governor Arjun Mahendran “threatened” him to place the recently interdicted officer of the EPF P.H.I. Saman Kumara in the EPF Front Office where Treasury bond trading was carried out.
AG Jayalath observed that Saman Kumara was close with then Governor Mahendran and it seemed Saman Kumara was divulging details of discussions held at the EPF to Mahendran. Jayalath said he came to this conclusion following certain conversations he had with Saman K. and Mahendran. “ On the following day (the day after Saman Kumara was transferred), I received a call from Mr. Mahendran. He shouted at me, saying I sent a fellow with CFA qualification and he was not assigned to the front office and put somewhere else. I understood that Kumara mustve gone and told Mahendran that he was not put to the front office. I felt frustrated. It was under my directive to place Kumara. Mahendran directed me… he threatened me to do that… (to put Saman Kumara in the front office). Saman Kumara as the Chief Dealer of the EPF was responsible for buying treasury bonds purchased by Perpetual Treasuries in the secondary market.
AG Jayalath also said Saman Kumara had violated certain regulations in the Investment and Trading Guideline of the EPF by conducting dealings exceeding his daily limits. Daily dealing limit for a Chief Dealer in the EPF is Rs.2 billion. He also said “Saman Kumara was difficult to control he was regularly not in his seat and continuously used the mobile phone, disregarding the instruction not to (use mobile phones), to carry out deals.”
AG Jayalath also said a preliminary investigation he conducted in early 2016 on collusive activities of EPF dealers never received recognition from Governor Mahendran.
Asked as to how he felt at that time, Jayalath said he felt “frustrated” and “uneasy” about this arrangement, but did not want to shift Saman Kumara to another position because “if I (Jayalath) had shifted him (Saman Kumara) I would also have to walk out of my position.”
AG Jayalath went on to say that he had “heard what happened to some of the persons in the Central Bank who were against the then Governor Mahendran.” Laughter from those who were present at the hearing followed Jayalath’s observations regarding the difficult position he was in.
According to AG Jayalath, P.H.I. Saman Kumara was transferred to the EPF on 08 June 2015. “I put Saman Kumara in the Risk Management Division of the EPF. My people (the staff at the EPF ) warned me against Saman Kumara whom they claimed to a questionable dealer.”
“So I was scared”, Jayalath pointed out. “Dealers bare a big responsibility. I put Saman Kumara to a position in Risk Management Division to deal with equity, to test his conduct.” Then I received a telephone call from the then Governor Arjun Mahendran, Jayalath explained. “He called me and shouted at me for placing Saman Kumara in the Risk Management Division.”
Quoting the conversation, Jayalath said Mahendran told him “I sent a fellow with CFA qualification and this fellow tells me he was not assigned to the EPF Front Office.” According to Jayalath, Mahendran was unhappy that Saman Kumara was placed in the Risk Management Division. AG Jayalath said he attempted to reason out with Mahendran and told him that “the EPF was handicapped with lack of people in the Risk Management.”
AG Jayalath then explained his meeting with then Governor Mahendran at his office, after Governor’s office contact him to say that Governor Mahendran wanted Jayalath to come and meet him.
“So, I went to see him and spoke to him about the transfers. Mr. Pathuman of the EPF was transferred to Public Debt Department. He was one of the most experienced. So I ask Governor Mahendran to send him back to the EPF.” Jayalath said.
“Governor Mahendran then inquired me of Saman Kumara and told me that ‘I gave you a skilled CFA qualified person, so why are you not using him?’” Jayalath said.
So I told Governor Mahendran that “we cannot rely on Saman Kumara” because concerns have been raised on his conduct, Jayalath said. “Then Mr. Mahendran asked me whether these rumors had any proof. I told him we do not have proof. Then he asked me ‘so with no proof how can you say’ Saman Kumara’s conduct as a dealer is questionable?’” Jayalath reflected.
Disregarding his reasonings, Jayalath said “Mahendran asked me to assign Saman Kumara to the Front Office.” He also said “I requested Mahendran to give me one week before placing Saman Kumara in the Front Office” because “I did not want my staff to be demoralized by the decision.” AG Jayalath is to appear before the Treasury Bond Commission today (01).