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Treasury Bond issue: Ministers recall Rs 15 bn urgent borrowing requirement

Development Strategies and International Trade Minister Malik Samarawickreme arriving at the Bond Commission yesterday. Picture by Saman Sri Wedage

Development Strategies and International Trade Minister Malik Samarawickreme and State Enterprises Development Minister Kabir Hashim testified before the Presidential Commission of Inquiry investigation into the Treasury bond issue yesterday .

It was observed that both Ministers were summoned by the Commission and not the Attorney General’s Department. The tribunal questioned both Ministers on matters with regards to the Breakfast meeting held at the Central Bank on February 26,2015 and on the Rs. 15 billion urgent borrowing requirement as at February 2015.

Minister Malik Samarawickreme took to the witness box first. Commission Chairman Justice K.T. Chitrasiri questioned Minister Samarawickreme on the Breakfast meeting held at the CBSL. According to evidence led before the Commission, the discussion at the Breakfast meeting was in relation to the emergency borrowing requirement of Rs. 15 billion to pay for certain road development projects which were already completed. Minister Samarawickreme said the emergency borrowing requirement of Rs. 15 billion was to do with payments 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 Hashim, then Central Bank Governor Arjun Mahendran, officials from the General Treasury and the Central Bank.

JC: What was the purpose of this meeting?

MS: Finance Minister and the CBSL Governor were suggested to discuss about the RDA projects. Some of these were not 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 as how to raise funds for this requirement?

MS: There was no such discussion held on how to raise funds to my knowledge.

JC: Was there a discussion with regards to the auction which was 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 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 with regards to his capacity as the position he held in the United National Party.

JC: What is the position you held in 2015 to 2016, in the United National Party?

MS: I was the Chairman of the UNP.

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, did any fund contribution or payment to the United National Party?

MS: No. I am not aware of such a payment.

Neither the panel of Attorney General’s Department or any other counsels questioned Minister Samarawickreme. Minister Samarawickreme paid regards to the Commission for summoning him before the Commission.

State Enterprises Development Minister Kabir Hashim then took to the witness box. The tribunal questioned him on similar subject areas. Minister Hashim gave a detailed explanation with regards to the emergency borrowing requirement of Rs. 15 billion to fund several completed Road Development Projects. Minister Hasheem was the then Minister of Highways and Investment Promotion during 2015.

Chairman Justice K.T. Chitrasiri: Are you aware of a Breakfast meeting held at the Central Bank on 26 February 2015?

Minister Kabir Hashim: Yes.

JC: Did you attend the meeting?

KH: Yes.

JC: In what capacity did you attend the meeting?

KH: As the 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, Treasury and Central bank officials.

JC: What was the purpose of this meeting?

KH: Why I was there was that I had just taken over the Ministry and some highway projects started by the previous regime were stopped halfway. We had gone to the Economic Management Committee and made a request for funds. If you give me permission, I can refer to my documents my ministry referred to at that time. (Permission granted). On February 6, 2015 my accountant wrote to the Treasury Secretary saying that there are certain contractors who have stopped work and that we need urgent funds to clear the Rs. 18 billion outstanding, out of which we had an allocation of 3 billion. So basically we needed 15 billion for immediate purposes.

KH: (Continues) Subsequently at a meeting held on February 24, 2015 at Temple Trees, the Economic Management Committee, these road development projects were taken up and again, this fund requirement was emphasized. Then we were asked to come to the Central Bank on 26 February 2015. My accountant certified me that there was Rs. 3 billion 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 Ministry of Finance and the general Treasury made us known that they will 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 new requisition on March 16, 2015 asking for Rs 15 billion. We said we received Rs 8 billion, but that we need the balance 10 billion. We got the money in March.

Justice Jayawardena: In the month of March, the ministry requirement was 18 billion and the requirement remained in March? You wanted Rs 18 billion. Then you got Rs 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, did any fund contribution or payment to the United National Party?

KH: No not to my recollection.

The panel of the Attorney General did not question Minister Hashim.

At the afternoon session, former EPF dealer Indika Saman Kumara was briefly questioned on recordings of two telephone calls that have transpired between him and a dealer in the Pan Asia Banking Cooperation with regards to certain Treasury bond transactions.

The Attorney General’s panel submitted a list of 20 witnesses who they recommend to be summoned before the Treasury Bond Commission. The Commission decided to summon, 3 of the 20 witnesses for questioning. The three witnesses were, Indika Saman Kumara (former EPF Chief Dealer), Steve Samuels (PA of Arjun Aloysius) and Nihal Fonseka (member of the Monetary Board).

Meanwhile, legal counsel Jeewantha Jayathilake informed the Commission that his client Steve Samuels was hospitalised due to a cardiac issue. Steve Samuels is the personal assistant of Perpetual Treasuries Limited owner Arjun Aloysius. He was to testify before the Commission yesterday as well.

According to counsel Jayathilake, Samuels “has been admitted to the emergency ward of the ICU of the Asiri surgical.” “It is the emergency ward for cardiac problems. He has been diagnosed with a chest pain and they are running a full investigation at the moment,” he further said.

Counsel Jayatilake also said that he will tender the medical reports as soon as they reach him.

“He has been present every day, even yesterday. This is a genuine problem. He has no reason to avoid; he has been present every day when he was asked to come,” Jayathilake informed the Commission.

Commenting on Samuels’ absence, Justice Jayawardena told counsel Jayathilake that the Commission expects certain files to produced despite the witness’s absence.

“Mr. Jayathilake, one of the reasons why Samuels is called is as you know; there were some text messeges where he refers to files maintained in the names of certain people with initials. We want to see those files. We have asked Mr. Samuels to produce those files. Even though he is not here, he can produce those files to the Commission during the course of today. These are not his personal files; these are presumably the company’s. Make sure these files are produced for our perusal today,” Justice Jayawardena said.

“We have also endeavoured summons on Mr. Arjun Aloysius and Mr. Geoffrey Aloysius who apparently are difficult to locate. Counsel to Aloysius, please make sure these files are delivered today. We will not look at failure to produce these files very kindly.These files are maintained under the headings RK and AM. We want to see these files,” Justice Jayawardena added.

Counsel Jayathilake said that his client has told that these files that were requested are not in his possession.

“We expect to know in whose names these files are maintained, these persons who were the subject matter of these files.There was a reference to AM and an RK, so we would like to know who RK and AM were,” Justice Jayawardena firmly concluded.

Re-examination of former Central Bank Governor Arjun Mahendran will take place today at the Commission. Monetary Board member Nihal Fonseka will also be examined today.