Cabraal takes on critics, responds to allegations

Former Central Bank Governor Ajith Nivard Cabraal issued the following responses to allegations levelled against him by Prime Minister Ranil Wickremesinghe and others in the recent past

Former Central Bank Governor Ajith Nivard Cabraal 

Allegation 1: The PM has stated that as the former Central Bank Governor, you were responsible for the sale of a staggering Rs. 2.7 trillion worth of Treasury Bonds in 2012, 2013 and 2014 to “accomplices” or “cronies” of the previous regime

Response: I categorically reject this preposterous allegation. I must also state that it defies logic and common sense to claim that all Treasury Bond issues made by the Government from 2012 to 2014 have been to “accomplices” or “cronies” of the previous regime. I also condemn the PM’s shameful attempt to portray the time-tested practice of Direct Placements to Primary Dealers after conducting an auction, as a sinister process, and to claim the well-structured procedure of the Central Bank in issuing Bonds, as a process personally handled by me.

I believe the main reason for such outrageous and unsubstantiated statements by the PM is to shift attention from his own complicity in the current burning issue of the Treasury Bond scam, which is causing unprecedented losses to the economy. That is why I invited him to debate this subject openly, the PM is obviously dodging my challenge. However, if he musters up courage and accepts my invitation, the people could judge for themselves as to who is telling the truth. 

 

Allegation 2: You have been under pressure by your superiors, including the former President, to carry out certain actions, and have therefore carried out many illegal or unauthorised actions:

Response: Without hesitation, I can confirm that I had never been under pressure by any superior including the former President, unlike what is happening today. We must also realise that people may make various accusations, and that it is not reasonable or helpful to generalise by making sweeping statements. Each case must be viewed according to its individual circumstances. 

During my period in office, I have ensured that the Central Bank diligently follows the laws of the country and the rules and regulations established by the Monetary Board. I have also acted in the national interest of Sri Lanka and defended the integrity and well-being of our economy. Further, during my term of office at the Central Bank, well laid-out procedures were followed with proper authorisation. The Central Bank’s actions have been reviewed by the Internal Audit, Compliance Mechanism, Auditor General, and IFRS Auditors. 

In addition, Parliamentary oversight was exercised through COPE and COPA reviews. Through all such reviews, there has not been a single instance of misconduct, wrong-doing, or dishonesty that has been cited by any of those authorities in relation to my conduct during my long period of office. Hence it could be clearly seen that my record has been impeccable, and notwithstanding the vituperative accusations by the PM and some of his colleagues, no allegation has been substantiated, nor my image in the eyes of the general public been diminished.

Allegation 3: Although you had a successful career in accountancy and management before joining the UPFA Government in 2006, you had no experience in Central Banking unlike your successor, and that is why, as stated by the

PM, you even had to get the “disgraced” Dominique Strauss-Kahn to advise you and the Central Bank:

Response: People know that I have been the Governor for a period of nearly nine years. During that period, Sri Lanka’s GDP rose from $ 24 billion in 2005 to $ 75 billion by 2014. Per capita income rose from $ 1,250 to $ 3,650. Every macro-economic fundamental improved significantly. Because of this unprecedented transformation, politically-motivated persons, including the present PM, have been on a sustained attack to tarnish my reputation. These attacks have now escalated, because the conduct of the present Governor appointed by the PM is under severe flak. 

With reference to the appointment of Dominique Strauss-Kahn (DSK) as an Advisor, let me explain. The previous administration had an ambitious vision of taking Sri Lanka to a $ 7,500 per capita income, and creating an economy with a GDP of over $ 150 billion, by the year 2020. To do so, positioning Sri Lanka as an ‘International Financial Centre’ was vital, and therefore it was considered necessary by the Monetary Board to obtain specialised advice, from knowledgeable sources. In that regard, considering the fact that DSK was a former Finance Minister of France and Managing Director of the IMF, his firm was selected by the Monetary Board to be a suitable resource to provide such services. Hence, the PM’s suggestion is clearly erroneous.

In response to the PM’s claim that I was not a sound choice for the post of Governor because I was not an Economist, let me state that John Exter who drafted the Monetary Law Act, had specified the profile of the person who should be the Governor as follows: “The Governor should be a man of recognised and outstanding competence in, and understanding of, the economic and financial problems of Ceylon, and of unquestioned integrity and responsibility...” Exter added: “It is important that the Governor should have had actual financial experience”. 

In that regard, none can deny that I am a person with “actual financial experience” while possessing considerable understanding of the economic and financial problems of our country, quite unlike a foreigner who may not have such local knowledge or any responsibility towards the nation. Further, my professional track record of over four decades will confirm that I am a person of high integrity and responsibility, unlike certain persons who have been rocked with scandals within days of assuming office. Nevertheless, it is up to history to judge whether or not I have been successful, and not Ranil Wickremesinghe, who should probably reflect as to whether or not, his own choice for Governor has been consistent with the profile envisaged by John Exter! 

Allegation 4: You have been part of a Government which is accused of pilfering billions worth public property, and many countries have pledged assistance to round up the culprits:

Response: Stringent money laundering laws apply in the world today. In that environment, even if any of the former Government leaders pilfered billions as alleged, it would have been impossible for them to conceal such monies, particularly because some US authorities which are openly hostile to them, would have easily traced such assets, by now. In fact, we remember how quickly a notorious financier from the US who went to jail for “insider trading”, got caught when trying to transfer a few million US dollars, not billions, to his influential accomplice in Sri Lanka! That shows how complex it is to pilfer, retain and transfer even millions, leave alone billions! 

Nevertheless, I welcome the effort to pursue anyone who is alleged to have pilfered public property. But, what is happening in Sri Lanka today is not such an effort, but a “selective” prosecution by a special police unit directed by the PM, where wrong-doers of the current administration are safeguarded, while political opponents are harassed and locked up. 

 

Allegation 5: Although Arjuna Mahendran had been accused of insider trading and other misdemeanours, he has already been cleared by several agencies, including a Committee of Lawyers, and hence the current effort by the Opposition is a vendetta that is carried out to cover up their own frauds and misdeeds:

Response: The role played by Mahendran in the T-Bond scandal clearly raises suspicions, but his role seems to be only one segment of the well-planned and meticulously executed scam. Perhaps inadvertently, this has even been acknowledged by the UNP panel of lawyers, as well. However, from the evidence and other events that have unfolded so far, it is clear that this scam has been master-minded by a person of much higher rank than the Governor and his relation. In fact, persons who have systematically studied the emerging aspects of this scam and the elaborate attempts to cover-up are now convinced that this scam is similar to the notorious “Watergate” cover-up. 

Accordingly, after the elections, the new Government must appoint an Independent Special Prosecutor who must be mandated to inquire into all aspects of this scam. If such an investigation is done, that investigation will probably reveal that a topmost person of the current Government is also directly involved, given the intense effort at that level to somehow conceal this “Bondgate”. 

In my view, such an investigation must be a priority of the new government so that these suit-attired criminals are brought to book and the massive loss suffered by the country which is expected to exceed Rs. 50 billion by next week, recovered. Fortunately, in this case, the evidence to prove the offence, cover-up and quantum of loss is already available, unlike in the case of many accusations against the former regime, which were based on sweeping political statements, without the backing of cold, hard evidence. 

In my view, the committee of three UNP lawyers appointed by the PM was actually a vital segment of the shameful cover-up. Everyone expected that Committee to clear the Governor and absolve the Minister in charge of the Central Bank, of any complicity. The Committee readily obliged, notwithstanding the compelling evidence. In a strange way, the cover-up was further high-lighted through that process, and the suspicion that top leaders of the government were involved became even more obvious through that effort. In any event, this massive Rs. 50 billion scam cannot be put to rest, based on the superficial findings of a scanty report of 19 pages that has been prepared solely to whitewash the PM and the Governor. 

I believe that the allegation that the Opposition is carrying out a vendetta is also prompted by the PM’s guilty conscience because everyone in the country is now becoming increasingly aware that the PM is concocting some story or another every day to take the heat off himself with the Treasury Bond scam slowly but surely moving towards his direction. However, as is gradually happening now, those efforts will finally fail, because the truth is bound to prevail. 

 

Allegation 6: The call for the immediate removal of Governor Mahendran by Opposition Leader Nimal Siripala de Silva and the analysis by Professor G. L. Pieris that the Governor is not constitutionally qualified to hold such office, are not tenable:

Response: In my view, this Bondgate scandal goes well beyond Mahendran, and that is confirmed by the intensity of the cover up. Therefore, if a proper and impartial inquiry is to be held, not only the Governor but the PM too, must be asked to resign, as otherwise the PM could do much to influence the investigation. Further, in a public statement, Professor G. L. Peiris has submitted compelling arguments as to why a citizen of Singapore who cannot become a dual citizen, will not be qualified to serve as the Governor. However, the PM has avoided this fundamental issue and has attempted to distract people by talking about others who are ‘dual’ citizens. 

Having studied the arguments, I am inclined to accept Professor Peiris’ straight-forward contention that Mahendran cannot be a citizen of Sri Lanka since Singapore does not permit dual citizenship. In the meantime, if anyone suggests that Mahendran was politically victimised, that issue could be put to rest by simply perusing Mahendran’s application for Singapore citizenship, and ascertaining whether he had cited “political victimisation” as the reason for his seeking Singaporean citizenship. 

 

Allegation 7: You were also accused of financial fraud at the time of your appointment as the CB Governor

Response: As we now see from the practice followed by the PM, a person could “accuse” another without a shred of evidence, with the intention of tarnishing that person’s good name. In fact, as mentioned earlier, I have been subjected to such hate-driven accusations at various times in my career. The latest such accusation is the one recently made by the PM that I have issued Treasury Bonds to the value of Rs. 2.3 Trillion to “cronies” of the previous Government! 

In a similar manner, at the time of my appointment in 2006, The Sunday Leader carried several false accusations that I was involved in “pyramid” schemes. Similar to the present allegation of the PM, that story in 2006 too, was a brazen lie, and perhaps concocted by the same “mud-slinging” team that is presently inventing the new accusations! Therefore, I wish to categorically state that those past accusations were absolutely false, just like the present accusations of the PM, and also that The Sunday Leader has since unconditionally apologised to me and my family for publishing those untruthful stories. 

 

Allegation 8: You were also behind the hedging deals and the failure by the CB to maintain fiscal discipline leading to many an economic crisis:

Response: The economy that Ranil Wickremesinghe took over on 9 January 2015 was in very good shape, although, in a short period of around five months, the present Government has damaged it beyond belief. In response, the PM has to now level whatever accusation that comes to his mind. As is well known, “hedging” was carried out by the Ceylon Petroleum Corporation, functioning under the Ministry of Petroleum, as per a Cabinet decision, and those transactions had been the subject matter of several fundamental rights cases before the Supreme Court. In all such legal actions, no wrong-doing or misconduct has been levelled against me, and therefore, it is ridiculous that the PM is indulging in this type of low-down tactics.