News

Central Bank Forensic Audits: Aloysius cleared?

No evidence to prove collusion

Limited voice recordings says report

By The Sunday Morning News Desk

The Forensic Audit (FA) reports on the Central Bank Treasury Bond Scam, tabled in Parliament last week, states that there was no evidence to prove any collusion between former Central Bank of Sri Lanka (CBSL) Governor Arjuna Mahendran and Perpetual Treasuries Ltd. (PTL) Head Arjun Aloysius.

The fourth FA report – Investigation on Issuance of Treasury Bonds and Remittance of Funds to the General Treasury During 1 February 2015 to 31 March 2016 – states that the documentary and digital evidences reviewed as well as the limited number of voice recordings did not suggest that Mahendran was directly involved in sharing insider information with Aloysius.

On page 27 of the fourth report, it states: “However, the documentary and digital evidences reviewed (as provided in the respective Sections of this Report) and limited number of voice recordings of dealer rooms of PDs (primary dealers) did not suggest these anomalies are directly or indirectly linked to any potential nexus between the employees of the PDD (Public Debt Department) and the beneficiary PDs. It is pertinent to note that the CBSL did not installed voice record system at the PDD and significant limitations existed on the availability of ESI (electronically stored information) in terms of email files and email deletions, as detailed in the respective Sections of this Report. (sic)”

Furthermore, on page 30, Clause 2.4.1.E., it states: “However, the documentary and digital evidences reviewed (as provided in the respective Sections of this Report) and limited number of voice recordings of dealer rooms of PDs did not suggest that Mr. Arjuna Mahendran was directly involved in sharing insider information with Mr. Arjun Aloysius or PTL. It is pertinent to note that the CBSL did not installed voice record system at the PDD and significant limitations existed on the availability of ESI in terms of email files and email deletions, as detailed in the respective Sections of this Report. (sic)”

Also, on page 31, Clause 2.4.2., on the issue of “potential nexus between identified employees of the CBSL, PDs and market participants”, it has been noted “d) However, the documentary and digital evidences reviewed (as provided in the respective Sections of this Report) and limited voice recordings of dealer rooms at PDs did not suggest that the relationships and/or associations identified above have led the collusive behavior between Pan Asia and PTL. It is pertinent to note that the CBSL did not installed voice record system at the PDD and significant limitations existed on the availability of ESI in terms of email files and email deletions, as detailed in the respective Sections of this Report. (sic)”

According to page 30 of the fourth report, there was a conflict of interest between Mahendran and Aloysius, a PD.

“The same was corroborated by the statement made by Mr. Arjuna Mahendran before Commission of Inquiry that his son-in-law had a beneficial interest in PTL and continued to be a Director and Shareholder of the Holding Company of PTL while he was the Governor of the CBSL. Mr. Arjuna Mahendran’s son-in-law, Mr. Arjun Aloysius, was the Chief Executive Officer and Director of PTL during the year 2014 till 16 January 2015. During the review of call log records available in Forensic Communication Analysis Report provided by the CBSL, communications between Mr. Arjuna Mahendran and Mr. Kasun Palisena were noted which indicates that he was also closely involved in the business operations of PTL (sic),” the FA report noted.

The report notes that during the review of the copies of voice recordings of the PTL dealer room, it was noted that Aloysius was actively involved in the business operations of PTL and was a key decision maker during the review period.

Based on the communications, it was concluded that Aloysius continued to be involved in the operations of PTL throughout the period when Mahendran was the Governor of the CBSL and the conflict of interest was not resolved.

However, the report states that the documentary and digital evidences reviewed (as provided in the respective sections of the report) and limited number of voice recordings of dealer rooms of PDs did not suggest that Mahendran was directly involved in sharing insider information with Aloysius or PTL.

Mahendran, who is currently in Singapore, is wanted by the Criminal Investigation Department (CID) in connection with the scam.

The fourth report also notes that the documentary and digital evidence reviewed and limited voice recordings of dealer rooms at PTL did not suggest any collusion between Pan Asia and PTL, despite an association between Aloysius and Dimantha Seneviratne, the Pan Asia CEO at the time, Richie Dias, who was the Deputy General Manager – Treasury of Pan Asia at the time, and former Chairman of Pan Asia Nimal Perera.