Sri Lankan opposition submits No Trust Motion against Foreign Minister Karunanayake

Sri Lankan opposition submits No Trust Motion against Foreign Minister Karunanayake

Colombo, August 3 ( Thirty two members of the Joint Opposition in the Sri Lankan parliament on Thursday submitted to the Speaker a Motion of No Confidence against Foreign Minister Ravi Karunanayake for alleged financial links with Arjuna Aloysius,  a stock broker involved in the 2015 Central Bank bond scam.

Leader of the National Freedom Front, Wimal Weerawansa, told the media that due to the bond scam, Karunanayake is ineligible to hold the post of Foreign Minister.

This is the second time that Karunananayake will be facing  a Motion of No Confidence. In March 2016, he was subjected to one in which he was accused of misleading parliament about the state of the economy. But that motion was defeated comprehensively in June.

Opposition MP Weerawansa said that he was appalled by the answers  Karunanayake  gave to the Presidential Commission investigating the scam on Wednesday.

The Foreign Minister had told the commission that he was not aware that his wife, Mela, had  leased, and then bought, a posh penthouse for LKR 165 million  with money advanced by Arjun Aloysius of the stock brokering firm Perpetual Treasuries.

Karunanayake was Sri Lanka’s Finance Minister at the time and the stock market came under his ministry, hence there was a conflict of interest.

Karunanayake’s said that the deal on the penthouse was struck by his wife Mela through Global Transport and Logistics, the company he had founded.

But he had resigned from the chairmanship of that company after he became Finance Minister in January 2015. Therefore, he knew nothing about the transaction in regard to the house although he was living in it.

Karunanayake denied that Aloysius and he had gone to Singapore 13 times at the same time, but admitted that he had met Aloysius a couple of times in Singapore.

Presidential Commissioner Prasanna Jayawardene asked Krunanayake whether it was right to lease the apartment through a Perpetual Group company involved in the bond scam when, as Finance Minister, he was connected to bonds and capital markets.

Karunanayake agreed that it would not be correct to do so, but maintained that he was in the dark about the transaction.

He got to know about it only when opposition MP, Mahindananda Aluthgamage, brought it up in parliament. Following this, the borrowed LKR 165 million was repaid.

Bond Scam.

In 2015, after Arjuna Mahendran was appointed Central Bank Governor by the newly elected Sirisena-Wickremesinghe government, his son in law, Arjun Aloysius, a leader stock broker running the firm Perpetual Treasuries, made a killing by purchasing Central Bank bonds with inside knowledge.

In February 2015 the Central Bank advertised the sale of LKR 1 billion in 30 year government bonds at 12.5%. The sale was oversubscribed with 36 bids  totaling LKR. 20 billion. The majority of bidders (26), bid for LKR  100 million or less at a rate of 9.5% to 10.5%. However, a few bidders, including Perpetual Treasuries of Arjun Aloysius, wanted interest rates of 11% to 12%.

On 27 February 2015 the Central Bank accepted LKR  10 billion in bids at rates of 9.5% to 12.5%. Perpetual Treasuries was issued, directly and indirectly, Rs. 5 billion in bonds at 12.5%.

The issuing of ten times the advertised bonds, and at a higher than the expected rate of 9.5%,  allegedly cost the government an additional LKR 1.6 billion (U$ 10.6 million).

When existing inquiries did not unravel the truth, and the issue was hurting the image of the government,  President Sirisena appointed a Presidential Commission in January 2017.

(The featured image at the top show Foreign Minister Ravi Karunanayake speaking to the media after being grilled by the Presidential Commission)