Dr. Dayan Jayatilleka and Dr. Indrajit Coomaraswamy

By Janitha Devapriya 

Everyone connected or associated even remotely with banking, finance and the economy of this country heaved a collective sigh of relief when the President decided to appoint Dr. Indrajit Coomaraswamy, an erudite professional and economist, as Governor of the Central Bank. This helped to smoothen the thorny atmosphere that even threatened the continuity of the fragile coalition that now governs this country. 

The professionals, politicians and the commentators contributing to the financial pages of the high street journals joined the bandwagon in hailing this appointment. The credentials of the new Governor are too numerous and on the face of it, there could not have been a better candidate to head the troubled Central Bank.

Dr. Dayan Jayatilleka in his column in the Daily FT commended Dr. Indrajit Coomaraswamy in very glowing terms. He went to the extent of saying, “I went on TV more than once, saying that Dr. Indrajit Coomaraswamy would be the best choice for the job. He had been shortlisted at the time, but wasn’t the PM’s final choice. I am delighted that over a year later, the Government has come round to my publicly-stated view, and the criterion of merit has prevailed. Not since Dr. Warnasena Rasaputram and Deshamanya A.S. Jayawardena has our Central Bank had as intellectually solid and suitable a Governor.”

However, like the proverbial speck of dung in the pot of milk, there is one issue haunting this rapturous episode that seems to taint it. Namely, the brief association of Dr. Coomaraswamy with the felon Raj Rajaratnam brought out also in Dr. Jayatilleka’s column. The Sri Lankan-born Rajaratnam made a name for himself by managing one of the largest hedge funds in the world and became a notorious criminal after he was indicted for serious charges of insider trading. Rajaratnam headed the renowned Galleon Hedge Fund.

The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the centre of a 2009 insider trading scandal. The firm was founded by Raj Rajaratnam, a former equity research analyst and eventual president of Needham & Company in 1997. 

In October 2009 Rajaratnam and five others were charged with multiple counts of fraud and insider trading. Rajaratnam pleaded not guilty and remained free on $100 million bail, the largest in United States history. He was indicted by a grand jury in December 2009 and found guilty in US District Court on 14 charges in May 2011. He was sentenced by Judge Richard Holwell to 11 years in prison on 13 October 2011. Other former traders at Galleon were subsequently arrested and charged with contributing to the alleged conspiracy. Several former employees of the firm have cooperated in the investigation. As of January 2012 over 50 people had been convicted or pleaded guilty in the probe stemming from Galleon, not all of them Galleon employees.

Zvi Goffer, an ex-Galleon Group LLC trader, was found guilty of all 14 counts of conspiracy and securities fraud against him and sentenced by Judge Sullivan “to 10 years in prison for his role in a scheme to trade on inside information provided by lawyers”. Goffer had asked for a lenient sentence and prosecutors had recommended more than 10 years. Adam Smith, an ex-Galleon Group LLC trader, pleaded guilty and cooperated in the criminal trial of Raj Rajaratnam. He was sentenced in June 2012 to only a period of probation and no jail time by Judge Jed Rakoff, who took over the case from Judge Richard Holwell when he retired from the bench.

What is alarming about this connection is what Dr. Dayan Jayatilleka says in his column, “Raj Rajaratnam’s company, and Raj Rajaratnam was indubitably a financier of the LTTE apart from being a crook. He was a worthy successor of Emil Savundra” but Dr. Jayatilleka hastens to add, “However, guilt by association is not the most valid of criteria for evaluation and judgment”.

He goes further and says, “Indrajit has never shown the slightest trace of sympathy to the Tigers, or separatism or the political activism of the Tamil diaspora or indeed the cause and ideology of Tamil nationalism in general”. He qualifies his assessment by saying, “The point is that in the case of professionals, academics and intellectuals, their affiliations are not the main criteria. The quality of their professional product and performance—of their minds—and the expert value they add, is or should be the main criteria.”

Perhaps, Dr. Jayatilleka is trying to downplay his own comment about Rajaratnam’s LTTE affiliation and absolve Dr. Coomaraswamy of any taint thereof. On similar inference, one may question the yardstick applied by him to name Dinesh Goonewardena, Bandula Gunawardena, Vidura Wickremanayake and Vasudeva Nanayakkara with impeccably anti-UNP, progressive, radical and anti-imperialist records. These characteristics are not at all visible from their conduct but they are adopting very opportunistic stances and many a time associated with ultra-chauvinistic extremism when it comes to the ethnic issues.

It is strange that persons of the ilk of Dr. Jayatilleka are not prepared to show the same broadmindedness to Ravi Karunanayake when he was dragged to courts and roasted over coals for acting as intermediary for Rajaratnam’s hedge fund when it wanted to invest in the investment of Union Bank shares. Here it was a case of a procedural failure to have the funds received from New York in a private company account instead of a SIERA account. The lapse is on the part of the beneficiary bank. However, he was indicted on a charge of money laundering and exchange fraud. Colombo High Court Judge Iranganie Perera acquitted Finance Minister Ravi Karunanayake and two others on charges of money laundering in violation of the Exchange Control Act on 18 May 2015.

In conclusion, may I say that no one should have any parallel to the proverb “those who sleep with dogs rise with fleas on their bodies” as far as Dr. Coomaraswamy’s ostensibly innocent and professional association with Rajaratnam is concerned.