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Thursday, 3 August 2017 00:02 - - {{hitsCtrl.values.hits}}
By Uditha Jayasinghe
Foreign Minister Ravi Karunanayake yesterday remained defiant before the Presidential Commission of Inquiry denying any knowledge of payments made on the Monarch apartment allegedly rented on his behalf and rejecting conflicts of interest with Perpetual Treasuries Director Arjun Aloysius even though he admitted to a longstanding friendship.
Karunanayake, who was Finance Minister when the bond auction under inquiry took place on 27 February 2015, responding to several fiery rounds of questions by Additional Solicitor General (ASG), President’s Counsel Dappula de Livera, repeatedly denied any knowledge of the apartment being leased for his family by Walt and Row Ltd. till the matter was raised in Parliament by MP Mahindananda Aluthgamage in June 2016. Aloysius and his father are directors of Walt and Row and the company leased the fifth floor apartment for a monthly rent of Rs. 1.45 million. The commission was also informed that Perpetual Treasuries has 28 subsidiary companies.
During five hours of questioning, the Foreign Minister noted after the revelation in Parliament his family had reimbursed Walt and Row fully and a receipt for the transaction remains in his possession.
Karunanayake also told the commission days after the presidential elections in 2015 he resigned as Director of Global Transport and Logistics (GTL) Ltd and about eight other companies where he held the same position. His wife and daughter Onella had taken over the running of the company from that point.
As he was no longer a Director and was severely busy as Finance Minister, Karunanayake insisted that he was unaware of accommodation decisions made by his family.
During the testimony he described that his house in Battaramulla was about 20 years old and had been damaged by a minor fire caused by an electric shortage, which had prompted a renovation. It was at this point that the family had reached out to Anika Wijesuriya, who was known to the family as she was businessman Nahil Wijesuriya’s daughter. Nahil Wijesuriya headed Sathosa when Karunanayake was Trade Minister under a previous Government. Anika and Karunanayake’s children had also gone to school together and the Minister acknowledged the families were close. As a result the Minister insisted he had not questioned the decision to move into the apartment.
Even though the apartment was initially rented for six months the renovations to their house could not be completed in time, forcing the Karunanayake family to extend their lease by two months and afterwards purchased the apartment for Rs. 165 million. The Minister insisted that payment was made through GTL. During cross questioning by Commissioner P.S. Jayawardena, the Minister disputed the area of the apartment saying it was only 2,000 square feet, even when presented with the deed that stated it was 4,000 square feet. The Minister appealed to the commission to re-ascertain the size of the apartment.
When Judge Jayawardena recapped the previous testimony given by GTL Chief Financial Officer (CFO) B.R. Chinnaiya that the money to buy the apartment had been provided by GTL Chairman Lakshmi Kanthan in two cash tranches of Rs. 75 million and Rs. 70 million and questioned how such large amounts of cash were kept by GTL, Karunanayake denied wrongdoing and rejected any allegations of money laundering.
He also noted that Lakshmi Kanthan provided “consultancy services” to a number of local businesses and would have been remunerated for them resulting in the cash. The Minister also denied his wife and daughter would have been aware that linking with Walt and Row would be a conflict of interest to Karunanayake and admitted that if he had been aware of the connection at the time he would have avoided it.
Karunanayake also said an indirect method to lease the apartment was resorted to as the owner had refused to rent it to a politician. Commissioner Jayawardena recapped that Anika Wijesuriya had rejected such a statement.
SMS messages
ASG de Livera also submitted information digitally recovered from Aloysius’s phone that ran into several pages, including SMS messages that linked meetings between Aloysius and a person referred to as ‘RK’ and in other instances ‘Ravi K’. The total information collected ran for over 8,000 pages but only those relevant to questioning were submitted to the commission. One text message detailed an appeal for ‘RK’ to intervene in a transaction involving Bank of Ceylon while another SMS talked of non-payment of funds to the Sunday Leader newspaper and proposed the start of a gossip website to promote top politicians including Karunanayake on social media. Yet another sent on 28 November 2016 asked Aloysius’s assistant Steve Samuel to “remind PM and RK on Board paper”, which ASG de Livera said was linked to the Monetary Board meeting held later the same day. A calendar event on the phone in March 2017 was for a “meeting with RK. Proposed auction for the week.” The Minister denied any knowledge of the events or people involved.
ASG de Livera then submitted documents charging that Karunanayake and Aloysius were in Singapore and Kuala Lumpur on 13 occasions at the same time but this was later disputed by Aloysius’s lawyers who contended that their trips only overlapped a few times and even so was no indication that they had met. Karunanayake accepted he had met Aloysius “twice or thrice” in Singapore, especially at the Finance Asia Meeting that was sponsored by Perpetual Treasuries. He also denied several times that they had discussed bond auctions or any linked transactions.
When the questioning moved on to former Central Bank Governor Arjuna Mahendran, the Foreign Minister accepted that they were longstanding friends. Karunanayake contradicted earlier testimony that the Government did not need to raise a higher amount of funds explaining that after the Government was elected they had uncovered Rs. 1.1 trillion unaccounted for debt left by the previous administration and had decided it needed to be repaid gradually.
During a meeting with top Cabinet members on 26 February 2015 Prime Minister Ranil Wickremesinghe had outlined the need to raise about Rs. 75 billion to repay road building contractors who had stopped work. Karunanayake emphasised Central Bank and Treasury officials had been aware of this need but stopped short of disclosing if the Treasury had been told to officially notify the Central Bank to increase its bond amounts at the 27 February 2015 auction. The Minister insisted deciding the availability of funds was the “collective responsibility” of top members of the Government and not isolated as his duty alone.
Karunanayake submitted documents to the commission detailing the excess financial needs of the Government because of what he termed as “irresponsible action” by the previous Government. He also provided a letter he had issued to former Governor Arjuna Mahendran on his request detailing that the need for extra funding had been discussed by top officials. He told the commission the letter was for Mahendran to submit to the various commissions he was called before in 2016, which also included two Committees on Public Enterprises (COPE).
In response, ASG de Livera contended the letter, which had no date or file name, could not have been maintained in such a crisp condition if issued in 2016 and charged it was issued recently to provide an explanation as to why the bond issuance on 27 February 2015 was increased tenfold. ASG de Livera also argued releasing such a letter was in contravention of Government due process. Karunanayake rejected that the letter was released recently and shot back he could not be held responsible for how it was preserved.
Karunanayake was greeted by gleeful supporters upon his exit from the commission in the afternoon and gave a short statement in response to questions by the media.
“Wrong things have been shown under the label of Penthouse. I have my house near Parliament before I entered politics. These are not new things. Attorney General’s Department chases after those who formed good governance instead of going after thieves. I am happy today because the Attorney General’s Department questions a powerful Minister of this Government,” he said.
