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Thursday, June 20, 2024

Why We “Say NO to CB Governor Arjuna Mahendran” – ACF

(Face book poster: Remove Arjun Mahendran)

Anti-corruption Front (ACF) commenced “its Say No to Arjuna Mahendran” considering the chaos he was creating in the Central Bank of Sri Lanka and the overall financial sector by his blatant misuse of power and treasury deal scams. His actions have undermined the entire banking sector and thus have destabilized the entire economy.

ACF wrote to President Maithripala Sirisena earlier this week, highlighting the reasons for our opposition to Mahendran. These points are noted below.

1. Mahendran has acted against the principals of good governance, which were the main selling points of the current administration. He was either directly or indirectly responsible for two controversial Treasury Bond auctions. In one instance, on 27 February 2015, there was an irregularity of Rs 6 billion and on the other there was an irregularity of Rs 7 billion.

2. These irregularities were conducted with the collaboration of Perpetual Treasuries, a company which is owned by his nephew Arjun Aloysius.

3. Mahendran is a citizen of Singapore (work Visa holder of Sri Lanka) and he has demonstrated that he is not able to fully commit to the service of Sri Lanka. Moreover given that he is not a citizen of the country he cannot uphold the artical 61 of the constitution which states that ‘A person appointed to any office referred to in this Chapter shall not enter upon the duties of his office until he takes and subscribes the oath or makes and subscribes the affirmation set out in the Fourth Schedule.” The fourth schedule states ‘”I ……………………………………………………. do solemnly declare and affirm / swear that I will faithfully perform the duties and discharge the functions of the office of …………………………………. in accordance with the Constitution of the Democratic Socialist Republic of Sri Lanka and the law, and that I will be faithful to the Republic of Sri Lanka and that I will to the best of my ability uphold and defend the Constitution of the Democratic Socialist Republic of Sri Lanka.”

4. Mahendran held the position for close to 18 months. This was ample time for him to obtain Sri Lankan citizenship. However he has not done so and he has deliberately misled the President on his visa status.

5. He has also violated the Monetary Law Act by benefitting from holding positions on private foreign companies  while holding the position of the head of CBSL.

6. Previously the CBSL followed the open tender process and direct consolidation process when obtaining credit for the government through issuing government bonds. But Mahendran introduced a system which has allowed Primary Dealers to manipulate interest rates, allowing them to amass massive wealth.

7. Mahendran prevented the EPF, a government owned fund from acting as a primary dealer during the Treasury Bond and Treasury Bill auctions allowing a selected group of primary dealers and financial actors to create a monopoly in the market.

8. Mahendran deliberately ensured that  selected group of primary dealers and financial actors were able to sell bonds to the EPF in the secondary treasury bond market. This has caused a significant loss to the EPF.

9. Mahendran  took all these decisions arbitrarily without informing the Monetary Board, which is the highest body overseeing decisions relating to monetary policy.

10. In the last 14 months, Mahendran   was outside the country for 140 days (most of the time on private visits).

11. Abusing state resources. The Central Bank has had to pay for his 28 foreign trips, the maintenance of two residences (although his family lives in Singapore), and extravagant expenses during foreign travel, bending its regulations on funds for such expenses.

Mahendran is not a financial miracle maker, in fact he is the opposite of a miracle maker, he has been a disaster for the stability of Sri Lankan banking system. Moreover most of the Sri Lankans are aware of the behaviour of Mahendran and have opposed his governorship and his continued presence is an existential threat to the survival of the government. Central Bank has a number of Deputy Governors who have the potential of being excellent governors  and ACF believe that the President must NOT give him a new term, if he does not wish to see a financial collapse and the end of his government.



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