Central Bank report into Golden Key was squashed
by none other than Nivard Cabraal
By Frederica Jansz
Sri Lanka's very own
Central Bank Governor Nivard Cabraal was responsible for
preventing ˜action being taken on the findings of a 2006
Central Bank report that found Golden Key to be˜in
violation of the Finance Companies Act No. 78 of 1988.
it was mistakenly reported last week that the
investigation into Golden Key was effectively squashed
by the previous governor of the Central Bank Sunil
Mendis, in fact it was after Cabraal was appointed
Central Bank Governor that the termination of the
investigation into Golden Key was ordered.
facts regarding the report were entirely accurate. ÿThe
findings of a Central Bank investigation into Golden Key
were dismissed by the Governor of the Central Bank in
November 2006. However the governor responsible was not,
as reported, ÿSunil Mendis, but Nivard Cabraal.
Mendis retired on June 30, 2006 when this report was
still being compiled. The report was squashed later
that year following a meeting Nivard Cabraal held
together with Lalith Kotelawala on November 11, 2006.
report into Golden Key compiled by the Central Bank
Investigations Department Head N. K. Gunatilake, details
in several files the legal violations committed by
Golden Key and calls for the Monetary Board to take
action against the company. The report clearly states
that Golden Key was in clear violation of the monetary
laws of this country by collecting deposits without a
licence to do so from the Central Bank.
However before relevant action could be taken the
investigation was effectively shelved by the senior
administration of the Central Bank on the instructions
of Nivard Cabraal.
November 11, 2006, Cabraal together with his directors
including his Assistant Governor Dr. Ranee Jayamaha
met Lalith Kotelawala and Wijedasa Rajapakshe.
Following this meeting the decision was made to brush
the 2006 report under the carpet.
gave Golden Key another two years to operate and collect
deposits before its collapse in late 2008, and cost
depositors and the economy billons of rupees.ÿ Had the
Central Bankÿacted on the report, and sent it to the
Monetary Board, action against Golden Key could have
been taken in a more systematic and orderly manner and
the fallout to depositors and the broader economy from
its collapse could have been mitigated. ÿ
report makes clear that sufficient evidence to shut down
Golden Key had been collected by the Central Bank in
2006, and only the deliberate intervention of senior
officials at the
Central Bankÿ prevented the ÿreport from being acted on.
that a clear opportunity existed for the Central Bank to
take action against ÿGolden Key in 2006 Nivard ÿCabraal
must take responsibility for allowing the Golden Key
scandal to assume the proportions it ultimately did. ÿÿÿ
Prominent Parliamentarian Wijedasa Rajapakshe's name
also features in the report and it is alleged that he
represented Lalith ÿKotelawala in meetings with senior
Central Bank officials and was instrumental in
persuading the Central Bank Governor to suspend the
investigation into Golden Key. ÿÿThere is documentary
evidence proving that the Parliamentarian ÿmet the
Governor of Central Bank on behalf of Lalith Kotelawala.
However Rajapakshe denied that these meeting were on
behalf of Golden Key. "I only spoke to the Central Bank
on behalf of Seylan Bank and The Finance. I was not
involved with ÿGolden Key," he said.
who is both an MPÿand a prominent lawyer, is
howeverÿcurrently appearing on behalf of Kotelawala at
the Supreme Court hearings regarding Golden Key.
involvement of Rajapakshe, who has also held the post of
chairman, COPE (an investigating body into malpractices
and corruption) adds another dimension to the scandal
over the report.ÿ
also alleged that the Central Bank employee responsible
for delivering copies of the report to Justice Shiranee
Tilakawardena has been removed from his position - again
indicating that officials are unhappy that the file was
leaked out of the Central Bank.
this points to the involvement of senior officials
within the Central Bank and beyond - and both Nivard
Cabraal and Wijedasa Rajapakshe have a lot to answer
week when this paper wrongly accused Sunil Mendis of
dismissing this crucial report - his reputation spoke
for him.ÿ Well-wishers rushed to his defence and left
The Sunday Leader's phones ÿringing off the hook - an
extraordinary demonstration of the value of a honest and
decent career even in ÿtoday's Sri Lanka.
week The Sunday Leader accuses Nivard Cabraal and
Wijedasa Rajapaksheÿ of being responsible for the
termination of the crucial 2006 investigation into
Golden Key and whether their reputations will answer as
forcefully on their behalf remains to be seen.
Sunil Mendis clarifies...
front page of The Sunday Leader of May 3 there
appeared an article under the heading, "2006
investigation into Golden Key was squashed by then
other paragraphs, the article contained the following:
Supreme Court's ongoing investigation into Golden Key
has now uncovered evidence that Central Bank officials
colluded with representatives of Golden Key to enable
the company to keep functioning despite legislation that
states that companies are not authorised to take
deposits without a licence from the Central Bank."
"Sunil Mendis the then Central Bank Governor
subsequently announced that the investigations unit's
report into Golden Key was unnecessary and unacceptable
and the report was effectively squashed allowing Golden
Key to continue functioning."
details emerged when a file containing the 2006 report
was presented by the Central Bank at a court hearing to
Justice Shirani Tilakawardena."
Mendis' involvement in dismissing the investigation unit
report is clear and the former governor now finds
himself with a fair amount of explaining to do."
statements contained in the above paragraphs which refer
to me are absolutely false. These false statements were
published without any verification from me.
false allegations have caused me immense harm and great
anguish. Since its publication I have been and am
continuously receiving telephone calls from my friends,
relations, persons I know and others questioning me on
the contents of this publication.
know, matters relating to Golden Key are very much in
the news and there is grave public anxiety over the
circumstances, it is necessary that I should act
immediately, to protect myself, as much as I can, from
the further injury and damage that will be caused to me
by the false publication. A correction of the false
statements by the publisher can only appear next Sunday
because the newspaper is published only on Sundays.
earnestly request you therefore to allow me, in keeping
with the best traditions of your profession, to
vindicate my position through your newspaper
matter is before court, I realise that I should,
ordinarily, refrain myself from making public statements
on the facts relevant to the case. However, this is an
extraordinary situation where the offending article
itself states that I have "a fair amount of explaining
the circumstances stated above, I have no alternative
but to immediately announce the true position relating
to the false allegations. Nevertheless, because of the
pending court proceedings, my vindication is limited to
the essential minimum that has to be stated at this
Accordingly with utmost respect and greatest deference
to the Honourable the Supreme Court of Sri Lanka, I
state that when I held the office of Governor, Central
Bank I requested the Director/Supervision of Non Bank
Financial Institutions Department, Special
Investigations Unit to continue the investigations into
Golden Key Credit Card Co., and in accordance therewith,
such investigations were continuing at the time, I
ceased to hold that office on June 30, 2006.
South Asia’s media under fire — IFJ
quarter century of armed conflict between the Government
of Sri Lanka and the LTTE has badly eroded freedom of
expression, especially in terms of the functioning of
the media and the security of journalists and other
media staff, records the International Federation of
Journalists (IFJ) in its 2008-2009 Report on South Asia
titled Under Fire.
refers to the gruesome murder of The Sunday Leader
Founder Editor Lasantha Wickrematunge as the incident
that gave an ominous start to the year 2009 and records
with horror, the kidnap style arrest of Sudar Oli Editor
N.Vidyatharan as a signal of increasing dangers for
IFJ’s latest report notes that Wickrematunge had earned
a global reputation for his campaigning style and been
honoured by world bodies for his commitment to
transparency and probity in public life.
adds that Lasantha Wickrematunge’s seemingly unending
confrontations with the authorities were testimony to
his ceaseless struggle for press freedom and the public
right to know.
adds that when awarding the UNESCO World Press Freedom
Prize 2009, the 14 member awards jury had stated the
choice was ‘almost unanimous’ as Wickrematunge was
‘clearly conscious of the dangers he faced’ and still
chose to speak out.
the chair of the UNESCO jury puts it, “Lasantha
Wickrematunge continues to inspire journalists around
the world,” notes the report.
report records the killing of a Jaffna based journalist
Puniyamoorthy Sathiyamoorthy in an artillery attack
while reportedly seeking refuge in a government declared
safe zone and the May 2008 killing of Paranirupasingam
Devakumar, a MBC reporter based in Jaffna in a brutal
knife attack during curfew hours.
IFJ report lays special emphasis on the government’s
attempt to resort to draconian counter terrorism laws to
imprison and prosecute journalists and counts editor of
the now defunct North-Eastern Monthly, J. S.
Tissainayagam, publisher N. Jasiharan and his partner V.
Vallarmathy under the Prevention of Terrorism Act, (PTA)
without being produced before courts within the first 90
days of detention, as stipulated under the emergency
report adds: “Tissainayagam may not be the first
journalist in the world to be accused under
counter-terrorism laws on the basis of his writing. But
he is certainly the only one currently being held.”
report recorded among the many impediments faced by the
Sri Lankan media, “the inability of most independent
media to access the war zone has ensured that there is a
high degree of public uncertainty about the dimensions
of the humanitarian problem.” And emphasises on the need
to ensure media access to all relevant sites as an
essential condition for durable peace.
IFJ report also refers to attempts to muzzle the media
through the introduction of regulatory provisions and
gagging the electronic media, thwarted due to opposition
by civil society.
Besides it records various instances of the state media
and defence or government officials slandering
journalists and giving them the LTTE label, thus causing
serious security threats to them and even their
Referring to Jaffna’s media being under siege, the
report notes that just when the people of Sri Lanka are
most in need of professional and authoritative reporting
from an area that is the epicenter of ongoing military
operations against a separatist insurgency, the press in
Jaffna is in a state of paralysis and the small media
community in the city has been devastated by targeted
report adds; “Since Wickrematunge’s murder in January,
the trickle of journalists fleeing the country has
turned into a torrent.”
Aravind Adiga, bestselling author
of The White Tiger on Sri Lanka’s war
the world’s oldest, best-organised, and nastiest
terrorist groups is about to be wiped out in
This sounds like good news, but the world may soon
discover that the elimination of this particular
terrorist group came at a terrible price. Indeed, in so
many ways, what is happening in Sri Lanka — this small,
sunny, and incredibly beautiful nation — seems like a
perfect libertarian’s nightmare of what can go wrong in
a war on terror.
Bloodshed has always seemed incongruous in Sri Lanka, an
island nation of about 20 million people in the
Indian Ocean that is a favourite tourist spot for visitors from
and England. Hidden far away from Sri Lanka’s gorgeous
beaches and Buddhist temples, though, the fighting has
been vicious: no one knows how many have died in a civil
war that is a quarter of a century old, but estimates
start at 60,000 and go up.
post-9/11 world, how could any foreign government
possibly ask the Sri Lankan government to show
moderation in its war against a terrorist group?
civil war grew out of the island’s major ethnic fault
line. Most Sri Lankans are Sinhala-speaking Buddhists,
but a large minority are Tamils (who are Hindu and
Christian). Many Sinhalese felt that the Tamils were
unfairly favoured by the British, who ruled the island
until 1948. After the British left, Sinhala nationalists
tried to get even through heavy-handed attempts to
impose their language and culture on the Tamils.
led to tensions between the two ethnic groups. Things
came to a head in 1983, in a vicious anti-Tamil pogrom
during which thousands of Tamils were killed by mobs. A
civil war followed, with the government taking on a
variety of Tamil guerrilla groups who demanded a
separate homeland for Tamils within Sri Lanka — the most
important of which was the Liberation Tigers of Tamil
LTTE became a pioneer in terrorism — its cadres were
some of the world’s first suicide bombers, and it
developed a global financial network to shake down
expatriate Sri Lankan Tamils living in Europe and
a shadowy supreme leader named Pirapaharan, the LTTE
became a lethal organisation that specialised in
assassinations — including the 1991 killing of former
Indian Prime Minister Rajiv Gandhi. What made its cause
morally complicated was the fact that many Tamils did
have genuine grievances within Sri Lanka, and felt that
the fear of the LTTE was the only thing forcing their
government to extend basic rights to them.
this reason, “The Tigers” (as the LTTE were called) were
never short of finances or manpower, and though the long
civil war had its ups and downs, the Tigers managed to
defy the Sri Lankan army and seized control of parts of
the country’s north and east.
2002, a ceasefire was struck between the government and
the Tigers, who pretty much ran a quasi-independent
state in the north of the country. I made three trips to
during this ceasefire, including two to cover the
tsunami, which struck the island in 2004.
Although the horror of the tsunami produced a brief
desire for national reconciliation, tensions between the
LTTE and the government still simmered, and most Sri
Lankans expected the civil war to flare up sooner or
later. It did resume last year, but what happened took
everyone by surprise. The LTTE simply collapsed. An
internal fight during the ceasefire weakened the LTTE,
and Sri Lanka had a new president, Mahinda Rajapakse,
who seemed determined to crush the Tigers once and for
LTTE has also been the victim of a new global attitude
towards terror. All through the 1990s, far too many
governments could take a neutral — or even sympathetic —
attitude towards terrorist groups, as long as they
didn’t explode bombs in their territory.
was widely known, for instance, that Pakistan, a big
recipient of US military aid, was channeling some of
that money to fund Islamist terror groups operating in
India — but who really cared in Washington? (India,
for its part, was guilty of allowing the LTTE
considerable access to its territory for a part of the
September 11, 2001, attitudes changed. Governments
across the world classified the LTTE as a terrorist
organisation, and began to crack down on its
international finance network. There is a new global
consensus on terrorism — and the Sri Lankan government
has used it to its advantage. Sri Lanka, a recipient of
international aid and tourism, is dependent on the
goodwill of the world community; and foreign
governments, in the past, have asked Sri Lanka to
negotiate with the LTTE rather than continue the bloody
civil war. But in the post-9/11 world, how could any
foreign government possibly ask the Sri Lankan
government to show moderation in its war against a
past few months, the Sri Lankan army has won battle
after battle against the Tigers in the north of the
country and forced them out of their strongholds.
Outgunned and outmaneuvered in traditional warfare, the
Tigers have responded by exposing innocent people to
danger — they have taken civilians hostage in a bid to
stop the Sri Lankan army from shelling them. This
cynical and brutal tactic has not worked.
LTTE are all but finished. They have been driven into a
toehold in the north, and will probably be wiped out in
the next few weeks — but their defeat has come at a
cost: The United Nations says it believes that numerous
civilians have been killed in the fighting (one estimate
puts the number at several thousand, but this is hard to
displaced Tamil civilians now live in makeshift camps,
and are threatened by malnutrition and disease. Has the
Sri Lankan government been careful to minimise civilian
casualties, as it claims, or has it cold-bloodedly
ignored civilian deaths in its war against the LTTE, as
many Tamil activists claim? We can’t know for sure,
because whether or not the Sri Lankan government is
guilty of slaughtering some of its own civilians, it
certainly is culpable of another crime — a war against
relatively recently, Sri Lanka, a parliamentary
democracy, had a press that was free and outspoken. This
press freedom has been under threat for some time — and
it has virtually been snuffed out during the recent war
against the LTTE. Journalists have been denied free and
full access to the fighting in the north — and the world
has little reliable information on what exactly is
happening there. Those Sri Lankan reporters who question
the way the army has conducted the war are labeled
traitors by the government’s top ministers and
bureaucrats. Threats, arrests, and murder follow.
recent statement, President Obama highlighted the plight
of J.S. Tissainayagam, a Sri Lankan journalist who has
been detained for over a year by the government. But the
biggest blow against the Sri Lankan press was struck in
January this year, when Lasantha Wickrematunge, editor
of The Sunday Leader, a newspaper that had been critical
of President Rajapakse, was killed by unidentified men
on his way to work.
Wickrematunge, a fearless editor with whom I had worked
during my visits to the country, had been anticipating
the worst. After his death, his newspaper published a
letter, written by Wickrematunge, accusing the
government of being complicit in his death. This charge
is denied by the government, but few journalists feel
secure in the country. Wickrematunge’s successor at The
Sunday Leader told an Indian newspaper: “If you dare to
dissent, if you are critical of not the war but even the
conduct of this war, you are immediately labeled a
defence, the Sri Lankan government claims that press
freedom exists in the country. It is true that
dissenting voices can make themselves heard in Sri Lanka
— but those who speak out against the government’s war
on terror are incredibly brave men and women, who do so
in an atmosphere of fear and insecurity.
recent trip to the country, I found that journalists
whom I had known for years were edgy about discussing
the war in the north, because of the real threat that
they could be picked up by thugs, beaten up, or even
killed. “We tend to censor ourselves now,” a Sri Lankan
blogger told me.
was most frightening to me was that most Sri Lankans did
not seem to mind what was happening to their press. Most
of them support the government’s war against the LTTE —
and seem to view the journalists who question aspects of
the war as unpatriotic members of society who deserve
the worst that happens to them.
vain, the journalists argue that if the government kills
innocent civilians in the north, it will only engender
bitterness and paranoia among the island’s Tamils — and
that the civil war will invariably resume. In vain, they
argue that justice is the most important weapon in the
war against terrorists.
many civilians in
now seem to buy the government’s claim that anyone
questioning their army is a traitor. A free and
democratic country has become warped by a prolonged war
world has issued the Sri Lankan government a blank check
in its fight against the LTTE, and it is time now to
tear up that check. President Rajapakse must immediately
end the climate of fear in which journalists in his
country operate; he must free reporters who have been
falsely arrested; and must find and prosecute the
killers of Lasantha Wickrematunge.
must allow reporters, Sri Lankan and foreign, full
access to the northern end of the island, so they can
verify for themselves that Tamil civilians caught in the
warfare there are living in humane, secure conditions.
If he does not do so, the rest of the world has no
choice but to assume that the worst of the charges
levelled against his government are true — and act
Adiga is the bestselling author of The White Tiger,
which won the 2008 Man Booker Prize.)
UK Tamil faces jail on terror
head of the Tamil Tigers in Britain is facing jail after
being found guilty last month, on April 17th, of two
Arunachalam Chrishanthakumar, 52, supplied bomb-making
equipment to the Tigers in Sri Lanka.
electrical components had "an obvious terrorist
purpose," jurors were told. He was also found guilty of
receiving documents for the purpose of terrorism.
of Norbury, South London, bought equipment from an army
surplus store in Southsea, Hampshire.
could face a retrial after the jury failed to reach
verdicts on three other charges at
Kingston Crown Court, South