'My resignation would have amounted to accepting guilt' says Arjuna Mahendran

Abandoning ship on frivolous charges is dereliction of duties


Lakshman Arjuna Mahendran ,Central Bank Governor

by Saman Indrajith


Central Bank Governor, Lakshman Arjuna Mahendran is in the center of a controversy with not only opposition politicians but some elements within the government also demanding his resignation. 

He gave up a lucrative career in international banking when he was asked to take charge of the Central Bank of Sri Lanka. After assuming duties on January 27, 2015 as the 13th Governor of the Central Bank, he embarked on the Herculean task of clearing the financial mess and steering the economy towards prosperity.

But the Oxford trained economist and banker has come severe flak over a range of issues. His term ends on June 30. Last Friday, he announced that he would not seek a service extension until the parliamentary watchdog COPE clears his name.

During an interview with The Sunday Island, Mahendran responded to allegations against him. The following are excerpts of the interview:

Q: In the backdrop of a series of allegations against you, do you think that you will be sacked or not be given an extension? Why didn't you opt to resign?

A: It is in the hands of the President to give the extension to me or not. In any case, I have decided not to seek an extension of my term until COPE clears my name. The COPE is the best forum I could prove my innocence. I am waiting for the COPE report.  It is very important for my reputation. I came to serve my motherland. So the President would decide whether I would continue to serve or not.

My resignation would have amounted to accepting guilt. I took up this job to performing certain tasks, and for me to abandon ship just on frivolous charges would have been dereliction of duties.

Q: You are accused of living an extravagant life on public funds. One accusation is that you live in a JAIC Hilton suite, while there is an official residence allocated to the Governor.

A: (Laughs) I simply do not know why I am accused of such matters. Since I was appointed to the position of Central Bank Governor on my return to Sri Lanka, I lived in my own house. I visit the official residence at Bauddhaloka Mawatha only when I have official functions there. I neither live at JAIC Hilton or any other place paid for by government funds. I cannot understand the meaning of these allegations.

Q: You have gone abroad 38 times after assuming office and is said to have spent Rs.14.5 million out of public funds in 11 months for your personal indulgences. You have been accused of spending over Rs 450,000 per single meal and buying luxury clothes paying from a credit card issued to you by the Central Bank.

A: These allegations are baseless. I use a credit card issued by my private bank and pocket out all my personal expenses. Had I been abroad on expenses from the Central Bank, that was only for official purposes. As the Central Bank Governor I may need to host diplomats and foreign officials. Such dining would cost little bit more than our usual meals. In such occasions, I am not expected to treat them in a boutique and have to abide by guidelines of decorum and hospitality which are trademarks of our culture.

Except for such official occasions, I have not lived extravagantly spending millions of rupees of public funds. Now my suit is known as the most expensive one in the country. I do not need to spend millions from Central Bank funds to buy clothes. I simply cannot understand why I have been accused of such matters.

Q: Then for what you have spent millions out of the credit card given to you by the bank?

A: As I have already told you, I make payments from the credit card given to me by the bank during official functions. It is the purpose of giving me that card. The Central Bank pays for official functions. Except for that, I have never used that card for my personal expenses.

Q: Why did you not comply with the Auditor General’s request to submit necessary information and details to prepare a report on all Central Bank transactions, including bond issues during the recent past to be sent to COPE?

A: The Central Bank has some sensitive information that cannot be divulged to the public. There are procedures to be followed and with regard to releasing sensitive information because such actions would lead to financial sector instability. The data requested had been market-sensitive and their release would have threatened the smooth functioning of financial markets.

We have to abide by the provisions of the Monetary Law Act. The Chief Justice too confirmed that. The Central Bank has to make an assessment before releasing certain information. We followed those rules and guidelines set out by the Chief Justice and after the assessment, we provided all information the Auditor General had asked for. Some parties with vested interests interpreted this in various ways.

Q: How would you respond to the accusation by MP Bandula Gunawardena that you manipulated computer data in the Central Bank and printed money exceeding limits?

A: That is complete nonsense. There is a separate department and a staff to work with the IT system in the Central Bank. State-of-the-art standards and protection are provided to the computer system of the Central Bank for such systems face the constant threat of being hacked. You cannot erase data from a Central Bank system in the manner you would erase files from a laptop computer. Anyone could make such wild allegations. It is not the truth and I do not think that people could be fooled by such stories.

Q: It is said that you left a lucrative job Singapore which paid you more than what you receive now to accept the post of Central Bank Governor. MP Wimal Weerawansa too has questioned why you took all the trouble to make such sacrifices and suffer a personal financial loss to gain nothing. What do you expect to gain?

A: It is true that I earned more abroad. But it is an honour to hold the position of Governor of the Central Bank of one’s motherland. Apart from that, I worked there earlier in a junior position. It is a rare honour. That was why I accepted the invitation. I had to live abroad due to unavoidable reasons but I am truly Sri Lankan and proud to be called a Sri Lankan. The other factor that motivated me to accept this was the desire to become a part of the process of reawakening the country after the decades-long war.

Q: But the Opposition says you were just a Singaporean handpicked by Prime Minister Ranil Wickremesinghe and got this job not because of qualifications, but thanks to friendship.

A: My parents are Sri Lankan. I was born in the US because they were there at that time. I grew up in Sri Lanka. I was at Royal Junior School and then at Royal College. Then from Royal, I directly went to Oxford in the UK. I completed my Advanced Level in 1977 and got admission to Oxford in 1978. I did my degree in Philosophy, Politics and Economics and graduated in 1981. Then I came to Sri Lanka, and on January 1, 1983, I joined the Central Bank.

In the meantime, I also worked as an economist at the Mahaweli Authority for about a year. I was appointed the Head of the Money and Banking Unit. I worked there till about 1993. When the UNP government was formed in 2001, Ranil Wickremesinghe invited me to take over as Chairman of the Board of Investment (BoI). I was the Chairman from December 2001 to May 2004 until the Parliament was dissolved.

At that time, it was difficult to find a job after being the Chairman of the BoI. I was looking around and went to Singapore and since I could not find anything, I joined the Credit Suisse Bank in Singapore in July 2004.

In Singapore, they have a scheme where after working there until a point, they invite you to become their citizen. As part of their national policy, they encourage people to migrate there. I accepted that invitation since it was difficult to say no. That’s why in 2006, I accepted citizenship.

When President Maithripala Sirisena formed the new government after January 8, 2015 I was invited to accept the Governor's post and I did so. It’s like coming back home. It was my first formal job, and it was very heartwarming for me to come back. I have postgraduate qualifications from Oxford and professional qualifications and I do not understand how and why am I accused of not having qualifications.

Q: However, whatever your qualifications may be, you are accused of paving the way for loss of more than Rs 500,000 million through Treasury bond sales.

A: The COPE is conducting an investigation. I hope that investigation would clear my name. This baseless allegation went before the Supreme Court, which vindicated me in the fundamental rights petition that was filed by Chandra Jayaratne and two others on the same issue.

The Supreme Court dismissed the case as I was absolutely not at fault and had not violated statutory provisions. I do not need to talk of it more than that as the COPE investigation is in progress.



animated gif
Processing Request
Please Wait...