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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » UNP exposes the “Contravening Bank”!

UNP exposes the “Contravening Bank”!

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1UNP exposes the “Contravening Bank”! Empty UNP exposes the “Contravening Bank”! Fri Apr 12, 2013 1:56 am


Director - Equity Analytics
Director - Equity Analytics

* CB contracts TAG at Rs. 100 m to expand cooperation with US

* Harsha says Central Bank contracted firm made false declarations in US Govt. forms

* Contracted firm claims Central Bank is not owned by Government

* Disclosure in Foreign Agent Regulation Act forms refer to constitutional council that was abolished in 2010

* TAG to arrange two US Congressional delegation visits to SL ahead of UNHRC 2014

By Dharisha Bastians

A Washington-based advocacy and strategy group hired by the Central Bank of Sri Lanka has provided false declarations in a US Government form regarding the ownership and supervision of the country’s monetary authority, Opposition lawmakers charged yesterday.

UNP National List Parliamentarian and Economist Dr. Harsha De Silva said the Thompson Advisory Group that was hired by the Central Bank last month to expand trade and political relations with the US had claimed in its Foreign Agent Regulation Act, that the Central Bank of Sri Lanka is not owned, supervised, controlled, directed financed by or subsidised by a foreign Government. TAG has ticked no to all those questions posed in the FARA form. FARA is a US law of disclosure requiring US individuals and companies acting as agents of foreign principals to make periodic public disclosures of their relationship with the foreign principal.

“The Central Bank is a subject under the Ministry of Finance. The Ministry of Finance is the Government of Sri Lanka,” the MP said, adding that it was incredulous that this false information had been declared.
De Silva says that according to the declaration made by TAG, the Monetary Board governing the Central Bank is conferred corporate status and consists of five members appointed by the President on the approval of the Constitutional Council, a body that no longer exists under Sri Lankan law.

According to the TAG’s FARA declaration: “The Monetary Board of the Central Bank consists of five members. The Governor and three non-executive members are appointed by the President on the recommendation of the Minister of Finance and with the approval of the Constitutional Council. The Secretary of the Ministry of Finance is the fifth board member (ex-officio).”

The UNP legislator said the constitutional provisions referred to in the FARA declaration, which made the Central Bank an independent entity was repealed by the Mahinda Rajapaksa Government in 2010.
“The Constitutional Council was abolished in September 2010, when the 18th Amendment repealed the provisions of the 17th Amendment that set up the Council. Sri Lanka has no Constitutional Council today. In fact, under the 18th Amendment, the President makes appointments and those appointments are referred to the toothless Parliamentary Council that has never been properly constituted,” De Silva charged.

The UNP MP asserted that in the current context, the Central Bank was completely controlled by the President. “Look at this 1,000 rupee note. It was printed a few weeks prior to the 2010 presidential election and features a picture from Mahinda Rajapaksa’s election posters. So how is this not a Government entity?” he explained.

De Silva said that the scope of the contractual arrangement between the Central Bank and TAG was also befuddling because it listed under political activities undertaken by the US firm on behalf of the Central Bank to include expanding cooperation between the governments of Sri Lanka and the US even in the areas of national security. “Under which section of the Monetary Law is the Sri Lankan Central Bank vested with power to deal in matters of national security?” De Silva queried.

The Central Bank signed a contract on 16 March with Chairman of the Thompson Advisory Group Robert J. Thompson to enhance communication with key stakeholders in the US Government, promote Sri Lanka-friendly messaging and attract a higher volume of private sector investment from the USA.

De Silva said the CBSL-TAG deal was part of the Sri Lankan Government’s twisted foreign policy that denigrates the US and the West domestically while spending hundreds of millions to build its image and broaden its relations with the US Government in secret. “This Government’s foreign policy is a basket case. It’s like ‘dawal migel and ra daniel,’” he charged.

The contract signed on behalf of the Central Bank of Sri Lanka by Deputy Governor B.D.W.A. Silva is valued at Rs. 100 million or US$ 800,000 with Rs. 8,337,000 to be paid monthly to TAG up to the duration of March 2014.

Under the terms of the contract, TAG has declared under US law that the contract with the Sri Lankan Central Bank was aimed at educating US investors about investment and trade opportunities in Sri Lanka, educating decision makers in the US Congress and the Executive Branch and opinion leaders at think tanks, media outlets, and in academia.

TAG declares it will perform these tasks through “personal contact and through the development and dissemination of informational materials such as; factsheets, white papers, and op-eds”. This will also involve visits by Sri Lankan leaders to the US and visits by US Government and private sector officials to Sri Lanka. TAG has promised to deliver two visits by Congressional Delegations ahead of March 2014, when the UN Human Rights Council Sessions get underway in Geneva.


Director - Equity Analytics
Director - Equity Analytics

The Central Bank of Sri Lanka has engaged the services of a Washington based PR agency for a consideration of Rs. 100 million (approx. US$ 800,000) in order to deepen defence, investment, trade and cultural links with the US ahead of the UNHRC sessions in 2013.

The Central Bank would pay Rs. 100 million for a year’s service provided by the Thompson Advisory Group LLC, USA (TAG). The contract was signed by Central Bank Deputy Governor BDWA Silva and Robert J. Thompson, Chairman TAG on March 16, 2013 as the US government sponsored a second resolution against Sri Lanka at the UNHRC sessions in Geneva.

The deal was brokered by Thilak Siriwardena who will provide strategic consultancy services to the Central Bank for a consideration of US$ 7,000 a month for one year, opposition MPs disclosed yesterday.

During the year leading up to the UNHRC session in 2014, the TAG has undertaken to:

= Prepare and provide educational facts, figures and analyses relating to Sri Lanka to be submitted to the US government (congress and executive branches), think tanks, academia and media.

= Plan and execute immediately an ongoing engagement with US Congress, US Governmental Departments and United Nations.

= Engage with influential media.

= Brief US based investors on current US investment and additional investment and trade opportunities in Sri Lanka.

= Prepare suitable worded educational and promotional articles for US audiences, which would be factual representations based on the past 30 years and the remarkable post-conflict progress in Sri Lanka.

= Arrange a comprehensive programme in April 2013 for a Central Bank visit to Washington D.C.

= Arrange awareness and educational visits to Sri Lanka for senior US Government and private sector officials .

= Reach out to opinion leaders in think tanks and academia in the USA and engage with broader Sri Lankan Diaspora, by organising interactions and meetings as appropriate.

Providing details to the US Department of Justice under Foreign Agents Registration Act of 1938, TAG has made the following interesting disclosures about the Central Bank, raising a few eyebrows:

=The Central Bank is a semi-autonomous arm of the Sri Lankan government

= The Central Bank is not supervised, owned, directed, controlled, financed or subsidised by the Sri Lankan government, any political party nor any other principle.

Opposition MP Dr. Harsha De Silva, who disclosed the above information to the media yesterday (11) questioned the validity of disclosed by TAG to its government.

"The Monetary Board is appointed by the President according to the 18th Amendment. The now repealed 17th Amendment gave powers to the Constitutional Council to appoint the Monetary Board upon recommendations made by the Ministry of Finance and Planning, under whose jurisdiction the Central Bank falls. But now the appointments are made by the President. So is it right to say the Central Bank is not supervised, controlled or directed by the government?" the UNP Economic Spokesman said.

"And, since when did the Central Bank engage in talks relating to national security?" he asked.

Holding up a one thousand rupee note, he charged: "This is proof that the government controls the Central Bank, otherwise this (thousand rupee note) election poster would not have been printed on the eve of elections in 2010."

The Central Bank’s mandate is to maintain price stability and financial system stability in the economy.

The President in November 2011 depreciated the rupee without the Central Bank’s concurrence, denting its credibility because it maintained the rupee would strengthen. The Central Bank has also from time to time eroded price stability by printing money for the government, economists have often pointed out as an example of conflict of interest within the Central Bank.


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Yet another failure

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