Get away with economic crimes

The Colombo Magistrate’s Court last week extended the travel ban imposed on former central bank governor Ajith Nivard Cabraal until November 24. This order was issued when a personal complaint was heard before Colombo’s additional magistrate, Harshana Kekunawala.

Cabraal was named as a suspect in this personal complaint filed for embezzlement while he was governor of the Central Bank. The complaint alleges that during his tenure as Governor of the Central Bank from July 1, 2006 to January 8, 2015, Cabraal paid $6.5 million to Pakistani American political donor Imaad Zuberi without the approval of Cabinet ministers and therefore committed criminal acts. breach of trust.

It further alleges that Cabraal, while serving as Governor, caused a $500 million loss to the government through International Sovereign Bonds (ISBs) due on January 18, 2022. Cabraal is further accused of having suffered a loss of Rs. 10 billion to the government by appointing close relatives to positions dealing with monetary policy and publishing confidential information on Treasury bills and bond issues, during his tenure as Governor.

Rather than a complaint from an individual citizen, Cabraal and those who caused the outright economic collapse should be investigated and prosecuted by the state. In addition to the alleged corruption and embezzlement, he and a few others are directly responsible for the sheer incompetence with which the economy has been run.

As a result, in April this year the Treasury and Central Bank announced the suspension of all foreign debt repayments and in May Sri Lanka defaulted on its foreign bonds. Not a single individual responsible for this sovereign default, a first in Sri Lankan history, has been held accountable to date.

Sovereign default is the inability of a government to repay its national debts and marks the point of bankruptcy. Countries are generally reluctant to default on their national debt, as it will make borrowing more difficult and more expensive in the future. While ill-advised tax cuts in 2019 started the process that led to the economic collapse, the central bank’s highly questionable decisions to maintain an artificial exchange rate by burning up precious foreign exchange reserves contributed to a large extent. .

Even facing bankruptcy with severely depleted foreign currency reserves, Cabraal ordered the repayment of a $500 million international sovereign bond (ISB) that raised many eyebrows among economists. Was it sheer incompetence or was there a far more sinister and corrupt motive as to why Cabraal decided to pay $500 million to ISB holders from the country’s dwindling foreign exchange reserves as Sri Lanka faced a severe shortage of foreign exchange reserves?

Although Cabraal justified this decision, it is worth investigating whether people connected to politicians and civil servants had bought the bonds before their full maturity, at a higher interest rate and therefore made massive profits. .

A handful of individuals are responsible for the country’s economic collapse. They must be held accountable for the misery they have caused. A thorough investigation into their corruption, incompetence, dereliction of duty and negligence must be carried out immediately. There is no doubt that they must face justice.

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