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The Bond Scam And Good Governance

Sri Lanka’s first scandal with consequences

The Central Bank is somewhere in the background here

In Sri Lanka, something fishy happened in the issuance of government bonds, resulting in losses of nearly $72 million USD, $55 million of that hitting government institutions directly.

The fishy bit was that the person making the money (Arjun Aloysius) was the son-in-law of the Central Bank Governor, the person ultimately issuing the bonds. Here’s a quick video explainer I did years ago if you’re interested in more detail.

Because the people involved were so powerful, it looked like they would just get away with it. Indeed, this is usually the case in Sri Lanka, and much of the world.

Somehow, however, they didn’t.

In the face of ongoing outcry, The Central Bank Governor’s term was not renewed. Then a Presidential Commission was appointed which revealed that Arjun Aloysius was paying the Finance Minister’s rent at the time. And the Finance Minister resigned.

But it didn’t stop there.

The commission’s report actually recommends prosecution, and clawing back the money. And the President seems to agree.

For a country like Sri Lanka, this is a big deal.


If you look at it objectively, this all seems normal. There’s a scandal, people complain, people get busted (pending). In Sri Lanka, however, this isn’t normal. That’s what’s news to me.

In Sri Lanka, the powerful are rarely held accountable. You can kill, rape, steal — as long as you don’t fall out of political favor you’re unlikely to face legal or ethical consequences.

Ministers, MPs and public officials rarely if ever resign due to scandal. It’s just not a culture of shame in that sense, and people in power are almost expected to abuse it to enrich themselves and their family and friends.

But before we get to what make this government amazing for having resignations and credible investigations, let’s stay on the ethical high ground a bit and talk about what makes them bad.

The Deeper Rot

The Prime Minister appointed the Finance Minister and Central Bank Governor in question. The PM was also mentioned in Arjun Aloysius’s phone records. All of this stuff happened under his watch.

There was a national election after the scam during which the UNP seemed well funded, though that of course could be unrelated.

While the PM and the government as a whole seems to have some distance from the scandal, you have to admit that in a real culture of political accountability, the PM would probably resign and the government would fall.

We’re not there yet, so let’s talk about where we are.

Good Governance

This government ran on a platform of good governance — of not being corrupt. This kinda became a joke because corruption continued — most notably through the bond scam — but also in a lot of little and big ways throughout the government.

In ways, however, it’s not a joke. There really is much more media freedom than before. There also seem to be real, independent commissions, not tea parties of stooges.

And there have been actions. People actually have been investigated and prosecuted, including the past Secretary to the President and now this. It’s not as many investigations as people say they want, but it’s certainly more than before.

Is this actually good governance? No, but it’s Less Shit Governance. Hardly an election slogan, but definitely an improvement.

Also, Fun

Also, this is fun. Watching Ravi Karunayake (the Finance Minister) pretend he didn’t know who paid his rent or even where he lived was funny. Watching the staff of Perpetual Treasuries pretend they didn’t know English was also amusing.

It’s been fun, for once, to watch the generally powerful and unaccountable squirm. Not that other powerful people aren’t still getting away with stuff, but this seems like one time that the people can see justice done.

That’s something unusual and promising for the country, and also amusing. Let’s just hope they follow through.