Letter from Galleon Group founder
|October 21, 2009
Dear Galleon Employees, Clients and
I have decided that it is now in the
best interest of our investors and
employees to conduct an orderly wind
down of Galleon’s funds while we explore
various alternatives for our business.
At this important time, I want to
reassure investors of the liquidity of
our funds and assure Galleon employees
that we are seeking the best way to keep
together what I believe is the best long
/ short equity team in the business.
As many of you know, we have built our
business on the fundamental belief in
rigorous investment analysis combined
with active trading around core
positions. We have encouraged and
invited our investors to attend our
daily research morning meetings. Many of
you have done so and got a first hand
look at our process. This research
process is the core of our investment
and trading strategy.
The privilege of managing investors’
capital is a responsibility that I have
always taken very seriously. I want to
reiterate that I am innocent of all
charges and will defend myself against
these accusations with the same
intensity and focus I have brought to
managing our investors’ capital.
For those who have been my partners and
supporters over the last 17 years, I
sincerely thank you. I also want to
thank you for the innumerable
expressions of support I have received
from you over the past few days.
New York-based hedge fund manager Raja
Rajaratnam, who ranks 236th in the Forbes List of
Billionaires has become the much talked-about person
in business circles since the FBI sleuths took him
into custody on October 16.
Sri Lankan born Rajaratnam and five executives of his
Galleon Group were arrested in connection with their alleged
involvement in insider trading on the Bourse and for raking
in over US $ 20 million through this illicit activity..
It has transpired during investigations by a special unit
of the FBI, that Rajaratnam’s Galleon Group has been
spinning money by tipping off inside information of leading
American companies such as Google, Hilton, Polycom,
Clearwire, Akmai Technologies and AMD to speculators on the
New York Stock Exchange.
The Prosecution Counsel who represented the Attorney General
had, while making his submissions to court, asked that bail
not be granted to Rajaratnam and other suspects charging
that the Galleon Group had netted in US $ 25 million through
their illicit dealings between 2006 and 2009.
Born in Jaffna in 1957, Raj Rajaratnam had obtained a
degree in Engineering from the Sussex University in the UK.
He had later gone to the United States and got a degree in
Business management from a university there. In 1991 he had
headed some leading finance institutions and banks there. He
had launched his Galleon Group Hedge Fund in 1997 which he
built up by winning the confidence of entrepreneurs and
Rajaratnam first came into limelight here when he began
investing in our Stock Exchange. According to Bourse
sources, Rajaratnam holds Rs.52.4 million worth shares of
John Keells and Rs.8.1 worth shares of the Commercial Bank,
His share holdings in National Development Bank, DFCC Bank,
and the CIC company amount to Rs.5 million, Rs.12 million
and Rs.2 million respectively.
Director General of Securities and Exchange Commission
(SEC) Channa de Silva had said that they were to launch a
probe into investments made by Rajaratnam in this country.
There was a dip in the local share market soon after the
arrest of Rajaratnam by the FBI. However, it had soon
Was Raj custodian of LTTE funds?
Another serious charge made against Rajaratnam is that he
had funded the LTTE and the terrorist outfit’s front TRO. He
had donated US $ 3.5 million to the TRO according to the
charges against him.
US President George Bush proscribed the TRO and confiscated
its funds in November 2007. According to the case filed by
the US Attorney General, Rajaratnam had given US $.3.5
million to Dr. Nagaratnam Ranjithan, Head of the TRO in the
It came to light sometime later, that the millions of US
dollars collected by the TRO ostensibly for providing relief
to the Tsunami, had gone into funding military hardware for
The LTTE sympathisers in the States at the last
Presidential Poll, made a concerted effort to defeat the
Republican Party government of George Bush as revenge for
proscribing the LTTE and the TRO in the States. They worked
with dedication for the victory of the Democratic Party.
Rajaratnam had donated US $ 4600 to Hillary Clinton and US $
38,000 to Barrack Obama to fund their campaigns at the
primary election. In addition, Rajaratnam had contributed US
$ 118, 00 to Obama’s campaign fund at the Presidential
election, according to a report released by the US Federal
It is obvious that the LTTE sympathisers had obtained
dividends quite commensurate with the monies they had
invested when one reviews the conduct of the US government
both when the hostilities were at a decisive stage and after
the defeat the of the LTTE. Statements which have been made
since then by US State Secretary Hillary Clinton against Sri
Lanka, further demonstrates this fact.
Hillary tried her utmost to pressure Sri Lankan
government to announce a ceasefire when the armed forces
were poised to deal the final blow to the LTTE, She took up
the position that terrorists in the world could be divided
into two categories and the LTTE belonged to the category of
patriotic liberation movements. She at a later stage
levelled a rape charge against our soldiers. It is quite
possible that she was influenced by the LTTE sympathisers
who backed her election campaign.
The United States has proscribed 26 terrorist
organisations including Al Qaeda, Taliban, and the LTTE.
Under the ban imposed, these organisations funding them,
representing them and undertaking activity and disseminating
propaganda literature on behalf of them, are illegal.
However, former US ambassador here and now the US Assistant
Secretary of State for the Asian Affairs Robert O Blake had
held a discussion with the representatives from 16 pro-LTTE
organisations in the USA last August. V. Rudrakumaran, now
wearing Prabhakaran’s mantle as the leader of the moribund
outfit, an attorney - at - law domiciled in the States, had
led this delegation which criticised Sri Lanka government
charging it was violating human rights. It was after this
discussion that the US State department took the initiative
to submit a report on human rights violations in Sri Lanka
to the US Senate.
Double standards on terrorism
The US Immigration and Emigrations officials at the New York
airport had recently detained and questioned popular
Bollywood actor Sha Rukh Khan for several hours just because
the name `Khan’ had figured in some terrorist lists. The US
State Department demonstrated its double standard on
terrorism when they held talks with a person like
Rudrakumaran who is openly working to resurrect the
President Mahinda Rajapaksa decided not to attend the UN
General Assembly last September to register his protest
against this double standard, say diplomatic sources.
Raj among world’s richest
According to the Forbes Magazine, Raja Rajaratnam ranks
559th among the richest in the world, accounting for a
population of over 6800 million. The worth of his personal
assets exceeds US $ 2 billion. Given his conduct and the
massive wealth he has amassed within such a short time,
there is a reasonable suspicion warranting the question
whether he by himself had earned all that wealth. The FBI is
reportedly now conducting investigations to ascertain
whether Rajaratnam was the custodian of LTTE funds.
Raj’s questionable ties with politicos
There is information that Rajaratnam had maintained ties
with some politicians here. In fact, there is a case against
UNP Parliamentarian Ravi Karunanayake for allegedly
depositing in a private account a certain sum of money sent
by Rajaratnam for investment in violation of foreign
Meanwhile, it has come to light, that a group of Sri Lankan
politicians had enjoyed Rajaratnam’s hospitality at his posh
New York residence during their visit to the States.
Rajaratnam faces twenty years in jail and confiscation of
all his ill-gotten wealth in the event of being found guilty
of the charge that he had resorted to insider trading on the
No powerful person has so far come forward to rescue
Rajaratnam despite his having been a prominent supporter of
the Democratic Party election campaign. The rescue attempts
will not materialise because the US is a country where the
rule of the law prevails.
Sarath Fonseka in news
Former Army Commander and now the Chief of Defence Staff
Sarath Fonseka has become the leading news maker these days,
given the behind-the-scene moves and public announcements
that are being made by certain opposition parties pointing
to the possibility of his coming forward as the Common
Opposition Presidential candidate.
The architect of the plan to field a common opposition is
none other than Mangala Samaraweera. He first announced that
there was a move to field a well known Sarath as the Common
Opposition candidate. At that stage the possible candidate
hinted at was former Chief Justice Sarath Nanda Silva, and
when the latter found that the speculation was going too
far, he scotched it making a categorical statement that he
had no idea of entering politics.
Later Mangala referred to another well known Sarath
shifting the focus on General Fonseka.
This was the signal for several web sites being run with
Mangala’s patronage, to start a propaganda blitz about a
well known Sarath being groomed as the Common Opposition
Presidential candidate. One of these web sites ran a story
to say that General Fonseka was being cold-shouldered by the
government and was being given the `use and discard’
treatment by President Mahinda Rajapaksa. And therefore the
former Army Commander was highly disappointed.
A Mangala ploy
By this time, an open discussion had begun in the public
domain about the possibility of General Fonseka coming
forward as the Common Opposition Presidential candidate.
What was amusing was that it was the very Mangala
Samaraweera who once said that Major Fonseka was not fit
enough to lead the Salvation Army who was promoting General
Fonseka as the Common Opposition Presidential candidate from
Meanwhile, a leading follower of Mangala Samaraweera,
Sarath Manamendra, who is the leader of Nava Sihala Urumaya,
a political party confined to a name board, at a media
briefing held in Mangala’s office, extended an open
invitation to General Fonseka to come forward as the Common
Opposition Presidential candidate. It is obvious that
Manamendra had made this overture to the former Army
Commander at the behest of Mangala Samaraweera. Nava Sinhala
Urumaya is one of the political groupings expected to join
the National United Alliance.
JVP hails Gen. Fonseka’s candidature
JVP Parliamentarian Lal Kantha told a media briefing held in
Colombo on October 21, that his party has no reason to make
any issue of it, if General Fonseka comes forward as a
Presidential candidate to implement a good programme “At the
moment we have not identified anyone as the Common
Opposition candidate. However, we too welcome the idea of
fielding a common candidate,” he told the media briefing.
Mano Ganesan threatens to quit UNA
Democratic People’s Front leader Mano Ganesan who also
played a lead role in forming the UNA has expressed his
vehement opposition to the move to field General Fonseka as
the Common Presidential candidate of the UNA. It was under
the command of General Fonseka that the armed forces
decimated the LTTE and destroyed the LTTE leadership
including Prabhakaran. It is no wonder that Mano Ganesan who
was sympathetic to the LTTE is opposed to the person
responsible for destroying the LTTE. He announced in a press
release that he was resigning from the UNA if General
Fonseka was to be fielded as the Common Presidential
candidate under the UNA initiative. He also said that he had
already informed the UNA leader Ranil Wickremesinghe of his
Highly disturbed Ranil and Mangala had immediately
assuaged the ruffled Mano Ganesan, assuring him that the UNA
had not so far decided on a common candidate. None of the
constituent parties of the alliance they told him, had
formally or informally contacted General Fonseka in this
JHU leaders meet Gen. Fonseka
Meanwhile, JHU leader Parliamentarian Ven. Ellawela
Medhananda and Ven. Uduwe Dhammaloka who called on General
Fonseka had held a discussion that lasted for about one
hour. The two Theras had inquired from the former Army
Commander whether there was any truth in the rumors doing
rounds in the country that he was planning to come forward
as the Common Opposition Presidential candidate. “None has
made any offer to me so far, nor do I have any intention to
enter politics,” General Fonseka had reportedly told the two
bhikkhus. “Tell us if you have any issue with the
government. Should there be any issue, we can easily resolve
it,” they had told General Fonseka. And the latter had
asserted that he had no problem with the government.
Meeting of old school - mates
Construction and Engineering Services Minister Dr. Rajitha
Senaratne also met General Sarath Fonseka last week. Being
school pals the duo had had a very cordial chat. Dr.
Senaratne had taken advantage of this meeting to inquire
from the General whether there was any substance in the
widespread speculation that the latter was planning to come
forward as the Common Opposition Presidential candidate.
“There can be Saraths planning to enter politics. But this
Sarath has not entertained such an idea,” General Fonseka
had told Dr.Senaratne. General Fonseka left for the United
States last Friday on a two week visit.
Signing UNA Pact on October 29
Representatives of the constituent parties of the United
National Alliance who met at the Cambridge Terrace office of
Ranil Wickremesinghe, had fixed the signing of the agreement
and the Dasa Raja Pratipattiya document for October 29.
They have also decided to travel to Kandy in a motorcade the
following day – October 30 – to obtain blessings from Sri
A large number of UNP seniors had insisted that they
should contest under the `elephant’ symbol despite the `Dasa
Raja Pratipattiya’ being their political platform. However,
both Ranil Wickremesinghe and Mangala Samaraweera hold on to
the idea they should contest under the `pot’ symbol and
adopt the rainbow hues together as the party colour, as a
means of attracting more political parties and people with
different political views to the alliance.
SLMC still on the fence
Sri Lanka Muslim Congress which was associated with talks on
forming a broad joint opposition alliance from the outset is
still dragging its feet over the question of joining the
TNA. The reason for this state of indecision, is that a
large number of party seniors have questioned the wisdom of
teaming up with alliance led by the UNP which had suffered
humiliating defeats at successive elections. SLMC General
Secretary Hassan Ali says that they have planned to have
talks with the district leaders of the Eastern province on
October 25, 26 and 27 prior to taking a final decision at a
meeting of the Supreme Council. “Even if we decide to join
the UNA, we would do so after signing a Memorandum of
Understanding.,” he added. Given this situation, the signing
of the TNA agreement is likely to be further postponed, UNP
SLFP Central Committee meets
The SLFP Central Committee met at Temple Trees last
Wednesday with President Mahinda Rajapaksa in the chair. The
main topic that figured at the discussions at this meeting
was the SLFP National Convention to be held on November
15.They had initially planned to hold this convention as a
meeting of delegates from countrywide organisations.
However, President Rajapaksa said that he would welcome a
wider participation of the party membership in the
convention. Accordingly, it was decided to make arrangements
to accommodate the participation of 500 delegates from each
electorate. The party hierarchy had earlier decided to hold
the convention at the Sugathadasa indoor stadium, However,
after having considered that the fact that the seating
capacity of the indoor stadium would not be adequate, the
Committee decided to choose either the Khettarama stadium or
the Sugathadasa outdoor stadium as the venue.
President to announce which poll will come first,
The Committee discussed at length the upcoming Presidential
election and the Parliamentary election. The view of the
majority was that the Parliamentary elections should come
first. They pointed out that the victory at the
Parliamentary elections would create the necessary momentum
for a landslide at the Presidential poll. However, the
President and a few others took up the position that it
would be more advantageous if the General elections were to
follow the Presidential election. “Anyway, President
Rajapaksa will announce which election is to come first at
the National Convention on November 15,” an SLFP senior told
Hussain Baihla gets SLFP membership
Deputy Foreign Minister Hussain Baihla who quit the SLMC to
join the All Island Muslim Congress led by Minister Rishard
Badurdeen obtained the SLFP membership last week. Minister
Amir Ali too is expected to follow suit shortly.
Southern PC’s UPFA team to take oaths before President
The Board of Ministers of the newly elected Southern PC will
take their oaths before President Rajapaksa at the
Presidential Secretariat on October 29. Shan Wijelal de
Silva who polled the highest number of preference votes in
the province will be sworn in as the Chief Minister at this
ceremony. V.K.Indiaka from Hambantota district, Hemal
Gunasekera and Bindu Weerasinghe from Matara district and
U.G.P. Ariyatillake from Galle district are expected to be
sworn in as Ministers.
Three of the four candidates from the Communist Party who
contested on the UPFA lists in the Southern province have
been elected. Meanwhile, G. Denetti of the Communist party
who headed the preferences list of unelected candidates in
the Galle district has been offered the bonus seat bringing
the number of the CP members in the Council up to four. The
Communist Party has, on a request by Minister Chandrasiri
Gajadheera, decided to nominate Bindu Weerasinghe from
Matara for the Ministerial slot reserved for the party.
Meanwhile, a group of CP supporters from Galle on October 19
who mobbed the CP headquarters in Borella demanded that the
party’s Ministerial portfolio be given to either of the two
CP members elected from Galle. The CP leadership
nevertheless has decided to stick to their earlier decision
to offer the portfolio to Matara.
Hemal to continue as Provincial Minister
Earlier, President Rajapaksa had agreed to offer a seat in
Parliament to Hemal Gunasekera who garnered the highest
number of preference votes in Matara. President’s Senior
Advisor Basil Rajapaksa was to resign to make way for Hemal.
However, with the dissolution of Parliament in the offing,
Hemal Gunasekera has preferred to be a Provincial Minster
rather than an MP for a brief period.