Raj scam jolts business and
US’s double standards

Letter from Galleon Group founder Raj Rajaratnam
October 21, 2009
Dear Galleon Employees, Clients and Friends,
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.

Raj Rajaratnam

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 investors.

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 bounced back.

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 States.
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.

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 Elections Commission.

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 terrorist LTTE.
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 exchange laws.
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 US bourse.
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 behind-the-scene.

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 stand.

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 regard.

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 Dalada.

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 sources said.

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, November 15
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 The Nation.

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.