Goldquest investigation

Published 16 MAY 2007

Media watchdog condemns CID’s questioning of Morning Leader Editor

[Wednesday, 16 May 2007, 17:19 GMT]
Expressing concern over questioning of Ms. Sonali Samarasinghe, Editor of The Morning Leader, by the Criminal Investigations Department, to reveal the sources of an investigative article, the Free Media Movement (FMM), a Colombo-based Media watchdog, said in a press release that CID’s actions, “not just encroaches the domain of media freedom, but seriously erodes it…Quashing investigative reportage and independent journalism, we clearly see this as another incident wherein the State authorities, despite overt commitments to media freedom, in reality have a callous disregard for it.”

Full text of the press release follows:

The FMM is perturbed to learn that the Criminal Investigations Department (CID) of the Sri Lanka Police questioned the Editor of The Morning Leader, Sonali Samarasinghe, for over four hours today based on a complaint ostensibly under Sri Lankan Monetary Law made by the Central Bank in relation to series of investigative articles published in the Sunday Leader and Irudina news papers last year. The articles she was rigorously questioned on related to the operations of numismatics outfit GoldQuest, the directive of the Central Bank governors to stop the investigation into its activities in Sri Lanka and the publication of the document issuing the directive.

GoldQuest stands accused of operating a form of highly suspect pyramid-scheme in some of the world’s poorest countries. The company, which was based in Hong Kong, sold “commemorative” gold and silver coins and people are encouraged to gain commission by getting more people to sign up. In early May this year, the Jakarta Post in Indonesia reported that Quest International (QI) group Chief Executive Vijayeswaran Vijayaratnam, Director Joseph Bismark, and two other senior executives, Donna Marie Imson and Tagumpay Kintanar were arrested Thursday by the Indonesian police.

As reported by Lanka Business Online on 7th May 2007 on its website though several QI activists were arrested by Sri Lankan police, the Sri Lankan Central Bank dissolved its special investigation unit amidst much controversy in 2006. It is also reported that QI has invested significantly in the Sri Lankan banking sector.

The CID wanted to know the manner in which Sonali Samarasinghe conducted her investigation, the sources of her information, the officials she spoke to and the details obtained with regard to document stopping the GoldQuest investigation. The CID also questioned Ms. Samarasinghe on contacting the then Solicitor General to verify information on the status of the Gold Quest investigation. The CID informed Ms. Samarasinghe that if she did not disclose any of this information, they would inform the Magistrate Court and obtain the necessary directives.

Ms. Samarasinghe declined to give the sources of the information.

Needless to say, the FMM is seriously concerned that the CID, through its actions, not just encroaches the domain of media freedom, but seriously erodes it. This is not the first occasion in which the Police have taken into questioning journalists for pursuing stories that are perceived by those in power to be off limits to media acting in the public interest. This is also not the first occasion that journalists have been intimidated by the Police with requests made to reveal their sources. Ms. Samarasinghe’s right to publish information as she sees fit in her capacity as a professional journalist, is no exception to the cardinal rule of the freedom of expression enjoyed by all citizens, a vital cornerstone in media freedom.

While the FMM would have liked to see the CID and Police extend their fullest support to a public investigation into the dealings of GoldQuest in Sri Lanka, it is perversely not the case. This incident is indicative of the challenges faced by professional media in Sri Lanka today. Quashing investigative reportage and independent journalism, we clearly see this as another incident wherein the State authorities, despite overt commitments to media freedom, in reality have a callous disregard for it.

The FMM requests those in charge of the decision to question Ms. Samarasinghe to make the reasons for their decision to do so public. Recognising the inviolable right of journalists to investigate misdemeanors of public and private institutions and individuals who have embezzled public money, we find it deplorable that the Police have acted in a manner that chills media rights in Sri Lanka. We urge the Police and CID to desist, and remind them that working collaboratively helps strengthen democracy more than antagonizing and threatening journalists.

For more information – (+94) 777 315665
Spokesperson- S. Sivakumar 0777 315665

Convenor – Sunanda Deshapriya ( 0777 312457)
Secretary – Sunil Jayasekara ( 011 2851672/3)

 

Published 16 MAY 2007
http://www.lankabusinessonline.com/fullstory.phpnewsID=1964231619&no_view=1&SEARCH_TERM=33

Wrong Target 

Sri Lanka police questioning of editor over Goldquest expose deplorable: rights body
May 16, 2007 (LBO) – Police has questioned a newspaper editor over reporting of the activities of the Goldquest scheme in Sri Lanka, and a subsequent controversial investigation by the country’s Central Bank.
Sri Lanka’s Free Media Movement protested the questioning of Sonali Samarasinghe, the editor of the Morning Leader newspaper Wednesday, describing the move as ‘deplorable’ and a chilling attempt to undermine media freedom and democracy.FMM said Samarasinghe had been questioned for over four hours based on a complaint ostensibly under Sri Lankan Monetary Law made by the Central Bank in relation to a series of investigative articles published in the Sunday Leader and Irudina newspapers last year.”While the FMM would have liked to see the CID and Police extend their fullest support to a public investigation into the dealings of Goldquest in Sri Lanka, it is perversely not the case,” the Free Media Movement said.”This incident is indicative of the challenges faced by professional media in Sri Lanka today.”Quashing investigative reportage and independent journalism, we clearly see this as another incident wherein the State authorities, despite overt commitments to media freedom, in reality have a callous disregard for it.”The FMM asked those in charge of the decision to question Samarasinghe to make the reasons for their decision public.”Recognising the inviolable right of journalists to investigate misdemeanors of public and private institutions and individuals who have embezzled public money, we find it deplorable that the Police have acted in a manner that chills media rights in Sri Lanka,” the FMM said.

“We urge the Police and CID to desist, and remind them that working collaboratively helps strengthen democracy more than antagonizing and threatening journalists.”

“The CID wanted to know the manner in which Sonali Samarasinghe conducted her investigation, the sources of her information, the officials she spoke to and the details obtained with regard to documents stopping the Goldquest investigation,” the Free Media Movement said.

“The CID also questioned Ms. Samarasinghe on contacting the then Solicitor General to verify information on the status of the Goldquest investigation.

“The CID informed Ms. Samarasinghe that if she did not disclose any of this information, they would inform the Magistrate Court and obtain the necessary directives.”

“Ms. Samarasinghe declined to give the sources of the information.”

FMM said this was not the first occasion in which the Police have questioned journalists for pursuing stories that are perceived by those in power to be off limits to media acting in the public interest.

“This is also not the first occasion that journalists have been intimidated by the Police with requests made to reveal their sources,” FMM said.

“Ms. Samarasinghe’s right to publish information as she sees fit in her capacity as a professional journalist, is no exception to the cardinal rule of the freedom of expression enjoyed by all citizens, a vital cornerstone in media freedom.”

Statement published  27 MAY 2007

http://www.thesundayleader.lk/archive/20070527/news.htm

BASL concerned over questioning of Editor

The Bar Association of Sri Lanka (BASL) has noted with concern the questioning by the Criminal Investigations Department of Editor, The Morning Leader, Sonali Samarasinghe, an attorney-at-law and life member of the BASL, over a series of articles relating to the activities of GoldQuest, a pyramid scheme operating in several countries including Sri Lanka.

“BASL has been informed by Ms. Sonali Samarasinghe that the CID had told her that she should divulge her sources of information and that if she refused to do so it could result in obtaining a magistrate order to get her to do so,” the BASL has said in a statement.

The statement adds, “Such action by the authorities to force journalists to divulge their sources of information is a deterrent to investigative journalism. It is in the public interest that a journalist should obtain information in confidence and publish it to the people. By doing this, the journalist brings to the public notice information, which the public should know. A journalist has the right to expose wrongdoings and neglect of duty, which would otherwise go un-remedied.”

“The recourse to the courts to compel a journalist to divulge the sources of his information is a matter that has been dealt with by the House of Lords in the famous Granada case (British Steel Corporation v. Granada Television (1980) 3WLR 774). What is paramount is the interest of justice and that of public interest.”

BASL also addressed the need for a freedom of information law in the country stating that “A Right to Information Act is a dire need and so is the protection for whistle-blowers, which is an important component and instrument of freedom of expression if people are to provide information without fear of reprisals. It is a strong deterrent against corruption, abuse of power and waste of public wealth,” the BASL said.

“Curtailment of media freedom and freedom of expression goes against the very grain of democratic norms and efforts to bring about transparency in governance by the state, its institutions and also in the private sector.”

“The questioning of a reputed investigative journalist is a wrong signal at a time when media freedom is challenged by various quarters. The Bar Association of Sri Lanka is committed to uphold the freedom of expression and the freedom of press in as much as they are essential for a free and democratic society,” the BASL further states. 

_____________________________

Published 5 NOVEMBER 2006 in The Sunday Leader

Cabraal does the dirty again

Guilty feet got no  Rhythm

Disbands entire Special Investigations Unit

Transfers all seven personnel to other departments

Directly stops files reaching AG’s Department

Head, SIU sends internal memo halting all investigations into GoldQuest on Governor’s orders

GQ operatives flourish again as CB castrated by its own head

Uses position to stop wife Roshini from being interrogated by SIU

Gets wife to hastily resign as director of Capital Reach group after The Sunday Leader speaks to him

The Sunday Leader in possession of Agency Agreement between Fernando and Questnet

Parliamentary Select Committee to probe Nivard in the offing

By Sonali Samarasinghe

Amid calls for a paliamentary inquiry into his appointment, Governor, Central Bank, Ajith

Roshini Cabraal – A director and chairperson of Capital Reach Holdings up to June 30, 2006, Central Bank Governor Ajith Nivard Cabraal.
(Below the picture of Roshinis’) The document of Company search reveals Roshini’s resignation date
Parliamentarians call for Select Committee to probe Cabraal’s appointment as governor
And Agency Agreement between Anura Fernando and Questnet, dated December 3, 2004, are in the picture

Nivard Cabraal has not only quashed the investigations into suspected pyramid marketers Gold Quest in September but also disbanded the entire Special Investigations Unit (SIU) and transferred all the investigators to innocuous departments in the bank.   

What is more shocking and incriminates Cabraal further, is that it was just as his wife Roshini Sunethra Cabraal, who was up until June 30, a Director of Capital Reach Holdings Pvt. Ltd., Capital Reach Credit Pvt. Ltd. and Capital Reach Leasing Pvt. Ltd., was to be interrogated by the SIU team that the hurried orders came to have the investigation quashed.

Roshini resigns on cue

Not only that, Cabraal, had her resign as director of all these companies on June 30, 2006, the very day The Sunday Leader first called him to question him regarding the matter. Our first article on GoldQuest and Nivard Cabraal’s connection was published on Sunday, July 2.

Earlier Cabraal had made his wife a Director of these companies with effect from November 26, 2005 in his place after he  resigned, in order to take up more lucrative posts in government following Rajapakse’s Presidential victory.

In an interview with The Sunday Leader on June 30 he said on record as follows:

Q: Isn’t Capital Reach Credit Limited a family concern?

A: I am a minute shareholder. I have a few shares. My wife is a director.

However in perhaps one of the most hasty and unwise moves Cabraal has made, he panicked and got his wife to resign from Capital Reach Holdings, Capital Reach Credit and Capital Reach Leasing with effect from June 30, 2006, that is the very day this newspaper first spoke to Nivard and the very day he was intimated of the fact that The Sunday Leader was on his trail.

On July 28, 2005  he then transferred 100,000 shares in the name of his cousin Damien Amal Cabraal of No.5A, 36th Lane, Colombo 8

Anura Fernando, agent for GoldQuest had in one of his numerous statements to the SIU brought up the name of Roshini Cabraal and Capital Reach Holdings.  Fernando earlier denied to this newspaper he was an agent for GoldQuest pretending he did not know what we were talking about. However this newspaper is now in possession of the agency agreement appointing Fernando its agent. (See elsewhere on this page for copy of the agreement)

Cabraal recalls team

Cabraal gave orders stopping files which allegedly included incriminating evidence against him in statements and Central Bank reports, en route to the Attorney General’s Department and asked the officers to immediately return to the Central Bank.

Ayesh Ariyaratne ,legal officer, Central Bank Special Investigations Unit together with two others from the unit were on August 29, 2006 taking the files to the Attorney General’s Department to meet Deputy Solicitor General Yasantha Kodagoda when Ariyaratne received a telephone call instructing him to return to base immediately.

It was only about a week before these orders that one of Anura Fernando’s statements had mentioned the name of Cabraal’s wife Roshini. It was following this lead that the unit was preparing to summon Roshini Cabraal for interrogation.

Be that as it may, on the same day, after the team returned having abandoned their trip to the Attorney General’s Department,  Head of the Investigations Unit N.J.S.Abeysinghe sent round an internal memo stating that no further investigation or work should be done on GoldQuest save and except routine matters connected with the court case filed by that company.

Abeysinghe however when contacted by The Sunday Leader was tight lipped and seemed terrified of reprisals at least in demeanour as he hemmed and hawed and prevaricated and refused to comment saying he was transferred to another department and was now doing the work assigned to him at this department.(See box for interview).

When confronted with the fact that he had given a call and recalled the SIU team proceeding to a consultation with the AG, he said The Sunday Leader was wrong but when specifically asked if he was denying the existence of a note and the fact that he gave a call he prevaricated saying he was now not in that department and in a different department.

SIU disbanded by Cabraal

This internal memo was noted and minuted by all seven members of the unit. It was immediately afterward that the unit was disbanded.

The seven members of the unit headed by Deputy Director N.J.S. Abeysinghe included Legal Officer Ayesh Ariyasinghe, Legal Officer Enoka Amarasinghe, Accountants Theja Samarasinghe and one Sanjeewa and three sleuths of the CID specially seconded to investigate GoldQuest – ASP Mevan Silva, Chief Inspector Chandana Silva and IP Serasinghe.

AG asked to intervene

Earlier a deputy governor of the Central Bank wrote to the Attorney General requesting his advice on the GoldQuest matter. Central Bank sources told The Sunday Leader that subsequently officers from the SIU visited Solicitor General C.R. de Silva who after consultation requested the officers to take certain steps with regard to the investigation and to return on a specified date.

It was even as the officers led by Ayesh Ariyasinghe legal officer were returning with all relevant files on August 29 to have an extensive consultation with Deputy Solicitor General Yasantha Kodagoda that the unthinkable happened and they were recalled.

Attorney General’s Department sources confirmed that they in fact had opened a file for GoldQuest and as is routine called the officers for a preliminary consultation. However the officers did not arrive on the scheduled date and nothing further had emanated from the Central Bank.

The Sunday Leader separately spoke to Solicitor General C.R. de Silva who said he would have to call for the files and peruse them before he made any comment as he had been out of the island. 

Meanwhile it is reliably learnt that following the quashed investigation, GoldQuest has commenced operations all over the island again with secret cells mushrooming in remote villages and operatives swarming everywhere with no fear of reprisals from a Central Bank that has been castrated by its own head.

No conscience

While these hasty moves at the very time the investigation was hotting up only served to compound suspicion in the minds of the investigators, Cabraal continued to act sans conscience as he transferred these investigators willy nilly in order to not only break the back of the investigations but also to send the investigators a sinister message of fear and intimidation. A message, given that the Central Bank pays their salary, they took to heart all too well.

But Cabraal not only transferred the Central Bank employees, he also had three top sleuths of the CID specially seconded to work on the GoldQuest investigation thrown out of the Central Bank SIU, by speaking to his friend former IGP Chandra Fernando.

Fernando who was well known even as the head of police to allegedly wine and dine freely with characters of dubious repute was not expected to act with anything less than bad faith.

The three officers ASP Mevan Silva, Chief Inspector Chandana Silva and IP Serasinghe were earlier seconded to the Central Bank Special Investigations Unit by Chandra Fernando no less on the recommendations of the Attorney General.

All this was before Ajith Nivard Cabraal was appointed Central Bank Governor by President Rajapakse for no other reason than that he crossed over from the UNP and had to be given a chocolate coated cookie as a reward.

CID officers kicked out

However on September 13 as reported in The Sunday Leader, just two weeks after any engagement with the Attorney General was nullified by the Governor, the three CID sleuths were recalled by the former IGP in a letter to the Central Bank stating the prevailing situation in the country and lack of personnel complled him to recall the three officers whose valuable services were needed within the CID.

If their valuable services were needed anywhere, it was to monitor the goings on at the Central Bank itself. And that is exactly why Cabraal wanted them out. Not only that, when they were given their marching orders not even the CID Director Sisira Mendis was intimated of the fact inside sources say.

Cabraal’s dismal performance in the UNP cost him a much desired position and he left the ranks to join the more mediocre of the two groups where competition was almost non existent.

Even before Cabraal took office, The Sunday Leader exposed his links to GoldQuest through an elaborate business network he had set in motion and warned that the investigation will be buried if he assumed the governorship.

Cabraal in GoldQuest net

We revealed an all expenses paid trip to Monaco offered to Cabraal and his two sons by GoldQuest in March this year which he had accepted. It was wheeler dealer Anura Fernando, admittedly a long time buddy of Cabraal who did all the paper work for Cabraal when it came to GoldQuest.

For GoldQuest who had strategically identified and cultivated Nivard Cabraal, they couldn’t have had him in a sweeter spot than as governor of the Central Bank. Already the Central Bank investigation was giving them many a headache. Scores of their operatives were being arrested and the alleged illegal operation was being slowly but surely throttled.

The Sunday Leader has extensively dealt with the GoldQuest issue since June this year and we have proved not only that Cabraal and his companies are connected to pyramid schemes which were outlawed by the Central Bank itself but also that he had a business relationship with GoldQuest, a conglomerate under investigation also by the Central Bank.

Anura Fernando

Furthermore his long time buddy Anura Fernando who was seen carousing and revelling with Nivard at his celebratory party at Mount Lavinia Hotel after the presidential election was the point man and agent for GoldQuest in Sri Lanka.

In fact it was Cabraal who took Anura Fernando to meet Mahinda Rajapakse during last year’s presidential campaign to give the campaign a financial helping hand. Anura Fernando when asked by The Sunday Leader did not deny meeting Rajapakse but said he knew Rajapakse long before GoldQuest.

Funnily enough Anura Fernando denied he was the agent for GoldQuest in June when this newspaper questioned him.    “I am not the agent for GoldQuest I don’t know what you are talking about,” he said.

By this time however he had already been questioned and his statement recorded by the Central Bank. In fact the Central Bank was to question him on some 10 separate occasions where Fernando also revealed the names of persons in high places including the wife of Central Bank Governor Roshini Cabraal.

The Sunday Leader is now in possession of the Agency Agreement signed between Rhythm Collections Pvt.Ltd. and Questnet Ltd. appointing Fernando as agent with effect from December 3, 2004.

Agent for GoldQuest

Rhythm Collections was incorporated on September 24, 2004, just three months before Fernando received the agency. (See previous The Sunday Leader articles.) The directors are Nirmal Anura Fernando of No.8 Pelawatte Road, Nugegoda and his wife Estalita Rozabelle Dolores Fernando also of the same address. It was these two who signed the agency agreement. The witnesses to their signatures were K.K.Sathieskumar and H.R.S.A. Karunarathna.

Anura Fernando was to also become the chairman of Ferntea in July. Earlier a 50 percent controlling interest of Ferntea as The Sunday Leader has already revealed in past issues, was bought by Suntex International, a front company for GoldQuest in 2005.

Suntex International Holdings paid Rs. 55,534,109.95 to Ferntea  Chairman Jayantha Fernando for 48% of his shares in Ferntea. Ferntea now proceeded to clear goods on behalf of GoldQuest using its name and good offices with the Customs Department.

On another transaction details of which were revealed in The Sunday Leader of July 16, Ferntea owed Jayantha Fernando a sum of Rs. 18 million. However no payment was forthcoming. In the meantime on or about May 10 or 15 this year a huge consignment of gold coins, watches and other products arrived at the airport on behalf of Suntex International. The value including duty and VAT was approximately Rs. 45 million.

Anura made chairman of Ferntea

Usually it was Jayantha Fernando who would do the clearing on Gold- Quest’s behalf. Therefore he now obtained the original clearing documents duly stamped by the bank and paid a sum of Rs. 22-23 million for the goods. However he did not clear the goods by paying duty and VAT of Rs. 22 million.

Instead he told Ferntea now controlled by Suntex International that if he were not paid his Rs. 18 million he would hold on to the original documents and not clear the consignment.

Ferntea immediately summoned and emergency board meeting and Fernando was sacked as chairman of Ferntea in the first week of July this year and Anura Fernando, the GoldQuest agent and CEO of Ferntea was appointed by Suntex and now took over as chairman.

Following The Sunday Leader  Exposes all these matters had been revealed to the Central Bank SIU in a number of statements taken from Anura Fernando, Jayantha Fernando and various others connected thereto.

Questnet

Quesnet (see previous The Sunday Leader articles) is actually GoldQuest, a company incorporated in the territory of the British Virgin Islands as an international business company on September 16, 1998. On November 4, 2003 GoldQuest International changed its name to Questnet Ltd. The major shareholder in Questnet is Quest International better known as QI.

Fanfare to no avail

Indeed it was with much fan fare that the government heralded an investigation into the activities of pyramid schemes spending millions of rupees by way of advertisements in newspapers to warn the public of the dangers in falling prey to such schemes.

The controversial network marketing scheme, was deemed illegal in Sri Lanka in early 2005 after the scam drained an estimated US$ 15 million in foreign exchange from the country during the 18 month period it was in operation. The Central Bank then rushed through amendments to the Banking Act, banning pyramid style schemes.

Even seminars were conducted throughout the country to caution the public but little did the unsuspecting public know that the high and mighty themselves had a stake in such schemes. Even legislation was passed in February 2005 to outlaw the practice.

This newspaper with documentation showed that GoldQuest, moving to a grand and systematic strategy, was not only trying to take over the National Development Bank through the country’s stock exchange by resorting to subterfuge and false affidavits but they were also trying to gain control of several of the country’s key financial vertebrae such as the EPF, ETF and the lucrative Mahapola accounts through a network of front companies including companies belonging to Central Bank Governor Ajith Nivard Cabraal.

Background

Nivard Cabraal’s company Capital Reach Holdings was bought into by Suntex International, a front company for GoldQuest. Capital Reach Holdings interestingly enough was only incorporated on April 21, 2005 just four months after Anura Fernando gained agency of GoldQuest in December.

Parliament to probe Nivard

Just three weeks ago on October 20, a large number of UNP MPs called for a select committee of parliament to inquire into the suddent resignation of former Governor Central Bank, Sunil Mendis and the appointment of Ajith Nivard Cabraal.

The committee if appointed would consist of 21 members and would have extensive powers inter alia to summon before it any person or require any person to submit any document or record.

It is in this backdrop that Cabraal’s disgustingly blatant moves to quash the investigation and quell the zeal of the investigators and even dupe the Attorney General’s Department by spiriting away files meant to be discussed with the AG  should be viewed. It is President Rajapakse who appointed Cabraal. Therefore his actions will only serve to tarnish the image of the President and his government. If the President does not want to become more unpopular than he already is only one year into his presidency he should learn to discipline his own men.

Abeysinghe beats about the bushWhen The Sunday Leader called Abeysinghe he sounded frightened for his job. However other sources at the Centrtal Bank said that Abeysinghe himself had been a vigilant officer who had collected much vital information on GoldQuest before Nivard started to interfere. Excerpts:Q: There is a note sent by you to your department members directing them to stop all work on the GoldQuest investigation save routine court work on the orders of the Governor of the Central Bank of Sri Lanka.A: Now I am in a different department. What are you going to achieve by publishing that?Q: It is on the orders of the governor that you were acting isn’t it Mr. Abeysinghe?

A: (long silence) er……..

Q: I also very reliably learn that this move was made because Roshini Cabraal’s name came up in one of Anura Fernando’s statements

A: Now these matters are with different departments no

Q: It is not in any department at all now Mr. Abeysinghe isn’t that right? It has been quashed.There is no SIU isn’t it? Even you are in another department. You were the head of that unit?

A: I don’t.know (long silence)

Q: You were transferred and not even been given the same rank

A: No that is not correct no

Q:You are in the same rank?

A: (long  silence) ..There is nothing like that the information you have is. I mean .I just can’t believe.what you are telling is totally wrong.

Q: You mean to say this note is a forgery?

A: Yaa…nothing like that happened no

Q: Are you saying that the internal memo you sent to the others in the department is a forgery?

A: I don’t know, I can’t comment on these things no.I mean nothing has happened like that, I mean

Q: Do you accept this note or deny it because the other members have noted it in writing as having seen the contents therein?

A: (Long Silence) I don’t know what you are talking about.er ..you know this is.. I mean you are..

Q: The note definitely says to stop work on the orders of the governor except routine court work and the members of your department have signed

A: This is what..I mean..er. when a government officer works in a place he is.. I mean responsible for the work he is doing there. Once the officer is transferred that officer has to do the work in that new place. That is all I can say. That is the government ER, FR everything. It is always like that because government officers are transferable. So I don’t know why you are asking me or calling me, I just cannot understand.

Q: You are transferred only because the SIU closed?

A: No no who said… you are drawing the conclusions you are telling the things and..it is not correct, it is unfair. It is not fair by me also.

Q: Okay Mr. Abeysinghe you are saying it’s not disbanded correct?

A: Now I am in the International Operations Department and now I am doing this work. You also must allow officers to work in good faith 

Q: It would seem that your superior officers are not working in good faith; it is they who disbanded the SIU

A: No no …I am not contributing to what you are telling.

Q: Is the SIU disbanded?

A: That you can ask from whatever source you have but now I am in a different department

Q: And this note – are you denying it or not? If you are I will certainly say that

A: (Long silence). I am in a different department

 

 

 

 

 

 

Published 17 SEPTEMBER 2006 in The Sunday Leader

http://www.thesundayleader.lk/archive/20060917/spotlight.htm#Cabraal

Cabraal has the last laugh

The death of another national  investigation

 By Sonali Samarasinghe

Last Wednesday (13) marked the death of another national investigation which would have

IGP Chandra Fernando, Invitation by QI sent to Cabraal at the Central Bank and Cabraal referred to as ‘Governor’ three months before his appointment and Nivard — keeping a straight face for the public

saved the nation billions of dollars in foreign exchange and possibly Sri Lanka’s economy from being devoured by an international ring of  multi level marketers.

It was with much fanfare that the government heralded an investigation into the activities of pyramid schemes spending millions of rupees by way of advertisements in newspapers to warn the public of the dangers in falling prey to such schemes.

The controversial network marketing scheme  was deemed illegal in Sri Lanka in early 2005 after the scam drained an estimated US$ 15 million in foreign exchange from the country during the 18 month period it was in operation. The Central Bank then rushed through amendments to the Banking Act, banning pyramid style schemes. 

Even seminars were conducted throughout the country to caution the public but little did the unsuspecting public know that the high and mighty themselves had a stake in such schemes. Even legislation was passed in February 2005 to outlaw the practice.

Such was the zeal of the authorities that on the recommendation of the Attorney General, the Inspector General of Police Chandra Fernando no less, seconded three top sleuths from the Criminal Investigations Department to the Special Investigations Unit of the Central Bank to crack the mafia operating the schemes and foisting them on an unsuspecting and gullible public.

The three officers of the CID who were seconded to the Central Bank were ASP Mevan Silva, Chief Inspector Chandana Silva and IP Weerasinghe who got about their task like eager beavers and systematically began to unearth the massive ring that was operating the outlawed pyramid schemes.

All that was before President Mahinda Rajapakse’s blue eyed pet – Ajith Nivard Cabraal ascended the throne at the Central Bank.

We told you so

Even before Cabraal took office The Sunday Leader exposed his links to the pyramid scheme operators through an elaborate business network he had set in motion and warned that the investigation will be buried sooner than later if he assumed the governorship.

Indeed this newspaper even revealed an all expenses paid trip to Monaco offered to Cabraal and his two sons by GoldQuest in March which he had accepted. However due to extraneous reasons he could not keep his date in Monaco.

Ironically at that time when Sunil Mendis was still the governor of the Central Bank and Cabraal’s name had not even publicly surfaced as a possible successor, Quest International alias GoldQuest was to send his invite to the Central Bank describing him as  “governor.”

And now just a little over two months after Cabraal took office as Central Bank Governor, the three CID officers have been thrown out on their collective ear on a direct order by the IGP in consultation with the Central Bank.

At the time of their appointment the three officers were seconded for two years to conclude their investigations but hardly a year has lapsed before they were given the marching orders.          

Interestingly they were given the marching orders and asked to report back to the CID without any intimation even to the CID Director, Sisira Mendis inside sources said.

In a letter to the Central Bank of Sri Lanka the three CID officers were recalled by IGP Fernando stating the prevailing situation in the country and lack of personnel compelled him to recall the three officers whose valuable services were needed within the CID. 

Several arrests

However The Sunday Leader reliably learns that the CID officers were in fact perhaps doing their job too well. When the officers were first seconded, their job was to raid illegal money changing shops and deal with small time financial fraud. However with an increased awareness of pyramid schemes and multi level marketing the trio started investigating several of these schemes and making several arrests.

It was about this time The Sunday Leader learns that the name of Ajith Nivard Cabraal started to appear in several of the investigations. By mid year Cabraal had already taken over as Central Bank Governor even though he had earlier, as Secretary, Plan Implementation, occupied the Central Bank using it as his office.  

The Sunday Leader called the Central Bank Special Investigations Unit only to be hastily  and fearfully told that the officer was busy.

Considering that it was in fact the Central Bank itself that commenced investigations into pyramid schemes even engaging the media to highlight the dangers of such schemes to the public, the newly acquired fearful attitude of the Central Bank SIU stood out like a tall poppy.

 Under intense investigation

The Sunday Leader earlier ran a series of articles in order to assist the Central Bank in its investigations of GoldQuest and other like pyramid schemes that have been under intense Central Bank investigation by the Special Investigations Unit.

Moving to a grand and systematic strategy, this newspaper with documentation showed that not only was GoldQuest trying to take over the National Development Bank through the country’s stock exchange by resorting to subterfuge and false affidavits but they were also trying to gain control of several of the country’s key financial vertebrae such as the EPF, ETF and the lucrative Mahapola accounts through a network of front companies including companies belonging to Central Bank Governor Ajith Nivard Cabraal.

Lucrative government post

Nivard Cabraal’s company Capital Reach Holdings was bought into by Suntex International, a front company for GoldQuest. Nivard on November 26, 2005 resigned from the board of Capital Reach Holdings to take on lucrative government posts but installed his wife Roshini Cabraal in his place as chairperson.

GoldQuest in the meantime having palavered the Governor in luxurious style, has now requested the Appeal Court to direct the Central Bank to determine if GoldQuest’s marketing plan is against Sri Lanka’s banking laws.

The firm has also asked for a writ preventing the bank from prosecuting persons connected with GoldQuest until a determination is made regarding the legality of its marketing plan and for interim relief preventing the Central Bank from prosecuting or seizing its products until the appeal hearing is concluded.

Laws passed

Funnily enough, the Central Bank has already arrested several GoldQuest activists under an anti-pyramiding clause in the said Banking Act after the law was passed in parliament in February of last year.

 The Banking Amendment Act No 2 of 2005 certified on February 10, 2005 clearly sets down the law on illegal marketing scams. At least 10 local GoldQuest upliners recruited by the QI group have been arrested – all of them young and vulnerable, the oldest being only 21 years of age.

GoldQuest had filed the petition in the Appeal Court under the name of Questnet International citing the Governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal, the other members of the Monetary Board, senior officials of the bank’s special investigation unit and Sri Lanka’s Inspector General of Police as respondents.

 Call for information

Cabraal is also the head of the Monetary Board. Earlier, Deputy Director, Central Bank Special Investigations Unit, N.J.S. Abeyasinghe admitted to The Sunday Leader the Monetary Board would have access to details of the investigation and had the right to call for any information.  

It is in this backdrop that IGP Fernando should have been doubly careful. He should have exercised a modicum of caution before he set about recalling the officers even for innocent reasons given the alleged dealings of Cabraal with businessmen linked to the outlawed schemes.

Such a move even if innocent will serve only to detract from the appearance of a transparent and impartial investigation and create suspicion of a cover up because the investigation was getting too close for comfort. 

Published in The Sunday Leader 23 JULY 2006

http://www.thesundayleader.lk/archive/20060723/spotlight.htm

Conflict of interest and the Gold Quest saga

By Sonali Samarasinghe

If you thought the evidence on Gold Quest we provided last week was dynamite, then today

A company search of CopyQuest in Malaysia establishes Gold Quest Chief Vijayeswaran to Jagaiah, CopyQuest company search shows the same address of Jagaiah as that given in his affidavit to NDB, Capital Reach Holdings Limited minutes of 11-04-2006 with excerpts on decision to bid for the management of EPF, ETF, Mahapola etc. , Jagaiah’s affidavit to NDB which has the same address as his Copy Quest address and Nivard Cabraal are in the picture

you’ll be blown out of your seat.

 Evidence has now come to light that GoldQuest and A.P.Jagaiah have in fact acted in concert to buy shares of the National Development Bank with company search records now in our possession showing a direct link between Jagaiah, Goldquest and Vijayeswaran, the monarch of the Quest group. 

The question is this. The NDB is a public quoted company. What action will the Securities Exchange Commission (SEC) now take to ensure that GoldQuest alias Quest International does not take over one of the country’s assets through the Colombo Stock Exchange in contravention of banking laws?

The more telling question is therefore also this. For ironically, while Ajith Nivard Cabraal ostensibly a friend of the GoldQuest team sits on the Central Bank Governor’s seat, his sister Shiromi sits as a member on the SEC Board.

Indeed it was through Shiromi, who knew Mahinda Rajapakse during Law College days, that Nivard first met the man who was to be President.

Meanwhile, the regulator whether it is the Central Bank, the Securities Exchange Commission, the Colombo Stock Exchange or the Registrar of Companies must be able to act independently in the public interest and in the interest of the long term economic stability of the nation.

 All in the family

Funnily enough the regulators themselves are curiously if uncomfortably interconnected. The SEC Chairman is of course Gamini Wickremesinghe, nominated by Cabraal to replace Dr. Dayanath Jayasuriya who was a nominee of Treasury Secretary P.B.Jayasundera. Shiromi Wickremesinghe, Nivard’s sister also sits on the board of the SEC. Apart from Shiromi, D.K. Hettiarachchi, Registrar of Companies is also a SEC member as is Ranee Jayamaha of the Central Bank.

While Hettiarachchi and Cabraal go back a long way, Jayamaha may be compelled to conform to the wishes of her boss.Whether she is made of sterner stuff, we will have to see.

The Chairman of the Colombo Stock Exchange is Nihal Fonseka, CEO of the DFCC Bank and NDB’s primary competitor. Fonseka is also, hold on to your hats, Nivard’s cousin.

Jagaiah further exposed

In the past weeks The Sunday Leader revealed that GoldQuest in their own name bought 10% of the shares of NDB. Apart from that Magandran Rajadurai, Director, International Operations for QI, operating from 5/F Mass Mutual Tower, 38 Gloucester Road, Hong Kong also bought 4.9 % of NDB Bank Ltd. in his own name.

The NDB and NDB Bank Ltd were later merged in August 2005. As at present the GOSL owns 21% of the NDB shares. Of this 21 percent the Bank of Ceylon owns, 14% with the Secretary Treasury, Employees Trust Fund (ETF) and Employees Provident Fund (EPF) holding the rest. GoldQuest in its own name as per the NDB Annual Report 2005 holds 10%. For now recall that The Sunday Leader revealed the following with regard to the NDB:

(1) That according to the Companies Act and Commercial Banking Act a single shareholder cannot hold more than 10 %. It would thus be illegal to hold shares in concert under different names.

(2) That while GoldQuest was buying into NDB, interestingly enough Ravi Thambaiah, owners of Renuka Hotels, Cargo Boat Dispatch etc. were also buying into NDB. In fact on April 26, 2006 Ravi was made a director of the board by virtue of the fact that he was a substantial shareholder. The Renuka Group has 9.68 %. Also interesting is that Ravi Thambaiah is the brother in law of Nivard Ajith Cabraal, Governor of the Central Bank and Chairman of the Monetary Board.Nivard himself was an advisor and director of the Renuka Group.

(3) That the NDB has refused to register the shares of three others on suspicion that they are GoldQuest fronts.

(4) The first of these front names is one A.P.Jagaiah with 9.3% shares which the NDB has refused to register.

(6) The second is Fast Gain International Ltd. with 9.9% shares

(7) And Credit Suisse which has bought a further 9.5% shares through nominee accounts.

Jagaiah’s big lie

Last week The Sunday Leader revealed Jagaiah’s big lie and how he has attempted to dupe the Government of Sri Lanka, the Central Bank regulator and the National Development Bank by even swearing to a false affidavit. (See box)

 In his affidavit dated January 27, 2006 he says inter alia:

“I, A.P.Jagaiah (NRIC No.630215-11-5099) of No. 18 Jalan SG 9117 Taman Sri Gombak, 68100 Batu Caves, Selangor Malaysia being a Malaysian citizen and of full age do affirm/swear and state as follows: …

“I further state that I have no direct and/or indirect association and/or relationships of whatsoever nature with GoldQuest International Limited. I am unaware of parties connected to or with the said GoldQuest International Limited and I am also unaware of who the other members of the NDB are. I am also unaware of other persons with direct or indirect association and/or relationships with NDB.”

Smoke screen

In an attempt to create an elaborate smoke screen A.P. Jagaiah calls himself as such to the NDB while going as J.Anand Prakash when dealing in GoldQuest matters. J.Anand Prakash (A.P.J) is in fact the director of Copyquest SDN BHD having its office at No.12, Jalan TIB 1/1, Bolton Industrial Park, 68100 Batu Caves, Selangor Daru Ehsan, Malaysia. Copy Quest as we proved last week is a part of the Quest International Group. (See box)

GoldQuest, Questnet and Quest International are all aliases while Suntex International Holdings Limited is the front company for GoldQuest operating in Sri Lanka. It is through Suntex that GoldQuest bought into the companies owned and managed by Nivard Cabraal and later his wife Roshini.

That J. Anand Prakash alias A.P Jagaiah is inextricably linked to GoldQuest is now abundantly clear.

 Smoked out

The company search proves irrefutably that they are one and the same. (See box) It says Anand Prakash A/L Jagaiah and Jaganathan of No.18, Jalan 9/17 Seri gombak 68100 Batu Caves. Note the address given to the Companies Commission of Malaysia by J. Anand Prakash and the address given in the affidavit sworn to by A.P.Jagaiah to NDB. It is one and the same. But one need not look so far to find prima facie evidence of his  deception. Just look at the list of shareholders (see box)

(1) Vijayeswaran alias S.Vijayaratnam, the Malaysian national who controls Goldquest owns 199.999 shares of CopyQuest SDN BHD

(2) Anand Prakash A/L Jagaiah alias Jaganathan owns one share.

Therefore now A.P.Jagaiah alias J. Anand Prakash not to mention GoldQuest, stand exposed for acting in concert. And Jagaiah has also got caught lying in a sworn affidavit.

Conflict of interest

It now remains to be seen if the country’s regulators so clearly standing in conflict will act now in the public interest. The main mission of the SEC is to promote, maintain and develop a securities market that is fair, efficient, orderly and transparent. But will the SEC turn a blind eye to the GoldQuest multinational conglomerate under investigation by the Central Bank but attempting to swallow the nation’s economy through the Stock Exchange.

It’s own website states that the Securities and Exchange Commission of Sri Lanka (SEC) was established for the purpose of regulating the securities market in Sri Lanka; to grant licences to stock exchanges, stock brokers and stock dealers who engage in the business of trading in securities; to set up a Compensation Fund and for matters connected therewith or incidental thereto. 

The SEC now issues licences to the Stock Exchange, Stock Brokers / Dealers, Unit Trust Management Companies and registers Underwriters, Margin Providers, Credit Rating Agencies, Investment Managers and Securities Clearing Houses.

It is in this respect that the SEC must be doubly careful.  Alarming to note is that GoldQuest itself has ideas to take over the EPF and ETF and the Mahapola accounts. (See last week’s Sunday Leader.)

Board minutes

The Sunday Leader had already established that Nivard Cabraal’s Capital Reach Holdings was bought into by Suntex International which is of course a front company for GoldQuest. Nivard on November 26, 2005 resigned from the board of Capital Reach Holdings to take on lucrative government posts but installed his wife Roshini Cabraal in his place as chairperson.

On April 11, 2006, at 9.30 am the board of directors of Capital Reach Holdings met at No. 1, Lake Crescent, Colombo 2. By this time Nivard Cabraal had already agreed to be taken on a luxurious trip to Monaco courtesy Quest International. Roshini Cabraal herself would have known that her own two sons were also scheduled to make the trip later in May. In fact it was her company Cabraal Consulting Group that on April 2 sent the names of her husband and children to Anura Fernando to prepare for the trip. (See previous Sunday Leader newspapers.)

Anyway present at this meeting were Roshini Cabraal, Nivard’s wife as chairperson, Mayura Fernando managing director, Daya Muthukumarana, S.C.Weerasooria and of course Anura Fernando the GoldQuest agent in Sri Lanka and director of Rhythm Collection Pvt Ltd. who were all directors of the company. The minutes stated as follows inter alia: (See box)

MINUTE NO.2006/03/03:

PORTFOLIO MANAGEMENT (B/P 2006/03//01)

“The board was also informed that the projections contained in the paper were based on the discussions held with Mr. Anura Fernando on the portfolio of the foreign client represented by Mr.Anura Fernando (whilst negotiations were in progress in regard to the fee) and on the assumption that the totality of the funds would roll over twice every year.

“The board deliberated further on the matter and noted that – foreign clients should pay for the purchased direct to the broker through SIERA Accounts and therefore passive fund management referred to in the paper would not be applicable to foreign clients. Engaging in portfolio management as recommended by the managing director could be used as an entry point to position the company in the field of fund management and create a track record, to bid for the management of larger funds such as EPF, ETF, Mahapola etc.

The board decided that;

(i) A company under the name of Capital Reach Portfolio Management (Private) Limited (CRPM) be incorporated as a subsidiary of the company to engage in portfolio management business as outlined in the paper with an issued and paid up share capital of Rs.1,000,000.

(ii) Staff for CRPM be recruited on a need to have basis and initially, services of the staff attached to Mr.Anura Fernando be obtained on payment.

(iii) An application be made to the SEC to register CRPM as an investment manager. Mr. Anura Fernando disclosed his interest in the arrangement referred to in paragraph (ii) above, which was noted by the board.”

Anura Fernando’s foreign interest was of course the fact that he was the GoldQuest agent in Sri Lanka. And he was seeking through Capital Reach to control for his foreign account the funds of such local giants as the Mahapola, EPF and ETF.

 However will the SEC which states  in its own website they are the regulators  of fund managers now independently investigate even these minutes?

BOX

Nivard, let’s have a chat

The Sunday Leader dispatched a letter seeking a face to face interview with Nivard Ajith Cabraal, Central Bank Governor – a copy of which was also sent to him by email and fax.

The letter stated Thus.

Dear Mr Cabraal,

Further to the interview we had with you which was published in The Sunday Leader of June 4, we now request a more detailed interview with you where we may be able to put to you any questions of public interest we may have on the ongoing matter of GoldQuest and your involvement with the company and also on any other matters arising therefrom.

We are unable to appreciate your bland statements to other newspapers, which seek to avoid the issue and deal with extraneous and trivial matters of little public interest or value while avoiding the various issues brought up by our newspaper which we have based on documentation in our possession.

Neither can the public accept a blanket statement that your dealings will be above board considering that you do not seem to have acted above board in your dealings with GoldQuest and Quest International.

If you are willing to grant us an interview where we may pose questions to you which you may then obviously answer as you wish, we can assure you that your answers will not be truncated or edited for want of space and you will be afforded as much space as is needed.

Thank you

Sincerely

The Sunday Leader 

Published in The Sunday Leader 16 JULY 2006

http://www.thesundayleader.lk/archive/20060716/spotlight.htm

Documentary proof of attempt to take over NDB surfaces

Nivard’s double act and double dealing of Gold Quest  

By Sonali Samarasinghe

Incontrovertible new evidence now in our possession has revealed a master plan by GoldQuest to take over the economy of this country.

False affidavits, Swiss Bank accounts and numerous front shareholders accounts to take over

In the right place at the right time but is he the wrong man – Cabraal taking over as Central Bank Governor

control of the NDB reveal that GoldQuest has not only acted mala fides but is also involved in the mother of all conspiracies by a multinational conglomerate to take over a third world economy.

That there is definite bad faith in their dealings giving rise to suspicion about their motives is made amply clear by an affidavit forwarded to the NDB by A.P. Jagaiah, a 9.3%  front shareholder for GoldQuest (GQ) in the NDB. Jagaiah swears in the affidavit he has no connection to GQ and calls for his shares to be registered.

However our investigations and even Jagaiah’s own visiting card have  proven irrefutably that Jagaiah is not only a front for GQ but GQ has deliberately engaged in bamboozling the Central Bank regulator to hide the fact they are acting in concert together with Jagaiah (See box).

Another front busted

Credit Suisse is another front for GoldQuest that has bought up 9.7% NDB shares. However even stock brokers deny that Credit Suisse is a front for GQ. The Sunday Leader now provides the public, written proof that Credit Suisse is acting for GQ (See box).

Grand plan

Moving to a grand and systematic strategy, documentation shows that not only is this

The Copy Quest web site which identifies itself as part of Qi, Copyquest visiting card of A. P. Jagaiah given as J. Anand Prakash and address which reveals the big lie, Affidavit of A. P. Jagaiah given to NDB denying any connection to GoldQuest, Vijayeswaran’s letter to Credit-Suisse Bank in Switzerland on purchase of NDB shares , Letter confirming opening of account for transferring of money and Ferntea statement of account from Standard Chartered showing Rs. 49.54m deposit are in the picture

multinational conglomerate, trying to take over the National Development Bank through the country’s stock exchange by resorting to subterfuge and false affidavits (see box), but is  also trying to gain control of several of the country’s key financial vertebrae such as the EPF, ETF and the lucrative Mahapola accounts through a network of front companies including family companies belonging to Central Bank Governor Ajith Nivard Cabraal (see previous issues of The Sunday Leader).

This is revealed in several confidential documentation and minutes of board meetings as recently as May 2006, held behind closed doors, proof of which are now in The Sunday Leader’s possession.

That the GQ group also known as Quest International (QI) and Quest Net(see previous The Sunday Leader issues) had a stranglehold on Cabraal and was determined to have their man at the head of the all powerful Central Bank is also amply evident.

The Sunday Leader is also in possession of the names of key local leaders GoldQuest likes to call LVTC Leaders (see box) who have been tasked with spreading the financial cancer to the rural areas. These leaders are the key local operators who would manage the scheme at the grass root level to lure in as many recruits as possible. They are the equivalent of the political district organiser.

GoldQuest is even now operating from the Rhythm Collection Pvt. Ltd. office on the 4th floor of No.209/10, Union Place, Colombo 2. Rhythm Collection as established by The Sunday Leader previously is owned by Anura Fernando who is the local agent for GQ/QI.

GoldQuest consignments are now stashed away in an inner room heavily guarded by security guards from KayJay Security Services.

 Clandestine methods

Earlier GoldQuest, when banned by the Central Bank in 2005, resorted to more clandestine

Anura Fernando’s fax on Qi letterhead dated March 28th to Jeremy Guessoum, the Business Development Manager of Qi confirming he will be travelling with four others including “Governor of the Central Bank of Sri Lanka” and “Governor’s two sons” for the Qi-F1 Monaco Business Partners Meeting. The public were informed of Cabraal’s appointment only in June. and The second page of Anura Fernando’s letter where reference is made to Cabraal as ‘Governor’ invited to attend Qi-F1 Monaco Business Partners Meeting

methods of using several upliners, independent representatives and promoters who were sent into the rural areas in Sri Lanka to secretly lure the more vulnerable sections of society.

Reliable sources say that poor farmers are now falling ready prey to the get rich quick scheme. Sri Lankan farmers have always been a vulnerable section of society with a high rate of suicide among them. Sources reveal that farmers are now even selling off their tractors in a bid to get rich quick GoldQuest style.

Gold Quest, psychic?

Shockingly, months before even President Mahinda Rajapakse perhaps, knew that Cabraal would be appointed head of the Central Bank, GoldQuest knew. Anura Fernando the front man for GoldQuest in Sri Lanka, in a fax reply dated March 28, 2006 to Quest International referred to Nivard Cabraal as the “Governor of the Central Bank of Sri Lanka” (see box).

Mind you this is three months before Cabraal was appointed and long before the hapless incumbent, Governor Sunil Mendis, probably even knew what fate lay before him.

In an official fax reply document carrying the letterhead of QI, Anura Fernando of Rhythm Collection (Pvt.) Ltd. responded to Jeremy Guessoum, Business Development Manager of QI as follows: 

(1) That he confirmed he would attend the QI-F1 Monaco Business Partners Meeting 2006.

(2) That he will be travelling with four persons.

(3) That the names of the four persons would be in the ‘attached list.’

(4) That they would arrive in Nice on May 25, 2006 and depart on May 29, 2006.

QI ‘appoints’ Nivard Governor CB in March 

The attached list was included and stated thus -“Governor of the Central Bank of Sri Lanka” – Nivard Ajith Leslie Cabraal, the “Governor’s two sons” Chatura Vishvajit Cabraal and Charith Jeewaka Leslie Cabraal on a room sharing basis and Anura Fernando’s wife Estellita Rozabelle Dolores Fernando, co director of Rhythm Collection Pvt. Ltd.

Note well that the attached list sent to QI by its front man in Colombo and admittedly Nivard Cabraal’s long time buddy, carried the legend ‘Governor of the Central Bank of Sri Lanka’ with reference to Nivard and ‘Governor’s two sons’ in reference to his two male offspring (see box). And that was on March 28, 2006.

Taking over the NDB

The Sunday Leader has already revealed that Gold Quest in their own name bought 10% of the shares of NDB. Apart from that Magandran Rajadurai (see box), Director International Operations for QI, operating from 5/F Mass Mutual Tower, 38 Gloucester Road, Hong Kong also bought 4.9 % of NDB Bank Ltd. in his own name. The NDB and NDB Bank Ltd were later merged in August 2005.

As at present the GOSL owns 21% of the NDB shares. Of this 21 percent the Bank of Ceylon owns, 14% with the Secretary Treasury, Employees Trust Fund (ETF) and Employees Provident Fund (EPF) holding the rest. GoldQuest in its own name as per the NDB Annual Report 2005 owns 9.9% of NDB shares and is the second largest shareholder next to the Bank of Ceylon.

GQ may control EPF, ETF

Alarming is the fact that GoldQuest has already made plans to take control of the EPF and ETF funds giving them control of the GOSL share in NDB as well. But more of that anon.

For now recall that The Sunday Leader revealed the following with regard to the NDB:

(1) That according to the Companies Act and Commercial Banking Act a single shareholder cannot hold more than 10 %. It would thus be illegal to hold shares in concert under different names.

(2) That while GoldQuest was frantically buying into NDB, interestingly enough Ravi Thambaiah owners of  Renuka Hotels, Cargo Boat Dispatch etc. were also buying into NDB. In fact on April 26, 2006 Ravi was made a director of the board by virtue of the fact that he was a substantial shareholder. The Renuka group has 9.68 %. Also interesting is that Ravi Thambaiah is the brother in law of Nivard Ajith Cabraal, Governor of the Central Bank and Chairman of the Monetary Board.           

(3) That the NDB has refused to register the shares of three others on suspicion that they are GoldQuest fronts.

(5) The first of these front names is one A.P.Jagaiah with 9.3% shares which the NDB has refused to register.

(6) The second is Fast Gain International Ltd. with 9.9% shares

(7) And Credit Suisse which has bought a further 9.5% shares through nominee accounts.

Jagaiah a GoldQuest front

The Sunday Leader now has irrefutable proof that A.P.Jagaiah is in fact a front for GoldQuest. Not only that, this Jagaiah together with the Quest Group has attempted to dupe the Government of Sri Lanka, the Central Bank regulator and the National Development Bank by even swearing to a false affidavit.

In his affidavit dated January 27, 2006 he says inter alia:

“I, A.P.Jagaiah (NRIC No.630215-11-5099) of No. 18 Jalan SG 9117 Taman Sri Gombak, 68100 Batu Caves, Selangor Malaysia being a Malaysian citizen and of full age do affirm/swear and state as follows:

“I state I purchased 1,935,000 (one million nine hundred and thirty five thousand) shares in the National Development Bank Limited on or about November 11, 2005 and subsequently increased to 3,353,300 (three million three hundred and fifty three thousand three hundred) shares as of the date hereof through the Colombo Stock Exchange.

“I further state that I have no direct and/or indirect association and/or relationships of whatsoever nature with GoldQuest International Limited.

“I am unaware of parties connected to or with the said GoldQuest International Limited and I am also unaware of who the other members of the NDB are. I am also unaware of other persons with direct or indirect association and/or relationships with NDB..” (See box for full affidavit)

By the way A.P in Jagaiah stands for Anand Prakash.

Trying to take NDB for a ride

Now comes the subterfuge. Gold Quest used a simple ploy by secret agents throughout the ages and even by JVP elements in the terrible late          ’80s.  Just as for instance JVP lawyer Wijedasa Liyanarachchi who later died in police custody would call himself L.Wijedasa in the court house, and W. Liyanarachchi in the JVP cell, so did A.P. Jagaiah call himself as such to the NDB while going as J.Anand Prakash when dealing in GoldQuest matters.

J.Anand Prakash (A.P.J) was in fact the director of Copyquest SDN BHD having its office at No.12, Jalan TIB 1/1, Bolton Industrial Park, 68100 Batu Caves, Selangor Daru Ehsan, Malaysia.

Note the similarity in his stated residential address and his official one.

Now it becomes interesting. On the card is a URL www.copyquest.com.my. Go to  that URL and A.P.J. is exposed. For the home page clearly says that Copy Quest is part of the QI group. (see box for visiting card of A.P.Jagaiah alias J. Anand Prakash.)

Earlier in fact Jagaiah’s name did appear in the 50 largest shareholder list of the NDB on November 14, 2004. But a month later in December 2004 the NDB now doing due diligence in terms of the banking law took his name off the list on suspicion of being a GoldQuest front. Hence the affidavit denying any connection.

On December 12, 2005 the NDB in writing requested Jagaiah to swear an affidavit he had no connection to GoldQuest. On January 4, 2006 Jagaiah wrote in feigned indignation that NDB had no right to question him under the law and stated without prejudice that he in fact possesses the ultimate interest in the shares and that he did ‘not have a direct association either with GoldQuest International Limited or any other parties, in the manner contemplated by you.’

Two weeks later on January 27, 2006 Jagaiah through his lawyers Rozaidi Read and Co. of Kuala Lumpur while stating that NDB had no right in law to call for an affidavit,  however forwards an affidavit. (see box).  But now  A.P.Jagaiah alias J. Anand Prakash not to mention GoldQuest, stand exposed for acting in concert. And Jagaiah has also got caught lying in a sworn affidavit.

Credit Suisse also a GQ front 

The NDB has also not registered the Credit-Suisse Private Banking which has brought 9.7% shares through nominee accounts also on suspicion they were a front for GQ. Well The Sunday Leader now has proof to confirm the NDB suspicions.

Earlier CEO of Asia Capital Asanga Seneviratne who handles the account denied to the Business Section of The Morning Leader that Credit Suisse account was a front for GQ.

We beg to disagree. In fact we have irrefutable proof that it is in fact a front.

We are in possession of a letter written by GQ king pin Vijayeswaran on February 19, 2006 to the Manager, Credit  Suisse Private Banking,  Rue de la Monnaie 1-3, PO Box 500, 1211 GENEVA 70, Switzerland. Writing to Monsieur Andrea Lomginotti Buitoni the Gold Quest chief man states:

 ” I understand that Asia Capital Stockbrokers of 22-01, West Tower,  World Trade Centre, Echelon Square, Colombo 1, will purchase through the Colombo Stock Market, a tranche of shares representing 9.7% stake in the issued share capital of National Development Bank.

“That this transaction is to take place on Monday 20 February, 2006

“I am arranging for USD 11 million to be transferred to the Catana Limited Bank account on Monday 20 February, 2006

“I also confirm that as the total number of shares purchased is less than 10 percent of the total issued and that no legal opinion is required regarding the purchase of this holding as it is below the 10 percent threshold, above which the National Development Bank may refuse to register the transaction.”

However before this letter of February 19 was sent to Credit Suisse, Vijayeswaran and others at Gold Quest had to arrange for a Catana Limited Bank Account to be opened. Thus Buitoni, on February 16, sent an email to John Challen of the Legal Affairs Department and to Richard Zinkiewicz, the Managing Director of Gold Quest and Quest International. The Cathy he refers to is most probably Cathy Shou of Quest Strategies whose office is also situated in the same premises as GQ in Hong Kong. 

Email communication

‘As promised I managed to open Cata (sic) Limited account as I was telling you yesterday. I tried to reach you all, including Cathy, but no success, as probably you are sleeping.

“As Cathy told me, the mony(sic) will flow in from Barclays Personal Account of Mr. Vijay.

“Here are the details that you can pass on to Mr. Vijay and use for the transfer:

Catana Limited

USD Account No. 0251-857920-7

EUR Account No. 0251-857920-72-1″

From these documents it is abundantly clear that Credit Suisse through nominee accounts is in fact holding the shares for GoldQuest (see box).

Money laundering?

Evidence that GoldQuest is also contravening exchange control regulations is apparent from their own documentation.

Here’s how. A 50 percent controlling interest of Ferntea as The Sunday Leader has already revealed in past issues, was bought by Suntex International, a front company for Gold Quest in 2005. 

Suntex International Holdings paid Rs. 55,534,109.95 to Jayantha Fernando for 48% of his shares in Ferntea. Then Jayantha Fernando deposited that money back into Ferntea Limited under an investment agreement.

Therefore on May 20, 2005 Jayantha Fernando, Chairman of Ferntea deposited into  Ferntea Limited Sri Lankan rupee current account at Standard Chartered Bank, a sum of approximately Rs.55 million through a family company, Carmel Consolidated.

This transaction is reflected in the Ferntea Limited Statement of Accounts of June 1, 2006 of Standard Chartered Bank (see box).

At about the same time Suntex bought another 6% of Ferntea shares through the Colombo Stock Exchange.

On May 26, 2005 that is six days after Jayantha Fernando made his deposit, Suntex International Holdings deposited Rs. 49,540,000.00 in the same SCB Ferntea account.

However this Rs. 49.5 million deposited by Suntex did not appear to have come through a SIERRA account. A Sierra account is Central Bank approved and allows repatriation of funds under exchange control laws. 

Therefore this money could not be repatriated. But Suntex which was a front for GQ was now finding ways and means to repatriate these funds to their foreign account. This is revealed in an internal document of Ferntea Limited titled “Options available to Suntex for investing USD 1M in Ferntea.”

The three page document which sets out three options in its last page under ‘notes’ states as follows:

“An amount of USD 500,000 was invested by Suntex into Ferntea in May 2005. As these funds were not invested through the proper channels it cannot be repatriated.”

“A written opinion from the auditors should be obtained confirming that whatever investment path is chosen, the funds can be repaid to Suntex and repatriated from Sri Lanka at a future date.” (See box )

This USD 500,000 is of course the Rs.49.5 million Suntex deposited in Ferntea on May 26, 2005 at an approximate exchange rate of US$ 1=Rs.100.

While a written opinion was being sought on the matter Suntex now decided to enlist Jayantha Fernando’s help to white wash these monies in order that they may repatriate same without contravening the law.

To this end they discussed with Jayantha Fernando the purchase of his Catamaran Hotels belonging to him for a sum of Rs. 100 million where the Rs. 49.5 million deposited in Ferntea by them could be used to set off part of the purchase price.

Thus the money would pass on from business to business. Jayantha Fernando would have none of it and refused to play ball.

Meanwhile recall that Jayantha Fernando had deposited Rs. 55.5  million in Ferntea under an investment agreement which was considered as a loan to the company. The company was paying back Fernando on a staggered basis and also paying him interest on the money every month.

On May 20, 2006, Ferntea now owed Fernando a sum of Rs. 18 million as part of that payment. However no payment was forthcoming. In the meantime on or about May 10 or 15 this year a huge consignment of gold coins, watches and other products arrived at the airport on behalf of Suntex International. The value including duty and VAT was approximately Rs 45 million.

Remember that it was Jayantha Fernando who would usually do the clearing on their behalf. As usual Jayantha now obtained the original clearing documents duly stamped by the bank and paid a sum of Rs. 22-23 million for the goods. However he did not clear the goods by paying duty and VAT of Rs. 22 million.

Instead he told Ferntea now controlled by Suntex that if he were not paid his Rs. 18 million he would hold on to the original documents and not clear the consignment.

Ferntea immediately summoned an emergency board meeting which was objected to by Jayantha Fernando but a board meeting was held anyway and Jayantha Fernando was sacked as chairman of Ferntea last week. Anura Fernando the front man for GoldQuest and CEO appointed by Suntex took over as chairman.

This matter is now before court.

It is however clear that with internal fighting between partners and employees more sordid details will spill out into the open on the workings of GoldQuest.

 Deadly board meetings

Now let us come to another frightening aspect of the GoldQuest multinational monster of whose world wide operation we have only seen but a small percentage as yet.

In a nutshell The Sunday Leader had already established that Nivard Cabraal’s Capital Reach Holdings was bought into by Suntex International which is of course a front company for GoldQuest. Nivard on November 26, 2005 resigned from the board of Capital Reach Holdings to take on lucrative government posts but installed his wife Roshini Cabraal in his place as chairperson.

Be that as it may on April 11, 2006, at 9.30 am the board of directors of Capital Reach Holdings was to huddle together at No. 1, Lake Crescent, Colombo 2. By this time Nivard Cabraal had already agreed to be taken on a luxurious trip to Monaco by Quest International. Roshini Cabraal herself would have known that her own two sons were also scheduled to make the trip later in May. In fact it was her company Cabraal Consulting Group that on April 2 sent the names of her husband and children to Anura Fernando to prepare for the trip (see box).

Anyway present at this meeting were Roshini Cabraal, Nivard’s wife as chairperson, Mayura Fernando managing director, Daya Muthukumarana, S.C.Weerasooria and of course Anura Fernando who were all directors of the company.

In attendance was also Anusha Wijesinghe representing the Company Secretary Vanik Corporate Services Ltd.

The minutes stated as follows inter alia:

MINUTE NO.2006/03/03:

PORTFOLIO MANAGEMENT (B/P 2006/03//01)

“The board was also informed that the projections contained in the paper were based on the discussions held with Mr. Anura Fernando on the portfolio of the foreign client represented by Mr.Anura Fernando (whilst negotiations were in progress in regard to the fee) and on the assumption that the totality of the funds would roll over twice every year.

“The board deliberated further on the matter and noted that –

 Foreign clients should pay for the purchased direct to the broker through SIERA Accounts and therefore passive fund management referred to in the paper would not be applicable to foreign clients.

 Engaging in portfolio management as recommended by the managing director could be used as an entry point to position the company in the field of fund management and create a track record, to bid for the management of larger funds such as EPF, ETF, Mahapola etc.

The board decided that

(i) A company under the name of Capital Reach Portfolio Management (Private) Limited (CRPM) be incorporated as a subsidiary of the company to engage in portfolio management business as outlined in the paper with an issued and paid up share capital of Rs.1,000,000.

(ii) Staff for CRPM be recruited on a need to have basis and initially, services of the staff attached to Mr.Anura Fernando be obtained on payment.

(iii) An application be made to the SEC to register CRPM as an investment manager.

Mr. Anura Fernando disclosed his interest in the arrangement referred to in paragraph (ii) above, which was noted by the board.”

Anura Fernando whose foreign interest was of course the fact that he was the GoldQuest agent in Sri Lanka. And he was seeking through Capital Reach to control for his foreign account the funds of such local giants as the Mahapola, EPF and ETF. 

Conflict most foul

Meanwhile in a grotesque twist, GoldQuest last week sought relief from the Appellate Courts seeking an opportunity to explain its position to the Central Bank. A bank now governed by their friend Nivard Ajith Cabraal. To GoldQuest who had engineered the move the timing could not have been sweeter.  

Nivard must be accountable

Having palavered the Governor in luxurious style, GQ now requested the Appeal Court to direct the Central Bank to determine if GoldQuest’s marketing plan is against Sri Lanka’s banking laws. The firm has also asked for a writ preventing the bank from prosecuting persons connected with GoldQuest until a determination is made regarding the legality of its marketing plan and for interim relief preventing the Central Bank from prosecuting or seizing its products until the appeal hearing is concluded.

Funnily enough, the Central Bank has already arrested several GoldQuest activists under an anti-pyramiding clause in the said Banking Act after the law was passed in parliament in February of last year.  The Banking Amendment Act No. 2 of 2005 certified on February 10, 2005 clearly sets down the law on illegal marketing scams.

GoldQuest has filed the petition in the Appeal Court under the name of Questnet International citing the Governor of the Central Bank of Sri Lanka Ajith Nivard Cabraal, the other members of the Monetary Board, senior officials of the bank’s special investigation unit and Sri Lanka’s Inspector General of Police as respondents.

Cabraal is also the head of the Monetary Board.

Earlier Deputy Director of the Central Bank Special Investigations Unit, N.J.S. Abeyasinghe admitted to The Sunday Leader the Monetary Board would have access to details of the investigation and had the right to call for any information.  

Strategy fulfilled

Indeed it was one of the power grabbing strategies of GoldQuest when dealing with third world countries to capture the vital political or business contact rather than the business itself.

Operating like a well oiled secret mafia reliable sources told The Sunday Leader its pivotal figure, Malaysian national Vijayeswaran would urge their fund managers and stock brokers to buy into ailing companies to gain control not only of the company but also of  those locals within the company.

Exactly the strategy used by GoldQuest when it bought into local companies Ferntea and more particularly Cabraal’s family company – Capital Reach Holdings(see previous issues of The Sunday Leader newspaper).

Circumventing the law

Recall that GoldQuest and its marketing schemes ran into dire straights in Sri Lanka in early 2005. In February after parliament made the scheme illegal by an Act and the CB set up several units to investigate and stifle their financial activity through credit card transactions and bank accounts, GoldQuest decided to overcome the stringent new laws and come in through the Stock Exchange.

Nivard to the rescue?

It is about this time that a curious coincidence is recorded. Capital Reach Holdings, a new company was incorporated by Nivard Cabraal only on April 21, 2005. After which Capital Reach holdings set up two subsidiaries to take over the ailing Vanik Factors and Vanik Leasing by changing the names to Capital Reach Credit and Capital Reach Leasing respectively. It was only a few months later that GoldQuest front company Suntex International Pvt. Ltd. started frantically buying into the company. Not only that they took over control of Ferntea Pvt. buying over 50 % shares also at about the same time.

They now used Ferntea goodwill and import export mechanism to bring in their gold coins and other numismatics products into the country. Once they utilised Ferntea as a clearing agent for these goods they were handed over to GoldQuest agent in Sri Lanka Anura Fernando whose Rhythm Collection outlet now took over the goods for distribution.

The country can ill afford the mala fide machinations of multi national conglomerates at a time the economy is all but ruined. 

In this backdrop it is President Mahinda Rajapakse as Chief Executive and Minister of Finance who must take responsible action to protect the nation from unscrupulous elements be they potential ‘investors’ or his own appointees.

The LVTC LeadersHere are the names of the local leaders responsible for spreading the illegal marketing scheme through secret cells and closed door seminars especially in the rural areas in order to attract least attention. The Sunday Leader is also in possession of the telephone numbers, email addresses of the following persons.Jag of Colombo 5, Bharathi, Lakshman of Madiwela Kotte, Malinga of Colombo, Chamal, Nirosha, Rajan, Priyantha, Asoka, Arjun and Sandamali Premathilaka who also works at the Rhythm Collection office in Sri Lanka.Ironically Rhythm is an anagram for Rate Yourself To Help Mankind coined by none other than Vijayeswaran himself.Why GoldQuest is illegalGoldQuest, the controversial network marketing scheme, was deemed illegal in Sri Lanka in early 2005 after the scam drained an estimated US$ 15 million in foreign exchange from the country during the 18 month period it was in operation. The Central Bank then rushed through amendments to the Banking Act, banning pyramid style schemes.

The CB also set up a special unit to probe illegal activities that violate monetary laws and investigate violations of all laws related to the Central Bank ranging from the Banking Act, the Treasury Bill Ordinance, leasing, finance companies, Monetary Act and EPF, the Central Bank reportedly told media at the time.

Ironically, Gold Quest strategy meanwhile was far more widespread and dangerous. As we have already revealed one of their strategies was to control the country’s key financial institutions through the Stock Exchange and the EPF was one of the funds they eyed. 

Nevertheless, the Central Bank spearheaded an anti-pyramid crusade advertising widely in the print media, after network marketers began duping customers to purchase gold coins through international credit cards.  The CB recommenced an advertising campaign this year warning the public that the illegal scam were rearing its ugly head once again and that the scam contravenes the Money Laundering Act of 2006, Financial Transactions Reporting Act of 2006 and the Banking Amendment Act of 2005.  

Pyramid schemes are already banned in many countries and their proliferation in Sri Lanka alarmed former President Chandrika Kumaratunga, bankers and regulatory authorities, at the time which led to the legislation.

Apart from prosecuting people with fines the Central Bank also banned banks from facilitating GoldQuest transactions. Therefore GoldQuest was unable to use the banking system to facilitate its transactions. The CB also warned it would pass severe strictures on any bank that is found facilitating these transactions through international credit cards.

By some happy and curious coincidence  it was when GoldQuest was finding itself stifled in Sri Lanka in February and March 2005 that Capital Reach Holdings, Nivard Ajith Cabraal’s company of which he was chairman was incorporated on April 21, 2005.  GoldQuest’s front company Suntex International then bought into Capital Reach Holdings and also bought 50 percent of  Ferntea.

Even this year up to seven persons caught promoting the Gold Quest network marketing scheme have been arrested in Karandeniya in the Galle District. In December 2005 two Gold Quest upliners were arrested in Anuradhapura while conducting a seminar.

Gold Quest promoters have now moved to remote areas where the scheme had attracted less attention. Most of the upliners recruited by the schemers have just left school and are around 18 years of age. The oldest arrested was 22 years old.  Authorities told The Sunday Leader that vulnerable sections of society like the young, unemployed and rural poor  are now being targeted by the promoters. 

Nivard in a soup

Published in The Sunday Leader  2 JULY 2006

http://www.thesundayleader.lk/archive/20060702/spotlight.htm

By Sonali Samarasinghe

Letter by Q1 to Nivard at Central Bank thanking him for confirming his participation, GoldQuest changes its name to Questnet also incorporated in the British Virgin Islands, Nivard Cabraal confirming room booking and Nivard Cabraal are in the picture

MORE evidence has come to light linking GoldQuest players to top political manipulators, business brokers and politicians from both sides of the divide.

This newspaper reported that it was Nivard Ajith Cabraal, now Central Bank governor who accompanied Anura Fernando, the  GoldQuest agent in Sri Lanka and some other GoldQuest representatives to meet President Rajapakse during the presidential campaign last year.

But the multi level marketers’ quest for control through politics started much earlier. That key GoldQuest player and Malaysian national Vijayeswaran operated on a personal and unique level to gain control became obvious rather quickly. 

A source close to GoldQuest told this newspaper that in fact its unique operational style was such that sometimes it would buy into an ailing business in order to gain more bargaining power and control. 

This control was not merely financial but people oriented where they would seek to engage with key personalities, make valuable contact with vital business people, politicians and lobbyists, gain their confidence and their gratitude and then control them as tools to further their own ends.

Sumathipala connection

It was such a goal that drove Vijayeswaran to approach controversial bookie Thilanga Sumathipala in 2003. Sumathipala had already been appointed Telecom chairman and Vijayeswaran had been boasting in his circles that he had met Prime Minister Ranil Wickremesinghe as well.

He was trying to push a joint venture with Sumathipala to make a bid for the Lotteries Board. A push that in the end did not bear fruit with Wickremesinghe refusing to work outside established procedures.

For Vijay, more than the Lotteries Board it was the contact that would prove useful. Sumathipala by presenting himself as a man who controlled both sides was to Vijay a vital contact. He thus wanted to be in on the process and be involved in financial activity rather than clinch a sweet deal.

Certainly Sumathipala  was trying to impress upon anyone he met, especially a businessman such as Vijay that he was a man with controlling interests on both sides. Thus while being Telecom chairman under the patronage of Wickremesinghe on the one hand he was now meeting with then Opposition Leader Mahinda Rajapakse on the other. This was a time Sumathipala himself was under investigation by the CID in relation to the Cricket Board and Immigration fiasco involving underworld killer Dhammika Amarasinghe.

Foul plot

Thus it was that not 24 hours before then President Chandrika Kumaratunga in a constitutional coup snatched the vital ministries of defence, media and finance from the UNP regime, that Opposition Leader Mahinda Rajapakse was whispering about the move at Sumathipala’s house. And who pray should be listening in as an honoured guest but key GoldQuest director Vijayeswaran.

Ironically, when the take over was implemented the next day in November 2003 it was Sumathipala who played the goodie goodie and rushed to telephone Wickremesinghe to deliver the news. Wickremesinghe was at the time in Washington for crucial bilateral talks with US President George Bush. To Vijayeswaran, being in the thick of the action was an exhilarating experience and he was to boast to friends he was at Sumathipala’s house when Rajapakse disclosed Kumaratunga’s plans. What Sumathipala achieved through the process was to convey the impression he was powerful with both sides of the political spectrum.

But now as the case in politics, the President is daggers drawn with Sumathipala but that is another story for another day.

Be that as it may it is the appointment of Ajith Nivard Cabraal as Central Bank governor amidst allegations he was involved and/or being controlled by the infamous GoldQuest group that has left many in the financial sector aghast.

The Sunday Leader which first broke the story, now has irrefutable proof that GoldQuest International, Questnet and Quest International are inextricably connected and are in fact one and the same.

This newspaper has already exclusively reported the overlapping composition of directors and shareholders in all three companies and in its front company operating in Sri Lanka, Suntex International Holdings.

Suntex as earlier reported in The Sunday Leader is the tool used by GoldQuest to buy into and control many industries and top political personalities including new Central Bank Governor Ajith Nivard Cabraal.

For GoldQuest, Cabraal is a most useful ally, given that it is the Central Bank that in fact controls and regulates the economic activity of the nation and is currently conducting an investigation into the illegal pyramid schemes and into GoldQuest, Questnet and QI. 

GoldQuest is Questnet

 We are now in possession of documentation to prove that GoldQuest International was incorporated in the territory of British Virgin Islands as an international business company on September 16, 1998.

GoldQuest International Ltd changed its name to Questnet Ltd on November 4, 2003. The directors of Questnet as at April 27, 2004 were:

Vijayeswaran S. Vijayaratnam,  Joseph Luis Eleuterio Tomacruz Bismark, Kurt Georg Rocco Rinck, Wilfred Royce Lane and Richard E. Zinkeiwicz.

The major shareholder in Questnet is Quest International better known as QI.

Monaco invite

QI is of course now famous as much for its connection to the dubious pyramid schemes as it is for its generous invitation to Nivard Cabraal to attend an all expenses paid luxury trip to Monaco to witness the Grand Prix 2006.

Mind you, a trip Cabraal not only accepted as recently as April 27, for himself, but also arranged for his sons Chatura Vishvajit and Charith Jeewaka Leslie to accompany him to the grand event.

Cabraal accepted the invitation just six weeks before he ascended the banking throne. That he was finally unable to attend due to the Oslo talks which were taking shape and to which perhaps he may have had to attend is immaterial.

Addressed to Central Bank

Mind you QI audaciously writes to Cabraal at the Central Bank of Sri Lanka. The very fact that QI had the confidence to write to Nivard at the very institution which was investigating them shows that they derived this confidence through their control and close proximity to Nivard and possibly believing, through him to President Rajapakse.

But even more damning for Cabraal is that having accepted the invitation, he prepared for the luxury visit by making visa arrangements not through the Central Bank officially, but through his private family business – the Cabraal Consulting Group. He also harnessed the assistance of his long time buddy businessman Anura Fernando who was the agent for GoldQuest in Sri Lanka. (See The Sunday Leader newspapers of June 4 and June 11).

He excitedly prepared to leave to Monaco on QI’s invitation to such an extent that on April 2, 2006 he by urgent fax emanating from his family business Cabraal Consulting Group, directed Anura Fernando to get him a room separately, get his two sons Chatura Vishvajit Cabraal and Charith Jeewaka Leslie Cabraal a room on twin sharing basis and arranged to have the passport numbers sent on April 4.

It was only after he made all these arrangements that QI sent him a letter dated April 27, 2006 including a programme of events between Nice and Monaco to the Central Bank itself. They welcomed him as a VIP guest at the Grand Prix in Monaco and thanked him for CONFIRMING his participation at the QI F1 Monaco event.

Booking at Boscola Plaza Hotel

Not only that a booking on his behalf at Boscola Plaza Hotel, 12, Avenue de Verdun, 06004 Nice Cedex, France had been made for three persons based on his request.

The programme according to what was sent to Cabraal was to commence on May 25 with an informal reception for guests of QI at the Boscola Plaza Hotel and conclude on the morning of Monday, May 29.

The fact is that the man, sitting in an office at the Central Bank, in his capacity as top financial advisor to President Mahinda Rajapakse, and as Secretary Ministry of Planning was well aware of illegal pyramid schemes, of the on going Central Bank investigation into GoldQuest, Questnet and QI, and of the extensive advertising campaign conducted by the very bank which he desired to head, when he accepted the QI invitation.

Liar Liar

Not only that, in an interview with this newspaper (See The Sunday Leader of June 4) when directly asked the question whether he was invited by QI on an all expenses paid trip to Monaco he merely hedged the question and over generalised and deliberately trivialised the issue by answering that he received invitations by various persons all the time and he cannot remember specifics. That we have on record if the President wants to give it an ear even though he may want to turn a Nelsonian eye.

When directly asked if he accepted the QI invitation Nivard replied that he did not. In fact this writer in order to give Cabraal another chance to be truthful asked him this question four times (and this is on record) but the new CB Governor replied each time in the negative though he turned from confidant and debonaire to increasingly panic stricken as the interview went on.

The Sunday Leader has irrefutably proved by documentation – which we display on this page once again – that Cabraal did in fact accept the invitation and even arranged for his sons to accompany him.

Mummy to the rescue

Cabraal on two occasions was to scuttle over to the mummy – the mummified state media – to complain of harassment by the independent press.

He wrote about The Sunday Leader expose carried in the state run Sunday Observer of June 25, “over the past few weeks I have observed a highly organised and malicious smear campaign designed to discredit and humiliate me. It has been unleashed by a politically biased newspaper which is well known to be striving towards discrediting and destroying the image of the present government.”

Let us pause for reflection on this curious allegation. We verily believe that many politicians and other government officials in power do not need the help of the media to destroy their image. They are doing an excellent job of it by themselves. They are the reason First Baron Acton’s famous quote ‘power corrupts and absolute power tends to corrupt absolutely’ became a buzz phrase in this country. Nuff said.

This newspaper while certainly not conducting any campaign but merely carrying out its duty towards the public and doing its job as an investigative newspaper however agrees with Cabraal that it conducts its investigations in a highly organised and professional manner and thanks the new governor for the compliment.

And Cabraal’s allegation of The Sunday Leader being a politically biased newspaper is indeed rich considering the fact that he was a regular columnist in the pages of this very newspaper until the year 2004.  Indeed it was Cabraal who solicited space in the newspaper to enhance his profile and we readily gave him a helping hand at the time. Therefore his charge says more about the man than his allegation.

However we also state that it is Cabraal who has fallen willing victim to a ‘highly organised’ group – GoldQuest alias Questnet alias QI that seeks to take control over the key financial institutions of this country and grip the economy in its tentacles through its control over him.

Be that as it may, Cabraal in his reply carried in the  Sunday Observer further states that his previous work has included the business recovery and capital restructuring of ailing and sick companies and the paper has portrayed his earlier work as a sinister exercise and has made false statements to the effect.

Au contraire it is Cabraal who is now indulging in falsehood. It is pertinent to note that he does not deny any of the facts in our articles regarding his family businesses. If he read our articles and we are pretty certain he did, he would know that it is not the business itself but his business partners that have caused concern to the public.

It is precisely our point that Cabraal has allowed and invited and acted in concert with GoldQuest to take control of businesses. And if these companies as he says were ailing and sick and thus vulnerable at the time,  that is the very reason he should have acted responsibly.

Not only that, one of his companies – Capital Reach Holdings Ltd, (CRHL) of which he was chairman up until November 26, 2005 (when he resigned to take up lucrative political appointments following the Rajapakse victory) was incorporated only on April 21, 2005. It was this young and new parent company that in July 2005 took over Vanik Factors and Vanik Leasing Ltd and changed the names to Capital Reach Credit and Capital Reach Leasing Ltd respectively.

By the way even though Nivard resigned from CRHL he put in his place his wife Roshini Sunethra Cabraal to carry on the work on behalf of the family.

Curiouser and curiouser

Not nine months later by some curious coincidence Suntex International Holdings, the front company for GoldQuest is furiously buying into Capital Reach Holdings. Certainly that Vanik was ailing was public knowledge but why did GoldQuest have to come to its rescue through Nivard Cabraal’s private businesses?

And while GoldQuest was on a quest for control in many areas, it also bought over 50 % of Ferntea Ltd in mid 2005 not only to make active forays into the tea business but also to use Ferntea facilities and goodwill to clear GoldQuest related items such as gold coins, limited edition watches and other numismatics products used in the furtherance of their style of multi level marketing.

Having used the Ferntea resources to bring in the goods to the country it was then distributed through Anura Fernando’s company Rhythm Collection Pvt Ltd. Anura Fernando was also made CEO of Ferntea by virtue of the fact that Suntex now owned 50 percent.

However Cabraal in his missive to the Sunday Observer of last week states that his views on ‘pyramid schemes and multi level marketing has been clear, consistent and in the public domain. That in his book Lak Mawata Muthu Potak published in 2004 he has included an essay authored by him and also published in the Lankadeepa of June 27, 2004 which deals with these schemes, its dangers and ill effects.

This newspaper and indeed the public are at a loss to understand why if Cabraal knew so much of the dangers of pyramid schemes and those who indulged in the practice, decided consciously to sleep with the enemy and bite succulently into the forbidden fruit only 12 months later.

Cabraal also states in this same reply to the Observer that neither he nor members of his family ‘have availed themselves of any travel or entertainment benefits whatsoever at any events from any organisations whatsoever.’

Public not hoodwinked

This newspaper has clearly stated with documentary proof that he did infact accept an invitation by GoldQuest. That he later was unable to go due to political commitments rather than moral awakening as we said earlier is immaterial and no excuse at all. Further his sweeping statement that he has never accepted any benefits from any organisation is again a vacuous statement which he contradicts in his own interview with the Leader (see The Sunday Leader of June 4) where he says he receives lots of invitations and he accepts only what he wants. Does he expect the public to believe that when he goes for a cocktail he pays for the canapes?

Koheda yanne malle pol

Thus Nivard Cabraal  in his missive to the Observer which is cloaked as an answer merely tries to blow his own trumpet on extraneous matters while avoiding the hard questions and the specific issue on his connection to GoldQuest which has been proved by the Leader through documentation and indeed evidence that is in the public domain.

He now sits as Governor of the Central Bank and is privy to all investigative material unearthed by its investigations unit.  One can perhaps forgive President Rajapakse for his ignorance and lack of gray matter in the frontal lobe but can Cabraal ignore the conflict of interest, the integrity issues and the moral turpitude that he has gotten himself into?

In fact the Deputy Director,  Central Bank Special Investigations Unit, N.J.S.Abeysingha told this newspaper that the Monetary Board of the Central Bank would have access to the investigation records. Cabraal of course is as Governor is the head of the Monetary Board.

Abeysingha asserts diligently that the investigation will be carried out in a professional manner. If this were so however, by now Cabraal would at least have been under investigation. 

Probe into Nivard

However, Ajith Nivard Cabraal’s clamour to be Central Bank governor may prove fatal for the accountant who once described himself, in an election poster as the foremost chartered accountant in the country. A claim, that bewildered many at the time.

Following The Sunday Leader’s expose, last week several members of parliament moved the House to appoint an all powerful select committee to investigate Cabraal’s controversial appointment and probe into the mysterious circumstances under which Sunil Mendis, the previous governor was pushed out of his chair merely two years into his six year governorship.

The parliamentary members in their motion dated June 23, 2006 called on the Secretary General of Parliament to constitute a committee to investigate the suspicious circumstances under which Cabraal was appointed and his connection to the illegal pyramid schemes.

Powerful committee

According to the motion, The Select Committee would also look into the suitability of Cabraal to hold the position of  governor, Central Bank, and whether the appointment of an individual such as Ajith Nivard Cabraal, will seriously affect the credibility of the Central Bank and have disastrous effects on the country’s economy.

The motion was signed by MPs Bandula Gunawardena, P. Dayaratne, Ranjith Aluvihare, Dayasiri Jayasekera, W.B.Ekanayake, Lakshman Seneviratne, Dunesh Gankanda, Johnston Fernando, P.Radhakrishnan, Dharmadasa Banda, S.C.Rajakaruna and Neomal Perera.

A parliamentary select committee has the power to summon any person to appear before it, to require any person to obtain any document or record, to procure evidence written or oral and to obtain the services of specialists and experts in relevant fields to assist the committee.

Meanwhile, top accountants told this newspaper that Cabraal as an accountant himself, had the duty to disclose his financial dealings including the financial activities of his wife and family before he took over the responsibility that goes with the governorship of the CB.

The attempted sinister takeover of NDB by GoldQuestGoldquest first came into Sri Lanka as a substantial player in the markets by buying 25% of the shareholding belonging to businessman Nahil Wijesuriya in Asian Hotels Corporation. This 25 % they bought at approximately Rs. 4 million and subsequently divested their shares for Rs. 15 million. About 80 percent of these shares was bought by John Keells Holdings.Having got rid of their Asian Hotels Corporation shares they now set their beady eyes on the NDB. Through the stock market Gold Quest in its own name bought 10 % of the shares of NDB while one Magandran Rajadurai operating from Hong Kong  bought 4.9 % of NDB Bank Ltd.  Magandran, allegedly the Chief Operating Officer of Quest International bought  5 % in his name.Even though banking regulations forbade one entity to hold more than 10 % stake in a commercial bank it was the contention of Gold Quest that they held these shares separately.  In fact NDB Bank Ltd was a small enterprise opened in October 2001 while NDB was established by Act of Parliament in 1979. In August 2005 both entities merged and changed the name to NDB Ltd to fall under the Companies Act.However sources at the NDB told this newspaper that it is illegal to hold shares in concert and ownership of shares by the same management irrespective of names and personalities would tantamount to holding shares in concert. GoldQuest first bought 5.77% shares of NDB on December 1, 2003. On June 21, 2004, they bought a further 2.24%. On September 14, 2004 another 2.64% was bought.  Thus they now had a total of 10.55% to the GoldQuest name. Unhappy coincidencesInterestingly enough even as GoldQuest was buying chunks of NDB through various means, Ravi Thambiaiyah, owners of Renuka Hotels and Cargo Boat Dispatch and more importantly brother in law of Nivard Cabraal was also through various means buying into NDB. Ravi on April 26, 2006 in fact was made a director of the board by virtue of the fact that he was a substantial shareholder of the bank.  The Renuka Group already had some 5% shares prior to the GoldQuest buying frenzy. Subsequently between December 31, 2004 and April 28, 2006 it increased its holding to 9.68% .Also pertinent to note is that it was in April  2005 that Nivard incorporated Capital Reach Holdings Ltd and in which Ravi too had a share holding and which only nine months later was devoured by Gold Quest front company Suntex.Be that as it may there is concern that money launderers could not only make deposits in banks but due to poor due diligence could even take over whole banks by entering a country through its stock exchange. Unfortunately experts say, anti money laundering laws focus on deposits where for instance a bank has a right to ask questions on the origins of the deposit to find out if it is genuinely earned.

As The Sunday Leader reported earlier, it is in this context that the goings on at the National Development Bank become vital.

The Government of Sri Lanka (GOSL) owns 21 % of the shares of NDB with the Bank of Ceylon owning 14 % of the GOSL share and the Secretary Treasury, Employees Trust Fund and Employees Provident Fund holding the rest.

According to the Companies Act and Commercial Banking Act as it stands today, a single shareholder cannot own more than 10 percent. Accordingly the NDB also has the following shareholders.

(1) A global fund manager Aberdeen, through an aggregate of funds has 9.5 %.

(2) Renuka Group and Ravi Thambiayah through different entities such as Cargo Boat dispatch, Renuka Hotels, Lancaster Holdings etc. hold 9.7% of NDB shares.

(3) Another international fund manager, First State has some 6% shares.

Interestingly enough now the NDB has refused to register the shares of the following persons/companies. These companies are fronts for GoldQuest and reliable sources confirm that the NDB is suspicious that GoldQuest is moving to take over the bank. Indeed GoldQuest has almost 30 % shares to its name through front companies and individuals as of now. They are as follows:

(1) A.P.Jagaiah 9.3% shares which the NDB has refused to register.

(2) Fast Gain International Ltd 9.9 % shares, again the NDB has refused to register.

(3) Another suspicious account is Credit Suisse which has bought 9.5% shares through nominee accounts and which shares too have not been registered by NDB as yet.

There is irrefutable proof that A.P. Jagaiah is a front for GoldQuest. Jagaiah who lives in a modest house in Selangor Malaysia runs a small network and his income does not support his NDB dealings.  Banking sources said they have proof that GoldQuest made a direct sale on November 11, 2005 to Jagaiah.

NDB sources told this writer it was not only the bank as an entity but the senior management personally that felt threatened  by this bid by GoldQuest to take over the bank through mystery nominees. However the NDB is conducting extensive investigations into potential shareholders before registering their shares and even requesting fund managers who usually are not required to disclose details to, in fact disclose their shareholders in order to approach the investigation even handedly.

Ironically it will be the Central Bank that will have a decisive say in the ultimate analysis and Nivard Cabraal is safely seated in the top chair there. 

Nivard – the Deal Maker

Published in The Sunday Leader 11 JUNE 2006

http://www.thesundayleader.lk/archive/20060611/spotlight.htm

Ajith Nivard Cabraal, The advertisement placed by the Central Bank, Quest International letter to Cabraal referring to his acceptance of the Monaco trip, Fax to Anura Fernando from Cabraal Consulting Group and Capital Reach Holdings Ltd. allotment of shares

By Sonali Samarasinghe  Despite vehement denials by Presidential Economic Advisor Ajith Nivard Cabraal and his long time buddy, the well-known dubious businessman Anura Fernando, that Suntex International Holdings Ltd. (Suntex IHL) has no connection to the infamous Gold Quest, The Sunday Leader now has incontrovertible evidence to the contrary.Shocking new evidence now in our possession shows that not only Cabraal but top businessmen including the likes of Harry Jayawardene may be involved even unwittingly in an international web of alleged money laundering controlled by none other than Gold Quest and its front companies.Nivard involvedFollowing an investigation carried out by this newspaper in Hong Kong last week we are now in possession of irrefutable proof that Suntex IHL, Hong Kong is a front company for the cluster of illegal Gold Quest enterprises such as Quest International, Quest Net and Quest.We also have solid evidence that Cabraal and Fernando are both heavily linked through their companies with Gold Quest which is currently under investigation by the Central Bank. This, mind you, despite both Cabraal and Fernando denying any knowledge of Gold Quest during interviews with this newspaper last week. (See The Sunday Leader of June 4)Suntex bought into Cabraal’s CompanyCabraal, who until late 2005 was the chairman of his family company, Capital Reach Holdings Ltd. allotted 7,500,000 shares to Suntex on January 5, January 27 and March 17 this year. Suntex also bought an over 50% stake of Ferntea (Pvt) Ltd., by virtue of which Anura Fernando was made chief executive officer.Last week, The Sunday Leader exclusively reported the surreptitious moves by the infamous Gold Quest players to spread their tentacles into every area of Sri Lanka’s economy using the political influence wielded by Secretary, Plan Implementation Ministry and close Rajapakse ally, Cabraal.Cabraal was an ever-willing tool, allowing Gold Quest front companies to buy into his own family enterprises with impunity, mind you, even though a massive Central Bank investigation into Gold Quest and other companies linked to it was already underway.Meanwhile, recall that last week this newspaper told its readers to remember a name. That was Richard E. Zinckiewicz.

Zinckiewicz is the managing director of Gold Quest and has his office at Mass Mutual Tower, Gloucester Road, Hong Kong. Indeed in April he was to grant an interview to local journalists from the Wijaya Group of newspapers who reportedly met him at this office in Hong Kong.

Be that as it may, the Gold Quest website itself states that it is a multinational company and a retailer of gold and luxury products with a head office in Hong Kong at F Mass Mutual Tower, 38 Gloucester Road, Hong Kong

Richard E. Zinkiewicz

Now then who is Richard E. Zinkiewicz? He is the managing director of Gold Quest International Limited. As we pointed out last week, he had already given an interview to the state media on June 24, 2005 as the managing director of Gold Quest International and reportedly stated that the Quest International (QI) group has invested over US$ 20 million in various business ventures in Sri Lanka including financial, tea and telecommunications sectors.

In fact, as per our investigations overseas carried out last week, check out below the key players in the Gold Quest cluster of companies:

(1) Gold Quest International Limited

Directors:

Richard E. Zinkiewicz

Benjamin Dennis M Aguila

Shareholders:

Richard E. Zinkiewicz

Benjamin Dennis M Aguila

(2) Quest Net Ltd.

Directors:

Kunaseelan Senathirajah

Magendran S.Rajadurai

Joachim Kurt Steffen

Jakob Mayer

Benjamin Dennis M Aguila

Kurt Georg Rocco Rinck

Donna Marie Glenn Imson

The authorised representative in Hong Kong for Quest Net is of course Richard E. Zinkiewicz. However QuestNet is registered as an off shore overseas company and therefore not required to file the names of shareholders with the Hong Kong Companies Registry. It is incorporated in British Virgin Islands and its principal place of business in Hong Kong is none other than Mass Mutual Tower, 38 Gloucester Road. The same address as Gold Quest International.    

So it is irrefutably established that Zinkiewicz is in fact the main man and indeed one of only two shareholders with Benjamin Aguila of Gold Quest International. Bear in mind however that Quest Net and all of its directors are also very much a part of Gold Quest.

Now let us take a dekko at the shareholders of Suntex IHL.

Directors:

Richard E. Zinkiewicz

Benjamin Dennis M Aguila

Pei Zhen Zhou

Shareholders:

Richard E. Zinkiewicz

Benjamin Dennis M Aguila

You will see that the shareholders are none other than Zinkiewicz and Aguila, who of course are the only two shareholders and therefore the joint owners of Gold Quest as well. With the exception of Zhou who has been made a director in Suntex, it is Gold Quest that totally controls Suntex International Holdings. This is irrefutable fact.

It is also a fact that Cabraal who claims to be a top economist and the country’s foremost chartered accountant and Eisenhower Fellow to boot would definitely have known about this, despite his vehement denials to The Sunday Leader last week.

Capital Reach Holdings and Suntex

Now let us look at Cabraal’s family company, Capital Reach Holdings Limited (see box for full details of shareholders). On January 5, Suntex IHL of 5F, Mass Mutual Tower, 38, Gloucestor Road, Wanchai, Hong Kong was allotted 1,000,000 shares. This address corresponds with the address of Gold Quest International and is in fact the office of Zinkiewicz.

On January 27, Suntex was allotted another 5,500,000 shares while on March 17 Suntex was allotted 1,000,000 shares.

Cabraal Consulting Group and Suntex

Furthermore, Nivard Cabraal’s family concern is the Cabraal Consulting Group Pvt. Ltd. and his brother Lakshman Gerard Cabraal and his wife Roshini Sunethra Cabraal own a large number of shares in Capital Reach Holdings with Nivard Cabraal being one of seven subscribers to the company and his wife Roshini Sunethra Cabraal being a director of the company since November 26, 2005.

Nivard Cabraal who was chairman and director of Capital Reach Holdings Ltd. resigned on November 26, 2005 to take up plum political posts courtesy of President Mahinda Rajapakse after his slim presidential victory last November 17.

Vanik and Capital Reach

Meanwhile, let’s backtrack for a moment for the sake of clarity. Somewhere in July 2005 Capital Reach Holdings Ltd. (CRHL) acquired majority stakes in Vanik Leasing Limited and Vanik Factors Limited. Vanik in fact was a group in dire financial straights and was obviously ‘rescued’ by Capital Reach Holdings.

The board of directors of CRHL decided to change the names of the two subsidiary companies acquired by them to Capital Reach Leasing Limited (Vanik Leasing) and Capital Reach Credit Limited (Vanik Factors) on July 14, 2005.

Not only that, in July last year at a simple ceremony held at the company’s corporate office at No. 1, Lake Crescent, Colombo 2, new name plaques were unveiled by the Chairman , Capital Reach Group, Ajith Nivard Cabraal.

Ajith Nivard Cabraal was a director of Capital Reach Holdings, Capital Reach Credit and Capital Reach Leasing. He resigned with effect from November 26, 2005 to take up political postings and appointed in his place his wife Roshini Sunethra Cabraal, also a director at Cabraal Consulting Group Pvt. Ltd. Nivard Cabraal is also a director of the Cabraal Consulting Group.

The secretaries for all three Capital Reach companies are Vanik Corporate Services Ltd. of 131, W.A.D. Ramanayake Mawatha, Colombo 2.

Meanwhile, Capital Reach Holdings has 5,100,000 shares in Capital Reach Credit Pvt. Ltd. and 2,900,000 shares in Capital Reach Leasing Ltd.

So the three companies are inextricably linked to each other and very much a part of Nivard Cabraal and his business concerns.

On the subject of Capital Reach Holdings Ltd., one is compelled to note that while it acquired the majority shares of Vanik, the company itself was incorporated only on April 21, 2005. Suntex began buying into the company just nine months later.

Aegis and Harry J

However, there are other majority shareholders in Capital Reach Holdings that are infinitely interesting in the business world. That is a fund management company called Aegis Fund Management Pvt. Ltd., which was allotted 2,500,000 shares in Capital Reach Holdings Limited on June 26, 2005

Interestingly enough Aegis is owned by Distilleries Company of Sri Lanka Ltd., of which of course the majority shareholder is none other than Harry Jayawardena – the controversial business tycoon and lord of the Stassens Group of Companies.

Before we go any further lock that information in as well for future reference. We promise you a circus ride, though it is the public that are taken to be the clowns.

Now let us look at the company Ferntea Limited. Ferntea reportedly has an office in Malaysia in the Malaysian Hotel where Quest International held one of its major recruitment meetings in May this year.

In fact Shymica Marcelle Fernando, one of the directors of Ferntea, was to reportedly tell a journalist of the Wijaya Group taken as part of the promotional junket by Gold Quest that Ferntea put up a tea stall especially for the international conference held by QI in May this year. Nimal Bopage, a lawyer, was reportedly also in the company of some of the journalists while Sri Lanka’s Ambassador to Malaysia, R.D. Cassie Chetty was an honoured guest at the conference and was seen speaking with the young Sri Lankan recruits almost until midnight.

It is a shame that Sri Lanka’s diplomats were unaware that QI was a company being currently investigated by the Central Bank of Sri Lanka.

Be that as it may, now let us turn to the composition of Ferntea Ltd. yet again. We give below the directors as at July 22, 2005:

(1) Kunaseelan Senathirajah appointed on September 29, 2005. He is also a director of Suntex IHL

(2) Richard E. Zinkiewicz, also managing director Gold Quest International

Alternate Director John Challen, a British Lawyer

(3) Deepak Korla (Indian), Manager, Suntex IHL from September 26, 2005

Alternate director Joachim Kurt Steffen (German), Manager, Suntex IHL

(4) Pushpam Appalanaidu (Malaysian), accountant, Suntex IHL from September 26, 2005

Alternate Director Magandran S. Rajadurai (Malaysian), accountant, Suntex IHL

(5) Jakob Mayer, no alternate

(6) Jayantha S.Fernando

Alternate H. Joseph Chrishantha Perera

 (7) V.J.L.C. Fernando

(8) Shyamica Marcele Fernando appointed with effect from June 12, 2000

(9) Nirmal Anura Fernando appointed from June 27, 2005, also company director, Rhythm Collections Pvt. Ltd.

As we can see, Ferntea has been possessed by Suntex IHL which of course is none other than Gold Quest. Suntex in fact bought up a 50 percent stake of Ferntea as part of its expansion plan into tea and leisure business.

Not only that, you will see that most of the directors of Suntex are in fact directors also of Quest Net Ltd. That is Jakob Mayer, Kunaseelan Senathirajah, Magandran S. Rajadurai, and Joachim Kurt Steffan.  

Anura Fernando

Anura Fernando, aside from being Nivard Cabraal’s good buddy, is also the joint shareholder with his wife and director of Rhythm Collection Pvt. Ltd., which is the local agent for Gold Quest. (See The Sunday Leader of June 4)

Fernando now becomes the CEO of Ferntea by virtue of the fact that Suntex (read Gold Quest) owns 50% of its shares. In an interview with this writer, Fernando confirmed that Suntex had invested heavily in two local companies. One was Capital Reach Credit Ltd. The other was Ferntea.

Surely then Cabraal as a self-proclaimed top economist must have done his due diligence on the companies before he did business with them. If he did not, his claims as an educated and astute businessman must be called into question; if he did and still went ahead knowing who they were, then shame on him, and Cabraal must resign from government.

Money laundering

Furthermore Cabraal as a foremost financial advisor to Rajapakse no less, should be doubly aware that not only does the Gold Quest marketing style fall within prohibited schemes under Section 83 (c) of the Banking Act as amended in February 2005 but more importantly it falls within the definition of ‘unlawful activity’ in terms of the Prevention of Money Laundering Act No. 5 of 2006 and the Financial Transactions Reporting Act No. 6 of 2006.

In fact the very institution that Cabraal wants to head, the Central Bank itself, has since July 2005 and even as recently as May 7, 10 and 28 extensively advertised in the Sinhala and English newspapers against these pyramid schemes and other prohibited schemes re-emerging in the guise of network marketing, multi level marketing and referral schemes particularly in the rural areas.

One cannot imagine that Cabraal who claims to be the foremost chartered accountant in Sri Lanka and an Eisenhower Fellow and now stands as a top bidder for the post of Central Bank governorship would be so na‹ve as to be unaware of the very investigation conducted by the Central Bank itself and indeed going on in front of his face even as he now sits in his office in the Central Bank building advising Rajapakse on the one hand on finance, and planning and implementing on behalf of the President and Keheliya Rambukwella on the other.

Nivard’s hypocrisy

On June 8, that is four days after The Sunday Leader expos‚, Nivard Cabraal was to tell the state media in what can only be seen as absolute hypocrisy and double-speak that he was against pyramid schemes and that there was a need to take stringent measures to prevent the spread of such rackets in Sri Lanka. He states that he emphasises in the media the need for the Central Bank to make the public aware of such schemes.

Ironically, while doing roaring business together with Gold Quest through its front company Suntex, Cabraal in a bid to outsmart the investigators no doubt, reportedly says, “If a company like Gold Quest invests in the companies listed in the Stock Exchange, the relevant authorities should find out where that money comes from.”

Pray, is not Cabraal one of the relevant authorities, being a financial advisor to the President and a Central Bank governor hopeful? And why, pray, is this very relevant authority in the form of Ajith Nivard Leslie Cabraal still doing business with Gold Quest and accepting fully paid trips to Monaco by them for himself and his children as recently as May if he is against pyramid schemes?

Accepts Monaco invitation

In fact the significance of accepting the Monaco invitation (see last week’s The Sunday Leader) is that Gold Quest corresponded with him in his official capacity sending their letters to the Central Bank of Sri Lanka.

However, Cabraal was no dummy. He decided to make visa arrangements, etc., through Anura Fernando and sent faxes in his personal capacity through his family concern, Cabraal Consulting Group. Surely if Cabraal had nothing to hide, why did he not reply in his official capacity as well? (See The Sunday Leader of June 4 and boxes elsewhere on this page)

As this newspaper revealed last week, Cabraal  accepted an invitation by Gold Quest for an all expenses paid luxury trip to Monaco to witness the Formula One Grand Prix just two weeks ago in May. On April 27, Cabraal received a formal update and programme review of the Grand Prix to be held May 25-28 by Quest International (see copy of letter elsewhere on this page).

Taking over nations

There is serious concern among economic experts that black listed companies may be trying to take over the economies of countries like Sri Lanka.

In fact there is concern that money launderers could not only make deposits in banks but due to poor due diligence could even take over whole banks by entering a country through its stock exchange. Unfortunately experts say anti money laundering laws focus on deposits where for instance a bank has a right to ask questions on the origins of the deposit to find out if it is genuinely earned.

However, the financial regulatory infrastructure in Sri Lanka is not strong enough to lend itself to what the acts like the Money Laundering Act of 2006 and the Financial Transactions Reporting Act of 2006 are actually required to do. Therefore the very anti money laundering laws that are in place to fight terrorism, criminal funding and companies such as Gold Quest are rendered nugatory by loopholes within the system itself.  

Experts say that in Sri Lanka money launderers and internationally listed companies like perhaps Gold Quest have a window of sinister opportunity. Especially through the country’s stock exchange and even the Board of Investment where the focus is more on investment and economic activity for public consumption, rather than due diligence of foreign investor companies.

Therefore, such companies for instance need not merely make deposits in banks they could try to take over the bank itself. In any event economists say that most of these deposits usually come via foreign banks which have international regulations in place but are nonetheless vulnerable to such large deposits. There is no government mechanism or central filtering agency to screen these companies while their close nexus to the politicians of the day make the due diligence process even more difficult.

Gold Quest bid to take over NDB

It is in this context that the goings on at the National Development Bank (NDB) become vital. The NDB has been wary of many companies that have tried to register large numbers of shares and is currently involved in investigating each of these individuals and companies.

Meanwhile, The Sunday Leader in independent investigations learnt that the government of Sri Lanka owns 21 % of the shares of NDB with the Bank of Ceylon owning 14 % of the government share and the Secretary Treasury, Employees Trust Fund and Employees Provident Fund holding the rest.

According to the Companies Act and Commercial Banking Act as it stands today, a single shareholder cannot own more than 10 percent. Accordingly the NDB also has the following shareholders:

(1) A global fund manager, Aberdeen, through an aggregate of funds has 9.5 %

(2) Renuka Group and Ravi Thambiayah through different entities such as Cargo Boat Dispatch, Renuka Hotels, Lancaster Holdings, etc., hold  9.7% of NDB shares. Ravi Thambiayah in fact is the brother-in-law of Nivard Cabraal. Ravi is married to Nivard’s sister.

The Renuka group also has a considerable stake in Capital Reach Credit Ltd. When Cabraal was questioned on the shareholders of Capital Reach Credit by this writer he said thus:

Q: Anura Fernando is also a director of Capital Reach credit?

A: Yes, But there are many shareholders. MAS Holdings, Readywear, Renuka Hotels, Suntex – so many companies and industries.

Thus, Nivard Cabraal is also linked to the NDB by virtue of the fact that his brother in law’s family Group, Renuka owns 9.7% of the shares.

(3) Another international fund manager, First State has some 6% shares

Interestingly enough, now NDB has refused to register the shares of the following persons / companies. These companies are suspected to be fronts for Gold Quest and reliable sources confirm that the NDB is suspicious that Gold Quest is moving to take over the bank. Indeed, Gold Quest has almost 30 % shares to its name through front companies and individuals as of now. They are as follows:

(1) A.P. Jagaiah – 9.3% shares which the NDB has refused to register

(2) Fast Gain International Ltd. – 9.9 % shares, again the NDB has refused to register.

(3) Another suspicious account is Credit Suisse, which has bought 9.5% shares through nominee accounts and which shares too have not been registered by NDB as yet.

NDB sources told this writer it was not only the bank as an entity but the senior management personally that felt threatened by this bid by Gold Quest to take over the bank through mystery nominees. However, NDB is conducting extensive investigations into potential shareholders before registering their shares and even requesting fund managers who usually are not required to disclose details to in fact disclose their shareholders in order to approach the investigation evenhandedly.

Aegis

Recall now the name Aegis Fund Management Pvt. Ltd. The company is an entity of the Stassens Group and is owned by Distilleries Company of Sri Lanka Ltd. of which of course the Stassens Group is the major shareholder.

Aegis Fund Management Pvt. Ltd. has been set up to manage the life fund of Sri Lanka Insurance Corporation Ltd. (SLIC) which is also a part of the Harry Jayawardena empire. According to sources, a fund manager should not be involved in holding major shares in companies. It is thus quite shocking they say that Aegis now holds 2,500,000 shares in Capital Reach Holdings which is controlled by Cabraal and the Gold Quest front company, Suntex.

Meanwhile it is also learnt that SLIC-general fund has a 3.66% shareholding of NDB. However banking sources said that the shares of NHB and Stassen group in NDB apart from the SLIC percentage, is negligible.

Nivard to be investigated

Following The Sunday Leader investigation last week, the CID and Central Bank special investigators have now decided to investigate the dealings of Nivard Cabraal and his connection to Gold Quest.

However, it is anyone’s guess how far the investigation will be allowed to go ahead without political interference and sans political influence being brought to bear upon the Central Bank investigators who after all depend on the government for their bread and butter.

Therefore it becomes imperative that President Rajapakse strengthens the hand of the investigating unit of the Central Bank and gives them the confidence to go ahead and investigate Gold Quest and its dealings in Sri Lanka irrespective of who may be involved.

Minister told to meet secretary’s secretaryIt is Nivard’s arrogance that seems to have irritated many a government minister. UNP pole-vaulter Keheliya Rambukwella was no different. Keheliya as non-cabinet minister for the Plan Implementation Ministry is in fact Nivard Cabraal’s minister.But Cabraal, chartered accountant par excellence, was not about to allow himself to be summoned by anybody.Keheliya, however, not a man given to too much arrogance and not wanting to pull rank having known Nivard from their days in the UNP as well, was to telephone Cabraal and politely ask him whether he (Keheliya) could come and meet him, Nivard.Mind you, the Minister was only asking for an appointment to meet Nivard even though as the Minister, he could rightly have summoned Nivard to his presence.Nivard was to however retort that he was far too busy and told Keheliya to meet his (Nivard’s) secretary instead.Rambukwella was to repeat this curious episode to President Mahinda Rajapakse’s brother Basil Rajapakse, who was to tell Rambukwella not to take any notice of Nivard as he is a bit of a fool (“eya pissek”). Anura Fernando linkAs we said last week, Nivard Cabraal is also linked to the pyramid schemes through a local man of dubious reputation called Anura Fernando. Fernando is also the local agent for Gold Quest and the joint shareholder with his wife of Rhythm Collections Pvt. Ltd., the local front company for Gold Quest. (See last week’s The Sunday Leader)Nivard and Anura Fernando go back a long way. Possibly well over 25 years. In fact it is Nivard Cabraal who was to take Anura Fernando, businessman, to meet President Mahinda Rajapakse during the presidential campaign last year. In a lavish party thrown for all those loyalists who helped in the presidential campaign following Rajapakse’s victory in November 2005, Nivard Cabraal who hosted the gig was seen in a jolly mood together with Anura Fernando at the Mt. Lavinia beach soon after the election.

Nivard’s quest for Central Bank Governorship stuck on gold trail

Published in The Sunday Leader of 4 JUNE 2006

http://www.thesundayleader.lk/archive/20060604/spotlight.htm

President Mahinda Rajapakse, Nivard, Quest International letter to Nivard referring to his acceptance of the Monaco trip, Fax to Anura Fernando from Cabraal Consulting Group and Office of Capital Reach Credit Ltd down Lake Crescent

 

By Sonali Samarasinghe

Shocking evidence has come to light of an elaborate scheme by the infamous Gold Quest players to spread their tentacles into every area of Sri Lanka’s economy through top Presidential Advisor Ajit Nivard Cabraal.

Gold Quest has been so sharp in its dealing with Sri Lanka that even at its international conference in Malaysia organised by one of its major companies Quest International (QI) last month, the likes of Sri Lanka’s high Commissioner to Malaysia R. D. Cassie Chetty was seen legitimising the affair as an honoured guest.

Some 100 youngsters from Colombo, Galle, Matara and Kandy were present as part of the huge networking conference which included about 1000 youth from around the world. That is even as a full fledged investigation was underway in Colombo by the Central Bank on their business practices.

Gold Quest and other like Multi Level marketing schemes have been under intense Central Bank investigation by a Special Investigations Unit with the Inspector General of Police Chandra Fernando releasing a team of CID officers on secondment to the Central Bank, to help with the investigations.

Not only that, the Central Bank recently ran a series of advertisements in the media warning the public that the pyramid scheme was raising its ugly head again under different guises.

Economic tsunami

The illegal pyramid scheme originating in America has been described by American experts as a financial tsunami for developing nations and is rendered illegal under the Banking Amendment Act of 2005.

However the investigation, conducted by a special unit of the Central Bank may be under severe threat of being politically influenced, with Cabraal also sitting at an office in the same Central Bank Building as Secretary, Ministry of Plan Implementation.

Tryst in Monaco

Even moreso, as Cabraal, widely tipped to be appointed governor of the Central Bank by President Mahinda Rajapakse, as recently as last week, with impunity accepted an all expenses paid luxury invitation to Monaco by Quest International to attend the annual Grand Prix.

Not only that he even arranged for his sons to fly with him to the Formula One sporting event, asking for rooms for them on a sharing basis (see copy of fax sent to Anura Fernando).

However Cabraal was unable to attend at the last minute as the Oslo talks were being negotiated and he was compelled to stay in Colombo in case the peace talks hurriedly resumed.

That Nivard Cabraal is not playing a straight bat is evident given that despite documentary evidence to the contrary, he denied accepting the QI Monaco invitation, stating casually that he gets many invitations from various companies but he did not accept any invitation from QI. (Please see interview box and elsewhere on this page for copy of letter where he not only has accepted but has made preparations for his trip through Anura Fernando.

Meanwhile Cabraal also sold shares in a family company of which his wife is still a director to a front company of Gold Quest — Suntex International Holdings, thus making this a sordid jumble of conflicting interests and unethical business practice. Especially given his ambition to be governor, Central Bank and given that it is the Central bank that is investigating into the Gold Quest players.

Anura Fernando the link

The ambitious Nivard Cabraal’s link to Gold Quest is through a local man of dubious reputation called Anura Fernando. Fernando is also the local agent for Gold Quest. Fernando has already been questioned and his statement recorded by the Central Bank Investigations Unit in connection with Gold Quest. But more on Fernando later.

Anura meets Rajapakse

However, suffice it to say for the moment that it was Ajit Nivard Cabraal who was to take Anura Fernando –businessman, to meet President Mahinda Rajapakse during the presidential campaign last year to give the campaign a helping hand.

In fact when this writer asked Fernando whether he had also discussed Gold Quest when he met Rajapakse last year in the company of Nivard Cabraal to help with the campaign, Fernando did not deny the meeting but said he did not discuss Gold Quest. That we have on record.

“I knew Mahinda Rajapakse long before Gold Quest,” he was to say. Funnily enough however while saying he knew Rajapakse long before Gold Quest, when confronted with the statement that he was in fact the agent for Gold Quest he said, “I’m not the agent for Gold Quest I don’t know what you are talking about.” But more on that anon.

Monaco trip

Be that as it may Cabraal faxed the names of his family on April 2, 2006 to Anura Fernando to make the necessary visa arrangements for the Monaco trip. (See copy of fax sent by Cabraal Consulting Group elsewhere on this page).

Accepted invitation

On April 27, 2006 Cabraal received a formal update and programme review of the Grand Prix to be held May 25 –28 by Quest International – mind you a company currently under investigation by the Central Bank – addressed to him also at the Central Bank of Sri Lanka. (See copy of letter elsewhere on this page).

The letter thanked Cabraal for confirming his participation at the Quest International (QI) F1 Monaco event stating QI was honoured to welcome and host him as one of their VIP guests.

Mendis asked to resign

While Cabraal was busy wheeler dealing on state time on the one hand while angling for the governor’s seat on the other, the present Governor of the Central Bank, Sunil Mendis was asked to resign by Mahinda Rajapakse. An unheard of and unprecedented course of action considering the Central Bank Governor’s post is a sacred appointment protected by the Constitution.

Many in the finance sector are nonplussed that Mendis was moved out to accommodate Cabraal for no good reason other than to fulfil a lifelong dream of Cabraal’s since his salad days as an accountant. Removal from a posting is conferred on Parliament unless the person voluntarily resigns. Mendis will vacate office by June 30. He obviously had no stomach to refuse a presidential request.

Gold Quest invisible but present

Gold Quest in the meantime has wormed its way into the Sri Lankan economy by an ingenious method of laundering. It has bought into the tea, leisure, banking and telecommunications industry as well. Though Gold Quest held an almost 20 percent share in National Development Bank (NDB) through its proxies, a Malaysian national Mr. Tagiah who held 9.9 % and another foreign account which held 10 %, these were sold at the beginning of this year. However the talk in the market is that the shares were sold and re bought by persons or companies with less obvious but as intense a connection with Gold Quest as the overt proxies.

The elaborate operation

In a nutshell the story is this. Gold Quest, under investigation by the central Bank was to enter Sri Lanka through the back door. Its overseas associate and front company, Suntex International Holdings Ltd – based in Hong Kong bought into a Sri Lankan credit and finance company Capital Reach Credit Ltd and also bought 50 percent stake of the local tea company Ferntea Pvt Ltd.

Suntex then used the resources of Ferntea to clear gold coins, wristwatches, numismatic products and other similar items on behalf of Suntex International. The local company for Gold Quest is Rhythm Collections Pvt Ltd. Ferntea would thus clear the items for the Gold Quest overseas associate Suntex and hand over the items to the local Gold Quest front company, Rhythm Collections Pvt Ltd, and voila! home and safe.

Journos taken on promotional tour

That Gold Quest will splash money to make more money is obvious. This year on March 22 and April 28 they escorted a number of Sinhala and English journalists to Honk Kong and Malaysia on a promotional junket tour. A source at the Central Bank said that 10 or 11 journalists had in fact gone and CID sources stated that these trips may also come under scrutiny.

Some of the journalists who went are Boolitha Pradeep Kumara from the Upali Group (Divaina and Island). Prasanna Sanjeewa Tennakoon of the Wijeya Group (Lankadeepa, Daily Mirror and Sunday Times), Geeth Prasanna Gunasekera from the Sumathi Group (Lakbima), Malinda Seneviratne of the State media and lately of the Arpico group.

Sunday Leader offered HK trip

Once the Gold Quest people were made aware of The Sunday Leader investigation which we commenced only last week, this writer was also offered an all expenses paid trip to Hong Kong last Thursday. The offer was politely but firmly declined with a comment that if The Sunday Leader needed to go to Hong Kong as part of the investigation it would pay its own way. However in the interests of right of reply see elsewhere on these pages for a comment by Gold Quest.

Evil cult

Incidentally, in some parts of the West and even in America and Australia, multi level marketing and such pyramid schemes are even considered evil cultism and not merely bad business practice. Be that as it may in Sri Lanka it is considered detrimental to the floundering economy and a scam aimed at rural youth from low income families who would easily get enticed into these schemes.

Infiltrated

Central Bank investigators speaking on grounds of anonymity told The Sunday Leader that infiltrations have been made to the deepest parts of Sri Lanka from Anuradhapura in the North Central Province to places like Karandeniya in the south.

The Central Bank prohibited the Pyramid scheme under the Banking Amendment Act of 2005 which came into effect on February 10, 2005. Top sources at the Central Bank told this newspaper the Act was careful to describe the characteristics of these prohibited schemes rather than name them, as resourceful marketers would merely change the names of these schemes to gain legitimacy and avoid the effect of the Act.

A Central Bank source told this writer that those involved in the now widely known Pyramid scheme could easily take cover by re labeling the business and claiming they were internet vendors involved in internet marketing, network marketing or multi level marketing. The public must thus be extremely vigilant to study the characteristics of the business or scheme before being roped into it.

Name changes

A source at the investigations unit also confirmed to this writer that Gold Quest based in Hong Kong, goes under various other names and has different front companies that are currently also under investigation. They are Quest Net, QI or simply just Quest. So they are a cluster of companies.

QI is of course the company whose all expenses paid Monaco invite was accepted by aspiring Central Bank Governor and Secretary Ministry of Planning Ajit Nivard Cabraal.

Arrests made

Already young rural boys and girls have been arrested under the Banking Amendment Act of 2005. On December 15, 2005 a number of young Gold Quest recruits were arrested in Anuradhapura while as recently as April 25 this year another seven persons were arrested in Karandeniya . All these recruits are between 18-22 years of age.

The total number of arrests of young persons by the Central Bank in collaboration with the CID have now risen to 11. Cases have already been filed and investigators reveal that many other names have surfaced from the initial statements made by the arrested youth.

Lured by adventurism

What is pathetic is that about three of the youth arrested are A Level students and sitting for the exam this month. Our investigations revealed that the promoters were targeting young and gullible youth from the lower income groups and creating a sense of adventurism and mystique in order to lure them into the never ending world wide web of a money making scam that will ultimately leave you drained and alone.

No parents please

Central Bank Investigators told The Sunday Leader that the promoters discouraged the youth from bringing adults to the meetings as they asked too many questions while the youth are more spontaneous and would act immediately with little deliberation.

Also the rural youth are dazzled by promises of quick money and windfalls including the use of modern management techniques, promises of trips abroad and fancy cars by showing the before and after lives of those who had joined the scheme.

Blowing hot and cold

Investigative sources said that the usual method of these promoters was to first meet with 50 identified youth and filter down based on commitment, ability etc. to 25 and gradually to 10 and so on until they hone in on three people. These three they name as Cold, Warm and Hot. The Hot person is immediately recruited and is made a part of the scheme. Then it is the promoter’s task to make the warm person hot and the cold person warm and then hot for absorption into the inner circle.

Secret location

Meetings are held if possible every week at a secret location. For instance in Karandeniya the meeting was in a small house located in a semi rural area adjoining a nondescript shoe shop. However when you enter the house you are shocked that it is fully air-conditioned and has a posh interior not commensurate with its outer façade.

No strangers are allowed at these meetings. However if you are already in the inner circle you may invite a friend or someone you know well enough to ensure the person is not a mole or part of a sting operation by investigators.

Cult

Central Bank sources told the newspaper that this is fast turning into a cult based on team work and intense bonding. They also said that in Anuradhapura and Karandeniya the promoters have been from Pannipititya in the Kottawa area

Cabraal connection

Now that we understand the workings of Pyramid marketing promoters let us look at the companies specifically involved in Gold Quest through massive subterfuge and surreptitious selling of shares. We promise you a roller coaster ride that will end at the feet of Ajith Nivard Cabraal.

How is Cabraal involved? What are these companies and who runs them? Let’s begin with the local company Rhythm Collections Pvt Ltd.

Rhythm Collections

Rhythm Collections has its registered office at 209/10 4th Floor. Union Place, Colombo 2. Rhythm Collections is owned by Anura Fernando and his wife and therefore the directors are Nirmal Anura Fernando of No.8 Pelawatte Road Nugegoda and his wife Estalita Rozabelle Dolorus Fernando also of the same address. Rozabelle acts as the secretary to the company while the auditors are AM Associates of Galle Road, Colombo 6.

Weeraman gets caught

Rhythm Collections had a show room at the Premier Pacific Pinnacle Building on Duplication Road. One Nalaka Weeraman was manning this showroom. On July 26, 2005 Mr. Weeraman, an employee of Rhythm Collections was arrested by the CID for violating exchange control regulations.

According to the CID and CB sources, he had sold some gold coins on behalf of Rhythm Collections and accepted foreign currency to the tune of approximately US $400. However Rhythm Collections was not licensed to transact in foreign currency.

Rhythm is the local agent for Gold Quest

CB sources confirmed to this newspaper that Rhythm Collections was engaged in the business of importing gold coins, wristwatches and other numismatics products as part of the marketing scheme of Gold Quest. The clearing agent for Rhythm Collections was Ferntea Pvt Ltd, which used its resources to have these items cleared through customs.

The CID has already questioned and recorded statements from those connected with Rhythm Collections including the two shareholders and directors — Anura Fernando and his wife. Ferntea persons were also questioned including Jayantha Fernando its chairman.

A case was accordingly filed B3559/05 at Mt. Lavinia Magistrate’s court under exchange control laws and an interim order was made suspending Ferntea from clearing anymore goods until the conclusion of the investigation.

Entrapment

However sources close to Rhythm Collection say that the CID trapped Weeraman into transacting in foreign currency. Other sources told this newspaper Weeraman is out on bail and also now out of the country.

Anura Fernando when contacted by this writer said there was no merit in the case as Ferntea imported some goods and Rhythm Collections distributed them on behalf of Ferntea and there was an exchange control investigation where the authorities thought there had been a double payment. He confirmed the case was going on in Mt Lavinia courts but claimed that products were released and that the suspension order was dissolved.

Ferntea LTD.

The directors of Ferntea as at 22/7/2005 are as follows:

(1) Kunaseelan Senathirajah appointed on September 29, 2005. He is also a director of Suntex International Holdings Ltd.

(2) Richard E. Zinkiewicz also managing director Gold Quest International Alternate Director John Challen a British Lawyer

(3) Deepak Korla, Indian- manager Suntex International Holdings Limited from 26/09/2005, alternate director Joachim Kurt Steffen German – manager Suntex International Holdings Limited

(4) Pushpam Appalanaidu Malaysian – accountant, Suntex International Holdings Limited from 26/09/2005, alternate director Magandran S.Rajadurai also Malaysian –accountant, Suntex IHL

(5) Jakob Mayer no alternate director

(6) Jayantha S.Fernando alternate H.Joseph Chrishantha Perera

(7) V.J.L.C.Fernando

(8) Shyamica Marcele Fernando appointed wef 12/06/2000

(9) Nirmala Anura Fernando appointed from June 27, 2005 also company director Rhythm Collections Pvt Ltd

(10) Jakob Mayer

One can immediately detect a large presence of Suntex International Holdings Limited in Ferntea. This is because Suntex bought up a 50 percent stake of Ferntea as part of its expansion plan into the tea and leisure business. It is Ferntea that Gold Quest then used to clear their goods through Customs. Before we go any further remember a name. That is Richard E. Zinkiewicz who is also managing director Gold Quest International.

Anura Fernando is also the CEO of Ferntea by virtue of the fact that Suntex now owns 50 percent of its shares.

Suntex International Holdings Pvt Ltd

What is Suntex?

According to Anura Fernando himself in an interview with this writer (see box for full text) confirmed that Suntex has invested heavily in two local companies. One was Capital Reach Credit Ltd. The other was Ferntea. Extremely reliable sources confirm that Suntex is in fact the overseas associate company for Gold Quest. ‘However Anura Fernando denied that Suntex had anything to do with Gold Quest.

Zinkiewicz

This denial is easily discredited by documentary evidence and the turning up of Richard E. Zinkiewicz like a bad coin at every turn. That Gold Quest has in fact through Suntex in September 2005 crept into Ferntea and possessed its body is obvious.

Furthermore as recently as June 26, 2005 Zinkiewicz himself gives an interview to the state run Daily News, business section as the managing director of Gold Quest International.

Admissions to the state run Daily News

He is reported to have said that he would like to have a lengthy discussion with the Central Bank stating the company commenced operations in Sri Lanka in 1998. “We have made repeated requests to the Central Bank but still we have not got a chance to explain our position,” he reportedly states. Not only that, he is quoted as saying that Gold Quest is determined to expand operations in Sri Lanka and has invested about US$ 20 million in various businesses in Sri Lanka including tea and telecommunications.

He further states during the interview to the State run Daily News, “we are selling high quality products and the members are paid commissions for the sales made by them. Our coin buyers automatically become Gold Quest members and in turn can sell the medallions for commissions.”

Zinkiewicz also said the creation of Questnet as the QI group’s central distribution channel, GoldQuest is now focusing on building a powerful and universally appealing brand name for the 21st century.

Sources close to GoldQuest told The Sunday Leader they are now in the process of developing a local brand that would not involve foreign exchange.

Goldquest link to Suntex confirmed

Therefore the link to Gold Quest and Suntex is irrefutably confirmed.

Now let us look at the most interesting part of this saga. Anura Fernando has already confirmed to this newspaper that Suntex has invested in Capital Reach Credit Ltd. He also confirmed to this newspaper in an interview that he is a director of Capital Reach Credit as of today. He is a director by virtue of the fact that Suntex has invested in Capital Reach.

But we all know that Suntex is in fact Gold Quest. Therefore Capital Reach Credit has now also been possessed by the pyramid monster.

Cabraal’s family concern

Capital Reach Credit Pvt Ltd is also the family concern of Ajit Nivard Cabraal.

Consequent to the acquisition of majority stakes in Vanik Leasing Limited and Vanik Factors Limited by Capital Reach Holdings Limited (CRHL), also a family concern of Cabraal, the board of directors of CRHL decided to change the names of the two subsidiary companies to Capital Reach Leasing Limited (CRLL) and Capital Reach Credit Limited (CRCL) on July 14, 2005. Infact in July last year at a simple ceremony held at the company’s corporate office at No. 1, Lake Crescent, Colombo 2, new name plaques were unveiled by the Chairman of the Group, Ajith Nivard Cabraal.

The directors of Capital Reach Credit Pvt Ltd are as follows:

(1) Nivard Ajith Leslie Cabraal, 32/7, School Lane Nawala – director Cabraal Consulting Group Pvt Ltd.

Nivard Cabraal was to however resign on 26/11/2005 a week after Mahinda Rajapakse won the presidential election in order to take up plum government posts. Instead he appointed in his place his wife Roshini Sunethra Cabraal also a director at Cabraal Consulting Group Pvt Ltd.

(2) Dayananda Muthukumarana a director of Capital Reach Holdings ltd

(3) Mayurasiri Bandula Fernando also a director of Capital Reach Holdings ltd

(4) Kumarasetti Vithanage Kolitha Mahinda Kumara

(5) Chandana Kumarie Sarojinie Perera Angelis Mudalige, a director of Forbes Real Estate Pvt Ltd.

A large number of Capital Reach Credit Limited shares were issued to Capital Reach Holdings in January 2006 amounting to 2,100,000 shares at Rs. 15 each.

The shareholders as at the annual return date of October 10,2005 are Vanik, Sebrof, Forbes Capital Pvt Ltd. and Capital Reach Holdings. Capital Reach Holdings has about 5,100,000 shares as disclosed.

What is Capital Reach Holdings?

The subscribers are Nivard Ajith Leslie Cabraal, Dayananda Muthukumarana, and five others. The major shareholders of this company are the Cabraal family and Suntex International Ltd.(See box for details on allotment of shares)

Cabraal as Central Bank Governor

Be that as it may, President Mahinda Rajapakse must be doubly careful in his appointment of a Central Bank governor. Rajapakse, not the brightest spark in economics must also be intensely selective of his economic advisors on whom he must totally rely, especially given his inexperience in the subject and ignorance in business matters a fact he even admitted to at a business forum prior to the presidential election.

He must also be careful given that he met Anura Fernando in the company of Nivard Cabraal during his presidential campaign and that Anura Fernando is inextricably linked to an illegal business practice currently being investigated by the Central Bank.

There is a fear that this investigation, like many other large scale investigations before, will reach the same fate. It is upto Rajapakse at least now in the interest of honesty and transparent governance to direct the Central Bank to conduct its investigations fearlessly who ever may be perhaps involved in the scam, if at all. All the public asks for is a full and fair investigation.

And in the overall circumstances, he would do well to think long and hard before appointing Cabraal as governor of the Central Bank of Sri Lanka whatever his political or personal IOUs maybe to the man.

BOX

Anura confirms connection to Capital Reach

Anura Fernando when confronted by many allegations of fraud and theft (see box on Who is he?) said he was hurt that the newspaper should be asking about such matters and making him out as a crook. He completely denied any of the charges leveled against him on those issues and also stated he had never served jail time in Bangkok or in Sri Lanka. He also said that he was a bonafide businessman involved in bringing foreign investors to Sri Lanka and was in the business of portfolio management. People are driven by jealousy in Sri Lanka and he was a victim , he said.

Below are excerpts of an interview

Q: Are you a director of Capital Reach Credit Ltd?

A: Yes I am .The people who bought into Capital Reach is Suntex which is a Hong Kong based company and it is by virtue of Suntex that I’ m a director.

Q: Suntex is the front company or associate company for GoldQuest?

A: Suntex has nothing to do with Gold Quest but it has invested in Capital Reach and Ferntea

Q: It has bought 50 percent of Ferntea shares?

A: Yes

Q: By virtue of that you are also CEO and director of Ferntea?

A: That is correct

Q: What is Rhythm Collection Pvt Ltd?

A: It is a local Sri Lankan company

Q:There is a case of exchange control fraud presently in courts?

A: There is no case. Ferntea imported products and we distributed on behalf of Ferntea and there was an exchange control investigation as they thought there had been a double payment for the same goods. But now it is sorted out.

Q:When you met Mahinda Rajapakse in the company of Ajit Nivard Cabraal during his presidential campaign didn’t you discuss Gold Quest?

A: I knew Mahinda Rajapakse long before GoldQuest. I was even in the UNP working committee

Q: When did Suntex buy into Capital Reach Credit?

A: I can’t quite recall but a few months ago when there was a private placement

Q: Who are the current directors?

A: Justin Meegoda, representative of Finco, Mayura Fernando….

Q:Are there any foreign directors?

A: No

Q: How many shares does Suntex own?

A: About 20 percent, I think Vanik owns about 30 percent

Q: For how much did you buy it?

A: We bought it on par. Rs. 15. I can’t remember the total figure

Allotment of shares — Capital Reach Holdings LTD


Jayantha too busy to talk

The Sunday Leader contacted Christopher Jayantha Shane Fernando who is the current chairman of Ferntea. However Jayantha Fernando said he was at a meeting and too busy to talk but would be able to speak about the matter on Monday.


What is Gold Quest

According to a report from Pyramid Scheme Alert President Robert L. FitzPatrick Gold Quest claims to be an ordinary multilevel marketing programme of the types that are operating openly in the USA and other countries. Its business model is a classic MLM program in which each new investor recruits others in an “endless chain.” Little actual retail selling occurs. Each “distributor” is also the “customer.”

Gold Quest markets gold coins and Jewellery. Each person pays money and then receives cash or inventory after recruiting at least 10 new people in a “binary” system with five new recruits on each “side.” Each new investor is offered the same “business opportunity” forever.


GoldQuest says its multilevel marketing is legitimate

In a press release issued in Hong Kong on May 30,2006 GoldQuest International Ltd (GQ) said that it operates on an internationally accepted legitimate multi-level network market model that encourages citizens to join their business plan within the boundaries of the law. “We successfully and legitimately operate in over 100 countries globally, and take great care in abiding by the laws of every country in which we have a presence.”

“In the last two years, the business plan of the QI Group has been criticised by the Central Bank of Sri Lanka, especially after the enactment of Section 83(c) of the Banking Act, amendment No 2 of 2005. We have examined the contents of the aforesaid amendment to the Banking Act and are confident that our business plan clearly does not fall within the purview of the aforesaid amendment to the Banking Act.”

The QI group has invested in the Colombo Stock Exchange and also made other investments in Sri Lanka. The company is eager to make further significant investments in Sri Lanka…..

John Challen, Legal Counsel


Nivard denies involvement with Gold Quest

Q: Do you have any connection, relationship, contact or any dealings with the Gold Quest people?

A : Not me directly. But I think what has happened is that various companies come to talk to me. What is this about?

Q: You are tipped to be the next Central Bank governor and it is the Central Bank that is conducting investigations against this Pyramid scheme and has already published advertisements warning against it.

A: As far as I am concerned anything I do will be above board . If I take office of any nature I will ensure and do the right thing.

Q: What is your connection with Anura Fernando?

A: I know him very well.

Q: We learn that President Rajapakse met the Gold Quest people together with you and Anura Fernando before the presidential election. Is there any truth to this?

A: No they didn’t meet me

Q: Anura Fernando is on record that he met Rajapakse with you

A: I don’t know about that, no no I know whom I meet with, he never met with me.

Q: Isn’t Capital Reach Credit Limited a family concern?

A: I’m a minute shareholder. I have a few shares. My wife is a director

Q: Anura Fernando is also a director of Capital Reach Credit?

A: Yes. But there are many shareholders — MAS Holdings, Readywear, Renuka Hotels, Suntex so many companies and industries.

Q: Did you accept an invitation by Quest International, a part of Gold Quest for an all expenses trip to Monaco for the Formula 1 Grand prix?

A: I get a lot of invitations. Various people invite me to various things. I don’t know I only accept what I want

Q: Did you accept the QI invitation?

A: No I didn’t accept.

Q: What about Capital Reach Holdings Ltd ,the parent company of Capital Reach Credit and Capital Reach Leasing?

A: I don’t have any shares in CR Credit and CR Leasing but I have less that two percent in Capital Reach Holdings. There are other shareholders with substantial shares.


Who is he? What does he do?

Who is this Anura Fernando. He is the nephew of the late B.J. Fernando President’s Counsel. Certainly he is a man charming in aspect but mention his name to many in Colombo or some business people in Fort and they will shudder. More than that, even some businessmen in Bangkok will go weak at the knees. Fernando did porridge for almost three months in Bangkok for defrauding a gem merchant of some US$ 350,000. He is said to have been arrested at border control. It is also alleged that he has defrauded another top politico based in the UK of some 45,000 sterling pounds. He was also arrested at the Bangkok airport about 18 months ago for defrauding Reliance Thai Co. Ltd. owned by an Indian national Syed Abdul Cader.

When confronted with these matters Fernando vehemently denied these charges to The Sunday Leader.

UNP MP Lakshman Seneviratne in fact somewhere between 2001 – 2002 was defrauded of Rs. 3 million by Fernando. Seneviratne made a CID complaint and Fernando was arrested. However the matter was then settled before reaching court with Fernando transferring his mother in law’s Nikaweratiya property in Seneviratne’s name. Only later did Seneviratne find that it was no settlement at all as the property was already mortgaged to Pramuka Bank and had no clear title.

Anura Fernando however denied these charges vehemently.

But Fernando is said to have started early. In his salad days he is charged with an involvement with forged currency while his political networking skills have never been in doubt. A man with many irons in the fire and many friends in high places he was even in the working committee of the United National Party having been appointed by Ranil Wickremesinghe for his services to the party in the form of brokering a deal with the DUNF and bringing them back into the fold.

In fact the man was extremely close to the late Gamini Dissanayake who sent him to receive some campaign funds on his behalf from India. However Dissanayake too was allegedly played out receiving only a fraction of the funds and Fernando was persona non grata after that. Thus Anura Fernando likeable as he is, is feared in business and political circles.And he is the point man of Gold Quest in Sri Lanka.


The growing cult in Sri Lanka

A young boy glances back like a frightened deer to make sure he is alone before he makes his way along a rural path somewhere in Karandeniya near Ambalangoda. He finally reaches his location. A lower middle class house of nondescript aspect innocently standing next to a small shoe shop. As he reaches the door he does not knock. He reaches into his trouser pocket for a mobile phone. He dials. Seconds later the door creaks open and as he enters, it shuts quickly behind him.

He has told nobody of where he is going. It is a secret meeting. He brings no strangers. He is still new. But he is comforted, for as he walks in to the surprising air conditioned sophistication of the house from the heat outside, he is immediately made welcome and enveloped into a group that could perhaps for a time become his life and almost certainly his ultimate ruin. This boy is in the jaws of another promotional pyramid scheme meeting.




In the right place at the right time but is he the wrong man - Cabraal taking over as Central Bank Governor

Goldquest investigation

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