8 C
Wednesday, September 28, 2022

Cabraal denies involvement in Hamilton lawsuit against SL – The Morning

Must read

  • Calls reports on alleged involvement ‘nonsense’
  • Says court actions inevitable after a default
  • Hamilton expressed confidence in Cabraal two days after $ 500 mn ISB payment in Jan. 

By Madhusha Thavapalakumar

Former Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal yesterday (22) vehemently denied any involvement in the lawsuit filed by Hamilton Reserve Bank (HRB) against Sri Lanka, which took the nation by surprise last morning when the bank demanded full payment for the country’s International Sovereign Bonds (ISBs) it held. 

Cabraal, who reportedly helped Hamilton Reserve Bank’s expansion into Sri Lanka, said the following to The Morning Business when asked about his possible involvement with the whole lawsuit saga: “That is absolute nonsense. When there’s a default, court actions are inevitable. Even when an ordinary person defaults on a loan, the lender or bank will typically file action.”

According to Hamilton Reserve Bank – which is headquartered in St. Kitts and Nevis, a commonwealth nation in the Caribbean Islands – it holds more than $ 250 million of Sri Lanka’s 5.875% ISBs that were due 25 July, and thus filed suit on Tuesday (22) in a New York federal court seeking full payment of principal and interest.

The bank, when it expanded operations into Sri Lanka on 20 January this year, posted on Twitter that it “fully supported” then-Central Bank Governor Cabraal.

“Hamilton Reserve Bank expands into Sri Lanka, fully supports Central Bank of Sri Lanka Governor Ajith Nivard Cabraal, signing up five new multi-currency correspondent banks for HRB clients [sic],” the bank had tweeted at the time.

The post came just two days after Sri Lanka settled a $ 500 million ISB on 18 January 2022, despite deteriorating gross official reserves and calls for default and debt restructuring by both local and international economists. 

Cabraal, despite advice to the contrary from economists and even global rating agencies, proceeded with the ISB payment in January, which resulted in Sri Lanka Freedom Party (SLFP) Senior Vice President Prof. Rohana Lakshman Piyadasa and former Janatha Vimukthi Peramuna (JVP) politburo member Sunil Hadunnetti alleging that the Central Bank was attempting to bankrupt the country by settling ISB payments at a time when it could not afford to do so because the friends and associates of the Rajapaksa family and Cabraal had purchased the maturing bonds.

Allegations were that they purchased the ISBs on the secondary market at a discounted rate with the assurance that the repayment would be made as per schedule. However, Cabraal subsequently denied these allegations. 

Cabraal also repeatedly made assurances that Sri Lanka would not default on its external debt obligations and the country would not seek the support of the IMF. However, the country ultimately ended up doing both. 

Hamilton Bank hails from a place that is termed as a “very beguiling tax haven” by certain international reports. St. Kitts and Nevis provides citizenship via an investment scheme that offers investors the opportunity to obtain a second passport from the country. Citizenship also offers no personal income tax, no gift tax, no death duties, no estate tax, no inheritance tax, and no capital gains tax on worldwide income.

Further, Hamilton Reserve Bank’s LinkedIn handle indicates that there are only 11 employees of the bank on the social network, which, as several netizens have already pointed out, is suspicious, given the bank claims to maintain a wide network with clients in over 150 countries. 

- Advertisement -spot_img

More articles

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments
- Advertisement -spot_img

Latest article

Would love your thoughts, please comment.x