Sri Lanka Express

Coomaraswamy sings ode to credibility at presser, but has he been truthful about Rajaratnam connection?

By Hassina Leelarathna
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Photo source: Sri Lanka Central Bank website
Author Anita Raghavan in an article about life after the fall of the mighty Galleon Group says that for most of its employees finding a job on Wall Street was tough after the financial crisis “and next to impossible if your résumé included a line that said “Galleon.”  (The Billionaire’s Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund, by Anita Raghavan)
The Galleon Group, one of the largest hedge fund management firms in the world was co-founded by Sri Lankan born Raj Rajaratnam. The firm collapsed in 2009 when Rajaratnam and five others were arrested and charged with multiple counts of fraud and insider trading.  Prosecutors said he made up to $63.8 million in illicit profit from 2003 to 2009 by trading in stocks such as eBay Inc, Goldman Sachs Group Inc and Google Inc.Raghavan  quotes a former employee of  the hedge fund as saying that regardless of whether they were prosecuted or not, “anybody involved was affected by Galleon.”

Raghavan also mentions a former Galleon portfolio manager who spoke on the condition of anonymity “because of the stain still associated with the Galleon name.”

 “Even today, it impacts my professional life. A year ago, when I was going and interviewing, Galleon was a stopper,” he said.

She quotes another Galleon employee as saying: “Other than Leon, nobody is in a better place.”

Leon is Leon Shaulov who was never charged with any wrongdoing, unlike the more than 70 people who were convicted or pleaded guilty when the federal government cracked down on insider trading at Galleon.

But Leon is not the only one in a better place since the fall of Galleon. 

There’s Dr. Indrajit Coomaraswamy, as of last week governor of Sri Lanka’s Central Bank.

"Where in this sprawling tangle of secret deals, complete with throw-away prepaid cellphones, phony email addresses, code names, signatures obtained under false pretenses, bogus doctors’ bills, and backdated investment documents did the “professional services” of Dr. Coomaraswamy fit in?"  


Clearly, the Galleon connection was no stopper for Dr. Coomaraswamy whose bio includes “special advisor” to the Galleon Hedge Fund and director of a British company called Galleon Research Services Limited, a wholly owned subsidiary of Galleon International Management LLC which folded up along with the fall of Rajaratnam.   

Dr. Coomaraswamy’s appointment to the high ranking post came not without political tension and drama but it had little to do with his qualifications  -- his CV dazzles with British degrees and high positions in government -- or his relationship with Rajaratnam.   The fact that in addition to his felonious business career, the friend and one-time employer of the would-be Central Bank governor had  bankrolled the LTTE, helping the terrorist outfit purchase weapons, gave little pause.  

Lacking a public confirmation hearing process, such as in the US, that would allow for the vetting of candidates before they are anointed to high public positions, the run-up to Coomaraswamy’s appointment was a political turf war with some horse trading thrown in.  Prime Minister Ranil Wickremasinghe wanted his close political associate and former Finance Secretary Charitha Ratwatte appointed while President Sirisena favored Dr. Coomaraswamy.

In the end, Wickremasinghe was checkmated and President Sirisena signaled his victory  with the following Twitter post: “After consulting all parties concerned, I appointed top economist Dr. Indrajit Coomaraswamy to lead the Central Bank of Sri Lanka.”
All parties concerned” apparently did not include the Joint Opposition which had campaigned hard for the removal of former governor Arjunan Mahendran.   

Nevertheless, Coomaraswamy’s appointment was cautiously welcomed by the opposition with Dinesh Gunawardena tweeting:  “We welcome appointment of a New CB Governor, an experienced professional & respected in his field. Hope he brings credibility to CBSL & CBG.”

Not everyone in the Joint Opposition was as conciliatory and willing to put the Galleon connection to bed.  National Freedom Front leader Wimal Weerawansa and Pivithuru Hela Urumaya General Secretary Udaya Gammanpila  blasted the appointment based on his connection with a convicted felon and LTTE financier.

Dr. Coomaraswamy’s opportunity to reassure his critics came with his first press conference, held in Colombo on July 5. 

The new governor started the event extolling the Central Bank as a “prestigious” institution and declaring that “the primary responsibility of the governor is to uphold its reputation and credibility.”

Nothing less would be expected of a Cambridge educated economist who hails, as the media has been reporting, from “a respected” or “distinguished” Tamil family, one who holds  “impeccable credentials.”   

Addressing the all-important Rajaratnam controversy (the only “blemish” that had to be zapped to attain perfection), Coomaraswamy said the billionaire had hired him for “professional services” and that his job was “to prepare research reports.”  

 “I quit almost a year before he was first accused of insider trading,” the state-run Daily News quoted him as saying. 
Raj Rajaratnam being led away by federal agents after his arrest in 2009

The new governor started his press conference extolling the Central Bank as a “prestigious” institution and declaring that “the primary responsibility of the governor is to uphold its reputation and credibility.”


From all published accounts, including his wiki, Dr. Coomaraswamy had two positions with the Rajaratnam enterprise: advisor to the Hedge Fund and director of the London-based Galleon Research Services.  So it’s not clear which of the roles he was referring to at the press conference.

Claiming that he quit his job before Rajaratnam was accused of a felony doesn’t quite create the distance he’s trying to put between himself and the crime scene, so to speak.  As federal prosecutors argued, Rajaratnam had been part of the insider trading racket for nearly seven years when he was arrested.  It was a long-drawn out crime drama during which the hedge fund tycoon used a network of tipsters from corporate offices and boardrooms to amass a fortune, paying for the forbidden information by wiring funds to offshore accounts and even rewarding the players with travel to lavish Super Bowl parties, prostitutes, and other forms of illicit entertainment.  Where in this sprawling tangle of secret deals, complete with throw-away prepaid cellphones, phony email addresses, code names, signatures obtained under false pretenses, bogus doctors’ bills, and backdated investment documents did the “professional services” of Dr. Coomaraswamy fit in?  As a “top-class economist” (another superlative thrown around) and as a “special advisor” to the company, how is it that Dr. Coomaraswamy missed the labyrinth of deceit which would finally lead to the arrest and conviction not just of Rajaratnam but of 75 others tied to Galleon?    

As for the timeline – his claimed exit from Galleon a year before Rajaratnam’s arrest – public records for the London outfit,  Galleon Research Services, indicate otherwise.
Galleon Research Services was incorporated on June 20,, 2008.  Rajaratnam was arrested on October 15, 2009.

Galleon Research’s annual company return for the period ending June 20, 2009 was filed and authorized by Dr. Coomaraswamy as director on July 15, 2009 – 3 months before the arrest.   The application to dissolve the company was filed and signed by Dr. Coomaraswamy on April 15, 2010, indicating that he was part of the operation until that point. 

When Dr. Coomaraswamy got into the Galleon gig in London,  Rajaratnam was at the top of his game, with a net worth of about $1.5 billion and robust hedge fund worth $7 billion. 

2008 was also the year when Rajaratnam was playing the insider game fast and furious. For example, acting on an insider phone call from Goldman Sachs board member Rajat Gupta, Galleon purchased nearly $25 million of Goldman Sachs stock, mostly for Rajaratnam’s portfolio.  Then the following month, when he learned from Gupta that Goldman was about to report a loss, he dumped the stock. 

In trying to figure out what exactly  Galleon Research Services set up to do and what was Dr. Coomaraswamy’s role might have been at the London office, public records might come in handy. 

According to the “Certificate of Incorporation,” which names Indrajit Coomaraswamy  as one of the company’s 2 directors,  the purpose of for Galleon Research Services (Company # 06625647) was “to carry on the business of general commercial company.” The following are among some of its stated objectives:

To guarantee and/or give security for the payment of money by, or the performance of contracts and obligations by, or the payment or repayment of principal, interest, dividends, and premiums on, and any other monies due in respect of securities or obligations by, the Company or by any other person or company, including any company which shall at the time be the holding company of the Company or another subsidiary undertaking of the Company or of any holding company of the Company or of any subsidiary of the Company or any holding company of the Company notwithstanding the fact that the Company may not receive any consideration or benefit from entering into any such guarantee or security.

To borrow or raise money or accept money on deposit to secure the payment of money or the observance of obligations in such manner as the Directors shall think fit and for such purposes to mortgage or otherwise charge in any manner whatsoever permitted in any jurisdiction in which the Company has assets or carries on business and in particular by way of fixed charge or floating charge over the whole or part of the undertaking and all or any of the property and assets (both present and future) and the uncalled capital of the Company and to create , issue, and accept securities.

To draw, make, accept, endorse, discount, negotiate, execute and issue cheques, bills of exchange, promissory notes, warrants, debentures and other negotiable or transferable instruments.

To issue and allot securities of the Company for cash or in payment or part payment for any property purchased or otherwise acquired by the Company or any services rendered to the Company or as security for any obligation or amount or for any other purpose.

To subscribe for, underwrite, purchase or otherwise acquire, securities of any company, fund or trust and to deal with and dispose of the same.

To promote any other company for the purpose of acquiring the whole or any part of the business or property of undertaking or any of the liabilities of the Company, or of undertaking any business or operations which may appear likely to assist or benefit the Company or to enhance the value of any property or business of the Company, and to place or guarantee the placing of, underwrite,, subscribe for, or otherwise acquire all or any part of the shares or securities of any such company aforesaid. 

To act as agents or brokers and as trustees for any person, firm or company, and to undertake and perform sub-contracts.
Do these objectives (which don’t even once include the word “research) suggest that the main function of the director at Galleon Research Services was to  crank out “macro economic” research reports?

The Galleon connection might not have been a stopper to Coomaraswamy’s ascent to the governorship, but, as a former employee said, its stain persists.

Dr. Coomaraswamy’s ode to credibility does little to remove it.

The Galleon Web (Source: PBT Consulting)

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