17 May, 2022


Bond Commission: The Prime Minister’s Evidence Is Critical

By Rusiripala Tennakoon –

Rusiripala Tennakoon

The investigation on the Central Bank Bond issue is proceeding before the COI appointed by the President. It was reported that the Attorney General’s department has submitted a further list of witnesses they wish to be summoned before the commission. The list reportedly includes the Prime Minister, required to give evidence. A few days back a statement coming from Temple Trees announced that PM is ready to come before the COI if called for. It will be a most welcome move for the consolation of all concerned if this is done.

The warrant issued by the President appointing the Commission to investigate and inquire into and report on several aspects related to the issuance of Treasury Bonds during the period 1st February  2015 and 31st March 2016, specifically include the following areas;

1.The Management and Administration and conduct of affairs of the CBSL in respect of,

a) The decision making process that preceded the issuance of bonds including decisions relating to 

  • Amounts to be raised
  • Determination of interest rates
  • The bond redeeming process

b) The disposal of Treasury Bonds by the dealers direct and indirect

2.Whether there has been any malpractice or irregularity or non -compliance in the procedure followed;

3.whether the transactions have been carried out fraudulently, recklessly and negligently or irresponsibly resulting in any loss to the State;

4.whether there has been non-compliance or disregard of the proper procedures applicable;

5.whether such non -compliance and disregard of procedures have resulted in the improper or irregular or discriminatory award of bonds;

6. person or persons responsible for any such act, omission or conduct;

7.Whether any inquiry or probe into any of the above, had been obstructed or prevented in any manner resulting in damage or detriment to the Government;

The above provisions inter alia encompass the decisions and directions during the period prior to the issuance of the controversial bonds. Therefore the evidence of Prime Minister Ranil Wickremesinghe as the Minister in charge of the CBSL becomes important to clarify matters related to vital decisions taken based on directives said to be given by him regarding bond issues.

Testimony by the former Governor Arjuna Mahendran himself and several other officials from the CBSL before the COI, establish that the Governor acted on a directive by his Minister to do away with the direct Placement system in the bond  auctions. There is no evidence of this directive being ratified or receiving the approval by the Monetary Board. In accordance with the warrant this matter falls within the ambit of the following;

  • Non-compliance in the procedure as it is an arbitrary change of procedure hitherto followed by the Public Debts Department,
  • A malpractice because the application of the new procedure was without any notice or pre-warning to the participating Primary Dealers,
  • An irregularity since it was not endorsed by the Monetary Board

While the Governor is responsible for his unilateral action, the Minister has to explain and clarify as to how he expected his directive to be implemented besides the circumstances that compelled him to give such a directive. It is only by this one can determine whether  there has been a disregard of the proper procedures applicable as required under the warrant.

The Auditor General, has stated before the 2nd COPE inquiry and also before the COI that the decision to increase the Bond sales to 10 Bn instead of the 2.6 Bn, recommended by the PDD during the 1st Bond issuance on 27th February, has caused a financial loss to the Government. He has quantified the visible immediate loss and shown a projected accruing long term loss. These factors are relevant in the context of the Presidential decree as shown above under the  clause, “person or persons responsible for any such act  omission or conduct”. According to evidence so far , as reported, the governor used the directive given to him by the PM to discontinue the direct placement practice as one of the reasons for his insistence to increase the bond issue to 10 Bn.

Ipso- facto the responsibility extends to the person who gave such a directive as regards the resulting loss.

The adverse effects of this directive becomes more significant and grave when we consider the bond transactions of 29th  and 31st  of March 2016. Due to the adhoc decision of the Governor, based on the Ministers directive, CBSL has closed these bond issues, by selling amounts much higher than the offers and at very high weighted average yield rates going far beyond the expected rates for settlement. In the  29th March bond issue the amount offered was 40 billion but the final accepted value  risen up to 77.7 billion. The WAYR of these accepted bonds range between 12.78 and 14.23 ! This is a rate that could be categorised as unusually high when the relevant financial and economic factors are applied.

Same happened during the 31st March Bond issue that followed. Having offered to issue 20 Bn. they have issued 50 Billion. The applicable WAYR was  between 11.75 and 13.72 much higher than the estimated rate for settlement. The Coupon rate applicable to the issue was ranging from 8.5% to 11.5 % only. These transactions took place under a virtually dealer dominated back ground as the Bank  was bound by a condition to accept auction offers only. Following factors have to be taken into consideration in this regard;

1. Two previous bond issues scheduled for 10th and 24th March were cancelled by the CBSL due to the bids received from the dealers being unacceptable due to unusually high rates

2. The PD company related to Governor’s son-in-law was the highest single beneficiary from these transactions and the procedure.




  • It is observed that Perpetual Treasuries have been awarded 60%  of the bonds issued in excess of the original amount called for(ie. 77.7 less 40).
  • This company has been provided Rs.36 Bn under the Reverse Repo and Intra Day Liquidity facility of the CBSL to settle their purchase liability on account of these bonds,
  • The statistics show that they have obtained over 75% of the total such facilities extended  compared to all other primary dealers.
  • This company has failed to settle the CBSL on the due dates on account of these bond purchases and they were subject to a fine of Rs 26 million for this default.

3. The action taken by the MOF Ravi Karunanayake, as revealed in evidence before the COI, to prevent the State banks from bidding freely at both auctions has immensely contributed towards the resulting illegitimate culmination

4. The decision making influenced by the auction only process to accept whatever the bid rate submitted by the dealers has caused a big loss to the government, estimated by the Auditor General as Rs.784 million only for the day for the 29th March 2016 bond issue.

The direction given by Governor Mahendran to increase the Bank rate ( also known as SDF rate) to 6.5% from 5% on the morning of the 1st Bond issue of 27th February, helped him to justify the increase of the issuance to 10 Bn. This decision was contrary to a previous decision not to increase the rates by the Monetary Board. In effect the decision also contributed to creating a favourable secondary market  to the successful bidders. It is established that his son-in-law’s company acquired 50% of the total bonds issued in that auction. However the rates were again reduced back to the previous position in April 2015.

In a strangely similar manner the SDF rates have been increased prior to the second bond issue on 29th March2016 in the following manner;

  • On 30th December 2015, the rates were increased to 6.0% and 7.5%
  • On 19th February 2016 again the rates were increased to 6.5% and 8.00%

This undoubtedly lead to the creation of an artificial favourable market for bond dealers to demand high rates from the CBSL and also to sell them at an excessively higher rate in the secondary market subsequently. The transactions in the aftermath to the bond issue clearly establish the purpose and intentions of this manoeuvre. The overall resulting damage to the detriment of the Government is reflected in the following;

  • The market movements which caused an inflationary trend beyond the regulated limits,
  • EPF paying excess amounts to invest its funds in the secondary market,
  • The instant loss to the CBSL by selling bonds at very low prices offered by favoured PDs 

The COI will decide whether this is an irresponsibility resulting in losses to the state and who are the persons that should be held responsible for such.

There are other fundamental issues centered round the relevant decision making process,

Viz. the failure and /or avoiding of proper precautionary action immediately following the furore of the 27th February 2015 bond issue;

    1. Failure to suspend  Governor or to send him on compulsory leave at least pending the various investigations which were proceeding at a public level, 3 man committee appointed by the Minister, and two parliamentary COPE inquiries and suppressing  the no confidence motion in the order book of parliament against the Governor signed by 90 MPs.
    2. Not taking any action against the intransigence displayed by certain CBSL officials by not releasing required information to the Auditor General who was conducting an investigation on a directive by the COPE. It will be recalled that the Attorney General clarified the matter and stated that there is no reason for the CBSL officials not to provide the information sought by the auditor general. This is a lapse on the part of the Minister in charge of the CBSL since it is he who should have intervened in the matter due to the governor being under investigation.
    3. There appears to be the existence of some  collusion  between the Minister of Finance and the Governor of the CBSL due to the accommodation of  certain unprecedented acts like the placement of a central bank official above the head of treasury in the NSB and holding a meeting of Ministers and others to request funds from the CBSL by passing the Treasury.

The  Minister in charge of the CBSL has to explain his position regarding these matters without which it would be difficult to determine whether there has been any omissions, oversights any lapses in the conduct of affairs falling within his responsibility.

The other area which needs to be explained or clarified is whether any inquiry or probe had been obstructed or prevented in any manner resulting in damage or detriment to the Government by any authority. It is the Ministers evidence that will be important in this regard. Any internal investigation following the revelations should have received his attention. Following events also need some authoritative explanation both in public interest and for assisting the COI.

      • The reason for the PM to appoint a committee of inquiry on the same day of the disputed 1st bond issue on 27th February 2015
      • Why was this report not allowed to be discussed in the parliament
      • Why did  the PM state in the parliament that the Governor has done no wrong while the 3 man committee appointed by him was proceeding with its findings
      • Why did he recommend to dissolve the parliament on the day it was scheduled to table the 1st COPE report
      • Why did he not report to the parliament that the previous regime had entered into contracts beyond the provisions
      • Why did he give further instructions to the 3man committee while it was in progress
      • Why did the PM refer the COPE report that was tabled in parliament to the Attorney General before the parliament decided on the course of action to be taken.

In appointing  the COI, the Presidential decree has stated as follows;

“And noting that this investigation and inquiry under this warrant is in addition to  and without prejudice to any measures that have been taken or which will be taken by relevant authorities including the CBSL in the exercise of their statutory and legal responsibilities”

According to this the Minister in charge of the CBSL will have to explain and detail whether there are any ongoing other investigations under his purview or whether he has taken any steps towards such a course of action. In an issue of this magnitude, while obstructing and preventing will be considered as an irregularity, not taking any action that should be taken also will  be considered as a non-compliance. The Public will welcome some explanation by the Minister in this regard.

Print Friendly, PDF & Email

Latest comments

  • 4

    The Prime Minister is a man of Integrity and spotless clean. He does not need money or he does not hold offshore accounts and he or his family has never built Palaces or Bungalows, in Los Angeles, Texas, Dubai, or Seychelles.

    The only minus point that he holds he takes things very lightly and decisions slowly. That’s his downfall. He has too much of greedy people surrounding him and at no stage those people stood behind him during the terror rule between 2005-2015 or helped him in whatever way to throw out the despot

    I can vouch for his honesty and integrity and he is a man of peace.

    • 7

      Yes, the Prime Minister is purer than an angels fart !

    • 3

      Rohan Gunarathane: What ever you preach, Everybody knows who PM is. My question is he is so honest as you say, as a country’s important leader. Why he is talking other economic crap instead, answering the most important question he made the central bank, EPF funds, state banks bleed while talking about increasing the GDP. How do you that when he was the instigatoe of the worst bank Scandle, one got caught, In Sri lankan history. Because, we here he is boasting that he has done better things than that. the rumour is some of is influential collegagues insructed him to do so. but, he did not know extent PENTHOUSE Ravi was involved in it. Simply answer why he is not much interesting in answerinf the his role when everybody is waiting for him. Why he is FCID as a political tol and not to prosectue thieves. Because, they all are thieves. PENTHOUSE RAVI is ready to drag everybody if he goes.

  • 5

    This is a message to all Ranil’s enemies and detractors!
    This government cannot be brought down by a few mongols,rapists and fraudsters, mass murderers

    • 1

      NEECHA BITCHWAL: IS there any corruption UttarKhand ?. Who do they stop that. Ranil the saint can not be brought down because he is attached to it like a parasitic fish remora.

    • 0

      True but general public including innocent gullible who comprise the majority can and will do it!

  • 5

    One day he will have to look back and ask himself , ” what have I contributed to my country after a lifetime in politics ” .

  • 3

    Rohan Gunaratna: I admire your efforts in defending Ranil by citing his personal qualities. Yet, did or do you make an attempt to ASSESS him as the Prime Minister of this country? Even in relation to this “Bond Scam” and several other administrative and governing matters connected with the country and him being in the driving seat, do you ever believe him to be the fit and proper person to hold that high ranking job? A person can be clean in every respect; but that alone is not going to make him or her a good and a promising PM. Having said that, I still doubt his “cleanliness”; “integrity” etc. that you speak of. Trace the history of this “Bond Scam” from the time he (Ranil) brought the CB under his purview and appointed a foreign national (a friend, a college mate) as its Governor ignoring all needed precautionary measures to be taken in the apex financial institution of the country. Next how did he constitute the Board of Management of the National Carrier – SriLankan Air? Go to his past history as the PM, during which time he signed that “dirty” agreement with Pirabahakaran of LTTE without the knowledge of the Cabinet or the President. Go beyond and see how he ran the Ministry of Education with a notorious underworld gang leader named Gonawala Sunil. Do I have to remind you to run through the “Batalanda” saga? Do I have to tell you to trace the way he changed the UNP Constitution, ably assisted by the then President MR by blocking the roadway to Sirikotha to hold his power within for an indefinite period and acted in the most disgraceful undemocratic manner? In an overall assessment, I would, without any hesitation say he is NOT HONEST and CLEAN as you try to portray. I will comment later on this subject of “Bond Scam” and his involvement, responsibility and accountability as the Minister in charge of the CB.

  • 2

    This is an unprecedentedly incident of democratic frame work in the Western oriented -democracy that recorded by the Prime-minister who has looted public funds belongs to Central Banka, not even been call for evidence is unusual.
    That shows the Weakness and non- operation of democratic enforcement authority in by Republic State of Sri lanka that fully political maneuvering by Primer. He is so powerful beyond Court of Law.

    The Politics of Democracy has rise to higher level of corruptions which exceed limits of govt. that disobey to Democratic Institutions by top administrator of state of Primer Ranil Wickranasinghe?
    Rules of Judiciary has lost power to directed for PM by order of state even appear before law authorities.
    Nation run on lawless land.

    The PM’s political influence is above that Executive President no power of authority in this land that to even summons to evidences for PMs the before an inquirer Commission appoint by President?.
    How can that we are looking for Rule of Law?
    All high -power of corrupted politicians are at Free of Chagres by good governances since 2015 January 8th under the ‘Rainbow Revolution..” ?

  • 3

    The truth is, in a decent law abiding govt, Ranil and the gang which includes those put foot notes in the COPE report whould and those who got money indirectly because I heard some say “Putha kochchara dunnada” is the only response), should have stepped down in order to carry out the investigation successfully. The rumour is this central bank robbery the nes turn began in 1994 and that means Ranil knew it in advance. Every president and prime minister knew how to earn money that is why they like the central bank and they have bankrupted state banks more than once. Even todate Ranil is dealying to go to fCID when he was the minister responsible for the FCID. Instead he is talking about Economic imporovement, constitution etc., that itself is a fruad and people have understood it. IT is those monies have reached as far as russia, england, Malaysia, china, Africa, Hong or Singapore. It is a mental disease for politicians. I do not know the real truth or the length of this scandle. First they had played with the bank in 1970 or so.

  • 1

    Rusiripala Tennakoon’s call ~ “Bond Commission: The Prime Minister’s Evidence Is Critical” will be needed only if doubts exist. Even without PM’s evidence the case is crystal clear.
    By the way the verdict will depend ENTIRELY on how forcefully the AG presents the case.

  • 1

    In many comments in the public domain (press & electronic) criticized the Solicitor General Mr. Dappuli Livera for not questioning both the Ministers viz. Mr. Cabir Hashim and Mr. Malik Samarawickrama when they were summoned before the Commission. In my thinking, the Solicitor General got the most important information he was looking for, when both of them “Admitted” under oath, that they attended a “Breakfast Meeting”with officials of the CB including the Governor to discuss financial requirements to meet the delayed payments to road construction contractors. On the date of that meeting Mr. Malik Samarawickrama was not a “Minister” but “Admitted” he attended the meeting in the capacity of an “Advisor” to the Prime Minister. This “Meeting” violated all the “Procedures” of SCB in listening “directly” to Ministers and “Advisor”, whereas in actual practice such requests for funds must originate from the Ministry of Finance. So now is the turn of the Solicitor General to question the PM, why he sent an “Advisor” to attend a meeting with CB officials and what his “instructions” were. Why PM did not “direct” the financial requirements through the proper channel viz Ministry of Finance. Next, quite unknown to the general public, the Commission has sent “Questions” to PM seeking answers in writing through a sworn “Affidavit” . What those “Questions” are not in public domain and I wonder whether the Solicitor General would know that plus the answers in the “Affidavit”. Perhaps, that could be the reason plus the answers he wants the Commission to know as regards that “Breakfast Meeting”, the PM has been listed as witness to be “Examined”. It is now up to and, I believe, the responsibility and the duty of the Commission to summon the PM and seek vital information before embarking on writing a report. The Commission must be informed, through media and public opinion that this country needs to know what the “Subject Minister” i.e. PM has to say about this “Bond Fiasco”. Until that is done, the Commission will be ended “MINUS” the expectations of the PUBLIC. After all these Commissions are “By the People” and “For the People”.

  • 1

    It is good thing to give one’s comments and views on any matter candidly. But if such views are subjective they have no value in the public eye.Will be regarded as rubbish!
    What is important is not to praise the suspect but elicit the required information first.
    The issues raised by the author of this article are authentic in the context of the presidential warrant and factual based on documents public.
    Hence talking about PMs integrity and honesty sounds childish and nincompooish to right thinking people. Don’t behave like the idiotic Politicians who keep on talking endlessly about the past to cover up their bloody failures to find solutions.
    Sometimes crooked politicos employ decoys to praise them!
    So in commenting don’t appear to fall into this category
    Learn to argue facts and not fables and fairy tales!

  • 0

    We r not aware whether or/and what questions the COI has sent to the PM. With respect we state that the COI will know best what to ask.
    Nevertheless the respected lordships will be cognizable about the public views and the observations on a public issue of this nature.
    The social groups that played a vital and dauntless role to bring about a social change truly democratic will be expecting social justice and unambiguous verdicts .
    The international watchdogs will have their vigilance focussed on how the hard won democracy is practiced.
    If all are equal before the law no one unless immunised under it should receive any priority or special treatment. There is nothing so sacrosanct about Hon Ranil Wickramasinghe coming before a public commission of inquiry. He has experience in such matters. He came before the Batalanda commission. Although this happened at a time when vital other witnesses have fled the country he faced the commission and as we are aware that became another simple episode that found its way to the dust bin of political history. Apparently that may have been the wish of those who appointed that commission then, cos they are all cuddled together in one nest today.
    So it will be nothing but fair and reasonable and more over equitable for The PM RW to come before the COI and help those officials assisting in the inquiry on behalf of the government from the Attorney Generals Dept and save the embarrassment of summoning him.
    Best course of action would be for the PM RW to volunteer as a mark of respect to the Presidential Decree!

  • 3

    Pukka Jayantha and Jimbo,

    “People who are brutally honest get more satisfaction out of the brutality than out of the honesty.”

  • 1

    It is no secret that there was an attempt to white wash the whole issue at the beginning. The report of “the three wise men” was the start of the cover up. Then the foot-notes in a Parliamentary report. There was endless praise of the Ex-Sri Lankan heading the Central Bank. (It is reported that a Minister in Singapore has said that the action of the Singaporean is a disgrace to Singapore). That entire image making is bad governance. Then resulted in the persistent opposition resulting in anger even among individuals whose colour of blood is “Green”. Gradually the tide began to turn. It must be admitted and it can described as a credit to the present system in place that this probing and startling revelations are made in a judicial or semi-judicial forum while the individuals are in power. A Minister and Deputy Leader of a party had to bow out of the Cabinet. But all that credit which gives an impression of good governance is washed away with the anger that is generated because the EPF affected. An Aloysius at the front and perhaps many others in the rear to benefit by the Billions, at the expense of ordinary folks to lose by that amount shakes the conscience of any average man very violently. In a less democratic country the guys concerned would have been executed in public after a High Speed Trial. Let me conclude this by pointing out that during early days of Lee Kuan Yew times in Singapore, a Minister committed suicide when the net was closing upon him for acceptance of a gratification. Will that happen in Sri Lanka? (I am not asking the Singaporean in Question to follow that suite.)

  • 4

    I am wondering why no one is talking about ‘Choura Regina’ who plundered public money. Has she been ‘Dry Cleaned’ by time?

  • 4

    A failed political career without popular support and no achievements to show, only justification being low cunning and servility to foreign sources esp white. The guy tried to be strong with the Chinese in the Port City Issue and had to eat humble pie and the country had to suffer losses !.

    His standing rests on making his followers believe that he has good genes ( family members were once rich and powerful) and studied in the best school in the world !

    It is a strange family and a comic claim about the school. Only shows how small the man really is.

    The Bond scam has shown the true man . A rascal with no principles ,only determined to stay in power at any cost.

    Will the commission rise to the challenge ? I doubt they have the courage or the legal skills to do that

  • 0

    What qualifications does Rusiripala has to comment on a advanced banking matter before a Presidential commission. Is it by being Peoples Bank clerk and chairman Bank of Ceylon simultaneously. This is how the then finance minister Felix Dias Bandaranayaka managed the country’s premier banking institution in late 70s.

    • 1

      Dear Upali
      We r not aware of the history you are talking about. But we are thankful to Rusiripala for getting involved in exposing this highly technical fraudulent matter and writing some sensible readable and factual accounts related to the episode. Whatever are his qualifications or affiliations he has shown his metal as a fearless critic. But we know that Hon Ranil Wickramasinghe appointed him as the Chairman of National Gem and Jeweller Authority where he served until RW govt. was dissolved by Chandrika K.
      Better talk about what he has presented and not about him. Looks like it is too much for you to comprehend!
      Good luck chum!

Leave A Comment

Comments should not exceed 200 words. Embedding external links and writing in capital letters are discouraged. Commenting is automatically disabled after 5 days and approval may take up to 24 hours. Please read our Comments Policy for further details. Your email address will not be published.