“I’ve just read the report in full. I’m appalled, according to the Monetary Law in this country the Central Bank Governor can not say that he didn’t know about it” a Central Bank economist told Colombo Telegraph.
Prime Minister Ranil Wickremesinghe
Commenting on the three-member committee report, appointed by Prime Minister Ranil Wickremesinghe to probe into the controversy that has emerged over the issuance of Treasury Bonds, the Central Bank economist said “this report and the way the ‘yahapalana’ government deals with problems is not only ridiculous, but dangerous.”
The first government-commissioned inquiry into the alleged corruption under the Sirisena government, concluded that “there was no evidence to the effect that the governor had direct participation with regard to the activities of the PDD and the Tender Board Committee.”
The following sections of Monetary Law Act will shed light on Governor’s responsibility which cannot be passed on to any other:
20. The Governor of the Central Bank shall be the principal representative of the bank and of the Monetary Board and shall in that capacity, but in accordance with policies or rules approved or made by the board, have authority.-
(a) to represent the Central Bank and the board in all relations with other persons, including the Government and any body of persons, corporate or unincorporate, whether public or private, domestic, foreign, or international; and
(b) to represent the Central Bank and the board in any legal proceedings either personally or through an attorney-at-law.
21. Subject to and in accordance with such rules, if any, as may be made by the Monetary Board in that behalf, the Governor may delegate to any other officer of the bank his authority to represent the bank for any purpose mentioned in section 20, so however that the Governor shall remain and continue to be responsible to the board for and in respect of any act or thing done or omitted to be done by any such delegate.
“So, he can’t say that he didn’t know about it!” said the economist who did not wish to be identified. He is barred from officially talking to the media.
Related stories;
Full Text Of Ranil’s Bond Committee Report – I’ve Nothing To Do With Committee Findings: Dr. WAW
Ranil’s Committee Clears Arjuna Mahendran
Arjuna Mahendran and the bond issue
Bedrock Barney / May 21, 2015
A picture is worth a thousand words. Ranil, like everyone else knows…….. that something smells fishy!!!
/
Dude / May 21, 2015
President Sirisena must use his executive power to dismiss Mahendran.
The so-called independent investigation launched by Ranil W. into the bond deal is a massive coverup..
Sri Lanka cannot afford to have the whole economy messed around by Mahendran at the CB who is not only corrupt but does not have the required qualifications, ethics of integrity for the job.
Also this is preventing investigation of the previous Central Bank crook Cabraal and his looting the CB to enrich himself and the Rajapaksa family.. Cabraal’s passport has been impounded but his assets illegally acquired must be traced and seized..
/
paul / May 21, 2015
“President Sirisena must use his executive power to dismiss Mahendran” and Ranil ;-O
/
Jango / May 21, 2015
Barney – “fishy” is right. And now it’s smelling positively rotten! Ranil really screwed up and unfortunately Maithri doesn’t seem to know what to do about it.
/
Jagath Fernando / May 21, 2015
Ranil will pay the price in Colombo District for the bond issue at the next elections.
/
Donald J Gnanakone / May 23, 2015
This is the worst shit the UNP found in 40 days which smells to the heavens. I agree that the Central Bank issue will hurt Ranil, Ravi, and the UNP badly. Many think that Ravi is the Minister in charge, while majority of the voters do not know that novice MP appointed by Ranil, (another FRCS Royalist) Harsha De Silva was the Minister in Charge hands on. He is very quiet now after he went to Killinochchi to open the second Central Bank in the Jaffna District with Mahendran and Swaminathan. CB’s second branch 1 mile from the A 9, next to Another army camp into the jungles has provision to build 250 homes for their employees from Colombo to Hambantota, was initiated by the Rajapakses and Cabraal 6 years ago with Mahinda laying the foundation stone.
Harsha is busy desperately canvassing for his KOTTE electorate in the Colombo district. The fool does not realize that Colombo district is from Wattala to Avissawella, and Panadura. Plenty of Tamil voters from Colombo proper, Avisawella estates, and even Wattala. Only a few Tamil Royalist like Sumanthiran his classmate might vote for him, and Mahendran’s friends and relatives will vote for him,. That includes the KARUVADDU CROWN from the ALOSIOUS clan in the Colombo district. Friends like CABRAAL too.
There is no votes of the JVP, JHU, FM Fonseka, Muslims, Tamils and Sirisena-Chandrika combine in Kotte and Colombo district. ALL OF THEM are contesting independently and UNP voters can only vote for a maximum of 3. Which also means he has to compete for the 3rd vote against UNP’ers like female Rosy S, Muzzamil, Eran W, Rajajapakse, Muslims and Tamils. He might be the 10th choice in the UNP list of a total of 18 MPs to be elected from Colombo.
Dwarf Harsha has to contest with the other giants in Colombo Hirunika, Fonseka, JHU, JVP, MEP’s Dinesh Gunawardene, Mano Ganeshan and his alliance, Eran W and Christians/Catholics, Grero et al. Sirisena-Chandrika- Mahinda Rajapakse supporters would not vote for Harsha De Silva.
However, since he is a good friend of Ranil now, (Not like Arjuna Mahendran, and a FRCS) with Ranil being the next PM, Harsha will get an important job with another new Mercedes Benz. Parliamentary pension benefits also will kick in.
He would be fine. No worries.
Donald Gnanakone.
/
Nathan / May 21, 2015
Do we need a Central Bank economist to tell us that the the Central Bank Governor would have known about it? Both PM and Bank Governor are hiding behind legal loop holes. If it was illegal, I am sure that by now, legal hawks in support of MR would have pinned them down. Mr. W.A Wijewardena should come forward to clear the air.
/
Don Stanley / May 21, 2015
The President, Sirisena, MUST use EXECUTIVE POWER and REMOVE Mahendran who is a corrupt scoundrel, insider trader and rent seeker..
This Mahendran fiasco is also blocking investigation of Ajith Nivard Cabral, Mahinda Jarapassa’s former CEO at the Central Bank who is another corrupt clown. BOTH Cabrall and Mahendran need to be investigated and put behind bars for RENT SEEKING and INSIDER TRADING in currencies and EPF funds fraud.
Cabraal must be held accountable for EPF and ETF loses, Commonwealth Games bid massive waste of funds and rent seeking in foreign currency transactions.
Ranil Wickramasinghe stinks – covering up Mahendran instead of asking Mahendran to RESIGN so that a full investigation into his INSIDER TRADING is complete.
Fact is that Mahendran was involved in INSIDER TRADING AND RENT SEEKING at the expense of the people and economy of Sri Lanka during the bond issue and you do not need to be a rocket scientist to know this. Mahendran is a corrupt clown and gave privileged info. to corrupt son-in-law – hence the unusual bidding pattern of his firm. This CB fiasco is dragging down the economy of the Sri Lanka and it is clear that both the Bank of Ceylon and its corrupt Manager who is a Rajapaksa stooge also must be investigated. Finally,
/
justice / May 21, 2015
[Edited out]
Mahendran was involved in the bond issue at Central Bank.
/
Srinath Gunaratne / May 21, 2015
Where is that FCID to investigate this?
MS and RW cheated Sri lankans to get the power and brought the country back by 10 years.
Did you watch that argument that between Harin and Wimal?
It clearly shows that the cost of the highway was reduced by reducing the lanes of the road!
Not by reducing the so alleged inflated prices as claimed in manifesto of the MS.
People now realise the lies, There is no yahapalanaya.
If the Police is independemt, Why do you need a FCID directed by MPs?
It is a political witch hunt!
/
Wera / May 21, 2015
This is a storm in a teacup most of you commenters are either way out of your league in knowing how this works or are just former MR stooges doing your best to shout and drown out you opponents. This is the pivot on which this government managed to hold on to the economy and pay its bills. When the aid in the mini budget was passed it was gleefully voted on almost unanimously why? The ugly pigs knew it will come a cropper for the lack on funds very soon. Then they could go to town and destroy this government. But it did not happen why this bond gave the treasury the breathing space it needed. So now what to do? Go after the governor. This company that bought the bonds did this country a huge favor. Without these funds we would have soon gone bankrupt. That Madamusalaya knew very well what was in store that is why he called for elections two years early. In spite of his many booby traps set to go off and sabotage the current government they have steered thru most of them so far which is a great credit to them.
/
Pot Shot / May 21, 2015
This kind of shoddy governance is unacceptable. There is so much public dissension on the matter it must be given serious attention. RW and Ravi.K’s insistence cannot appease the public outrage regarding this matter. We Sri Lankan’s lived for too long with this kind of mass scale corruption under MR and it is disgusting to see this happen all over again and within 3 months of this new government.
According to the investigation there have been no calls between Mahendran and his son-in-law as per the call logs. When both of them live in the same house/compound why should they take calls between them? This investigation is such a hogwash.
/
kolu ranil / May 21, 2015
This comment was removed by a moderator because it didn’t abide by our Comment policy.For more detail see our Comment policy https://www.colombotelegraph.com/index.php/comments-policy-2/
/
K.A Sumanasekera / May 21, 2015
So Mahendran didn’t know a thing about it. Poor fella..
Did Ranil hire him to sign Clock Cards of our hard working Central Bank Clerks?
/
Rabok / May 21, 2015
[Edited out] The other biggest issue is , we have a president who is not quick witted , not proactive , bend miserably under pressure, and quite miserably do not know which way to go – To make the matters worse – we have Rumour mill owner as our FM – God save this country – our future under these jokers will not be better
/
paul / May 21, 2015
“We have a president who is not quick witted , not proactive , bend miserably under pressure, and quite miserably do not know which way to go” not to mention totally illiterate in many spheres affectig the integrity of the team and the country he is supposed to be leading – be it on legal, economics, finance, social or science education.
“Insider trading” and “Rent-seeking” must be sounding like Latin to him.
/
kumarW / May 21, 2015
It is the Prime Minister RW that confirmed the Governor’s involvement in the Bond issue by stating in Parliament on March 17th that the Governor did instruct to accept bids up to Rs. 10 bn in the presence of two Deputy Governors!
/
sach / May 21, 2015
CT is first to report even when Gota release some air, but no mention about all the violence in Jaffna yesterday…why?
/
kolu ranil / May 21, 2015
[Edited out]
/
K.A Sumanasekera / May 21, 2015
Kolu Ranil…
How did you manage to get that name?…
I kinda like it….because it rhymes well like Kudu Mervyn..
BTW Wonder whether Ranil approved Dr Mervyn’s application.
Because Bodhi Sira has given firm instructions to the Exec Committee of his Faction not to enrol Dr Mervyn and Mr Dumind….
/
lal / May 21, 2015
Why? The Sinhalese are the bad guys, Tamils do no harm is the motto!
/
Aia / May 21, 2015
This is the last thing that Y3, having won an election on promise of bring good governance, would have embroiled in a few months into its tenure. Been in the position of the Governor and to say I don’t know is only shows AK’s ability to hold the position, and the call him to step down seems reasonable. We should learn to see the issues not the persons. Likewise, ministers, presidents secretaries all have to be responsible for the wrongs that happened under their leadership.
/
Ranil Wijeyesekera / May 21, 2015
This transaction took place as soon as he assumed office. He was not in control. He had Cabbral’s henchman in control.The decision was to change system It was to soon.Cabrals freind is Mahendra’s relation. They were out to fix him,. was this a conspiracy.
The mistake was to change the procedures.
This has gone to far. Let parliment remove him and take the responsility to prove. They may have to face defermation. Let Parliment if they feel they have proof cancel contract of Loan. Cancel bank Of Ceylon Loan.
/
Kalu Nangi / May 21, 2015
Good comment!
There is something fishy going on here. This man would have been stupid to get involved in insider trading so soon after appointment. MR henchmen seems to have fixed him.
/
Wickramasiri / May 23, 2015
Ranil Wijeyasekera, Your’s is perhaps the sanest comment in this forum. Why do many so called intelligent commentators rush to judgement? The hired hacks and sycophants of Mahinda Rajapaksa can be excused. They are doing their job. Others must reflect a little more. But then Arjuna Mahendran is responsible and accountable and he has to do what he has to do.
/
Dr Laksiri Fernando / May 21, 2015
It is appalling that Arjun Mahendran is still the Central Bank Governor. His appointment itself was irregular based on favoritism. Ranil Wickremasinghe should be ashamed of this appointment. At least after the revelation of the Bond scam, Mahendran should have been removed. The Central Bank is such an important institution in the country’s financial and economic system. The conflict of interest is very clear between Mahendran and his son-in-law and without Governor’s knowledge, the deal could not have taken place whatever the so-called Committee says. The Committee itself is a scam. What is the point in having a Governor, if he cannot take the responsibility? If he says that somebody else is responsible, he should have already taken measures against them. If he is a professional, with at least a modicum of integrity, he should have packed his bags and gone back to Singapore or elsewhere.
Even the President should not keep quiet on this matter. It is clear that Ranil, the PM, as the responsible Minister is wishy-washy on the whole matter. It is high time that the President intervenes and take some firm action. Otherwise, his credibility will also be questionable.
By the way, what is the (hell!) Central Bank trade unions are doing, including the Staff Officers’ Union? If it was Thulsiri Andradi’s time, the staff should have been in action by now.
/
K.A Sumanasekera / May 22, 2015
Dr Lucksiri mate,
Haven’t you guys been selling Ranil as No Nepotism, No favouritism, No Religion Mr Clean who will bring home the Bacon to the Elite, Anglicans , Vellalas and lately even for Muslims.
Surely Ranil has given Bacon , in fact a whole damn Leg of Premium Parma Ham to his mate Narendran even before Christmas.
Perhaps you forgot to mention the Commissions side of him.
Ranil and Mahendran stink to high Heaven.
What pisses me is this F,,,,,, Commission is for a life time for Mahendrans plus enough for his Testamentary Trust for several generations of little Mahendrans.
This must be the Mother of all rorts .in the history of Bond Trading…
/
Srinath Gunaratne / May 22, 2015
What is even more ironic is this government aka our tax payers has to work their arse out pay intrest for Mahendrans bonds. Settled for life!
Sri Lankans have no brains to believe in an accountant already accused of money laundering to be elected as a finance minister. Honda honda sellan elivena jameta!
/
D.Nimal / May 21, 2015
What about UNP-Ranil.W… accountability of Arjuan Mahaedra an appointment of CB Governor?
Our awareness of CB appointment by UNP -Ranil.W… has potential bias has infulance inside trading an issues of Govt.Bond has been huge amount Tax payers funds been misappropriated and cheated by UNP party higher echelon . Is that a Good Governances?
How can Ranil .W.. says he is pure or ‘MR Clean’? We have to believed, that UNP -leader Ranil.W..is excessively conservative, which ever-never listen to public voice.
UNP even employing these conservative methodologies.
We arrive at UNP-Ranil.. that are mind-boggling and this despite the fact that ample evidence before CB Bond inside trading ,nation quantitative estimates huge costs that could not be accurately measured. There is ample evidence before CB Bond inside trading that there was link between UNP Party Leaders and CB Governor.
But that the Bond of CB operation by Arjuna Mahandra risked creating more corruptions. That belief too has since been vindicated.
Needless to say there is sufficient evidence before the CB bond operation that it would lead to increased INTEREST RATE and stable income UNP Higher echelons .
But even if benefits do unexpectedly appear good decisions, that by UNP making huge return form POOR Tax Payers money. We want still required that CB Governor accurate estimates of lost as possible.
I have tried to understand how UNP-Ranil.W.. CBK & MS Governments work, systematic ways in which UNP often success Bond deal and what can be done to UNP undermine government ,better to meet the need’s of Sri Lankan public.
The political leadership of UNP Ranil .W..’s management and administration ,trying to put into practice an idea, that one can make corruptions ,how that ruling party government become inefficient, unresponsive and non-accountability; which create batter role of Good Governances in the society?
Inside Bond trading not the result of a single mistake by UNP-Ranil W…but culmination of dozens mistake made over last 100 days since 2015 January 9th.
I strong feel UNP as political Party plead guilty to that charges. UNP and their bunch of leaders and policies has lost credibility of Good Governances of Democracy.
We have to looked at consequently of using a higher interest rate of Bonds and though in evaluating future costs for the Poor Sri lanka people by misdeeds of UNP short sides policies of vested interest of foreign Capital, single handle that the will of Ranil W…..!
/
Crazyoldmansl / May 21, 2015
He CAN say that he did not know about it and it is a damned good thing that he DID say that he did not know about it and I hope that this will bring responsibility back where it should be and an end to the “one man show” that we have seen.
The governor does not have to make decisions that have to be devolved to specific mechanisms and those who make up those mechanisms must know how to exercise their responsibilities without looking to the governor to make their decisions. Time to grow up boys!…and if you choose to grown up to be “yes men” then you will pay the price.
/
Plato. / May 21, 2015
President MS is caught between Scylla and Charybdis[Greek Mythology].
Between Ranil and Anti Ranil factions.
Interestingly,in 1957 or thereabouts SWRD found himself in the same position;caught between Tamil disobedience and Sinhala extremists.
Unfortunately,History has a dirty habit of repeating itself!
/
Good Governance / May 22, 2015
Some of the comments posted here calls on President Srisena to use his powers to dismiss Mahendran. Does the President of Sri Lanka have that all pervading power to appoint and dismiss any official? The law applicable is the Monetary Law Act.
Section 16 of the Act states that President may on the recommendation of the Minister in charge of the subject of Finance remove the Governor etc for stated grounds. If the recommendation of the Minister is not forthcoming what can a so called Executive President do? JUST SIT AND WAIT.
We take the trouble to raise a big cry to pass the 19A to curb the power of the President. When things go wrong we want a powerless President to Act. Next time the fellows will ask what is the earthly use of a President directly elected by the people who cannot act decisively.
/
Don Quixote / May 22, 2015
It is accepted practice that it takes 6 months for a person to get a proper understanding of a new job. This is obviously something that Mahendran has not known the details of and he is now being set up.
My question is why is the opposition and the Rajapaksas’ so keen to put the central bank into turmoil ? What are they trying to cover up ?
Is the economy is a far worse state than we can even imagine ?!
/
K.A Sumanasekera / May 22, 2015
Has Singapore Tamil, Mahendran already started signing our Srilankan Bank Notes?…
If he has, I hope these are only LKR 5000 notes , because our Dalits don’t see or get a chance to touch them.
Every time the Elite and the Anglicans see them, they will feel proud that their 6 years of hard work since Nanthikadal has paid off .
And they will be proud that they have the signature as a serious memento for their special bond with the Diaspora.
Wonder how much a proof or a specimen note costs…
You can make a quick buck if Sira.s ass gets too hot and decides that enough is enough and sack Mahendran.
/
Pot Shot / May 22, 2015
If RW is to lose the no confidence motion It is utterly inconceivable that he is putting the entire country in danger for one Mr. Arujuna Mahendran who is without doubt guilty of the offence. It is time that RW listens to public opinion and sentiments something MR arrogantly didn’t heed to and faced the consequences on the 8th of Jan 2015.
http://www.dailymirror.lk/73481/over-60-sign-no-confidence-motion-against-pm-dullas
/
Not stupid / May 22, 2015
Who is the nameless ‘economist’ who has written this annonymous piece ?. What value is there in the condemnation of a faceless critique ?. How can we be even sure that he is an economist ? Is he economist or politician ?
/
xlntgson / May 23, 2015
How many bonds were there when the interest rate was raised? Was Arjuna Mahendran’s son-in-law, the only beneficiary? The govt badly in need of money raises it, knowingly who would buy such a huge quantity if not he trusts the bonafide and continuity of the regime? Was it of paper value or sold out after the increase of interest rate? Nothing can be done if the intentions are tainted and relevant people are discouraged to enter without hesitation. Diaspora, we invite to participate and if they do we cry foul. We disqualified them to enter politics, can we ban in them in stock market?
/
Banker / May 23, 2015
What is quoted from the Monetary law only relates to policies and representation of Central Bank where the Governor is responsible. It does not say that the Governor is responsible for day to day activities like the Issue of Treasury Bonds. If there is any irregularity in this regard it is the responsibility of the Officers in charge of such activities. Where I would say is Governors responsibilty is that he should have appointed a committee to investigate the activities and officers related to the issue of bonds when this irregularity was highlighted.
/
David Perera / May 23, 2015
Better without a Governor who is not aware of what is happening in the CB.If dealings amounting to billions goes without the knowledge of the one in charge he is paid and maintained for what?
/
Jim softy / May 24, 2015
LEt Ranil gets the Tamil votes at the expense of non-resident Tamils screwing up Sri lanka.
/
Jim softy / May 24, 2015
Ranil wickramsinghe is wasting Rs 5000 million to stay in power and to win the next election.
On the other hand, Never Trust Tamils. they are excellent at fishing in trouble waters. They don’t care anything when have the opportunity.
Arjun Mahendran’s first job was to rewards his Son in LAw and make him a billionaire.
Most Tamils who were rewarded with higher positions looted the place they working for.
/
Amali / May 24, 2015
This is related to Mr. Mahendran’s issue, the editorial of “The island” on 23 May, 2015 and former External Affairs Minister Mr. G.L Pieris’s comment.
I don’t see any wrong by appointing a person with a dual nationality to take the task, if he or she is competent in discharging the assigned task. How many ministry secretaries are dual citizens, including the present president secretary? However, citizenship of any person is immaterial if the person so appointed is incompetent of corrupt.
Mr. Mahendran is not the first person to appoint as a CB governor in the world. Even the British government appointed Mr. Mark Joseph Carney as the Governor of the Bank of England (Central Bank of England) who is a Canadian citizen. I don’t think Professor Pieris is aware of this. Mr. Carney is a Canadian citizen and is also an Irish citizen as he has Irish descent. He is considered to be the first non-Briton to be appointed to the role since the Bank of England was established in 1694.
/
Ruwan Gunasekera / May 24, 2015
Here is an excerpt from today’s Sunday Times:
For the UNP, electoral prospects have become brighter in view of the divisions within the SLFP. Yet, there is at least one major issue that is sure to haunt it at the upcoming parliamentary elections. That is the controversial Central Bank bond issue. In layman’s terms, a bond is a debt security, similar to an IOU. When one purchases a bond, he or she is lending money, in this instance to the Central Bank. In return for that money, the Bank provides a person with a bond in which it promises to pay a specified rate of interest for a fixed length of time and to repay the face value of the bond (the principal) when it matures or comes due. The Bank issues bonds at various interest rates and sells them to the public. Investors purchase them with the understanding that the Bank will pay back their original principal by a specific date. This is called the maturity date. Meanwhile, they continue to enjoy the income from interest.
The latest bond issue came after Arjuna Mahendran, a Singapore citizen and passport holder, assumed office as Governor of the Central Bank. The original bond issue was for one billion rupees at 9 per cent interest. However, this had been raised to Rs 10 billion for 30 years at 11.73 per cent interest. The fact that Mahendran’s son-in-law Arjun Aloysius, a Director of Perpetual Treasuries, received Rs. 5 billion worth of these bonds drew accusations of ‘insider trading’ and other malpractice. As the controversy grew, Prime Minister Wickremesinghe named a committee of three party lawyers who had little or no experience in bond issues to probe the matter. The three members were Gamini Pitipana (Chairman), Mahesh Kalugampitiya and Chandimal Mendis. They were provided the technical advice of W.A. Wijewardene, a former Deputy Governor of the Central Bank. As the Committee were to suggest, they were given terms of reference which were limited in scope.
The Committee’s report, once handed over to Premier Wickremesinghe, remained in limbo for some time. Thereafter, some of its findings were included in a news release issued by the Ministry of Policy Planning and Economic Affairs. In the process a paragraph which was not contained in the report was also included in the news release. It said: “However, the committee found that Governor Arjuna Mahendran had no direct role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept up to 10 billion rupees. The PDD had projected the government’s funding requirement as at 2nd March 2015 at 13.55 billion rupees.” That this paragraph was nowhere in the three member Committee’s report emerged only when it was tabled in Parliament belatedly, at least a month after it was handed over. The Committee only said “there is no evidence at this stage to the effect that the Governor of the CBSL (Central Bank of Sri Lanka) had direct participation….”
To make matters worse, the Committee had in fact cast serious doubts. Their report notes; “Given the sanctity and the obligations vested with the CBSL in managing the lifeblood of commerce in Sri Lanka and the onerous responsibility that calls for conduct beyond reproach, the Committee observes that it is not unfair for the general public to expect a high level of integrity in the conduct of the officials of the CBSL that includes the Deputy Governors and the Governor.” The Committee has gone further to assert that a “full-scale investigation by a proper Government Authority is warranted” and noted that “the bidding pattern of Perpetual Treasuries and securing 50 per cent of the accepted bids as unusual.”
The Committee has observed that the “Bank of Ceylon being a Primary Dealer had placed bids amounting to Rs. 13 billion for and on behalf of Perpetual Treasuries. At the interviews, both the Chief Dealer of the BOC and the CEO of Perpetual Treasuries said this was the first time ever that a Primary Dealer had forwarded bids at an auction for and on behalf of another Primary Dealer to the best of their knowledge.”
The Committee report adds: “The Chief Dealer of BOC informed the Committee that no Board approval was sought in forwarding bids on behalf of another Primary Dealer amounting to Rs. 13 billion and failed to apprise the board of BOC even thereafter. He further stated that this is not a credit facility. When the Committee questioned the Chief Dealer of the BOC he further stated that Perpetual Treasuries made a call with regard to placing the said bids and mentioned that the funding for such bid is by an Insurance Company. The Chief Dealer of BOC also stated that he inquired from the CEO of Perpetual Treasuries as to the reason of high amount of yield net of tax and the reply he received from the CEO of Perpetual Treasuries was “awoth atha thamai” (The rough meaning is colossal profit, if successful.)
“However, answering questions by the Committee, the CEO of Perpetual Treasuries denied that he mentioned that their source of funding is by an Insurance Company. He also disputed that it was he who said “awoth atha thamai” and said that it is the Chief Dealer of the BOC who said “awoth atha thamai. ” Hence, the Committee concluded that:
Though there is no legal bar, it is unusual for a Primary Dealer to forward bids through another Primary Dealer;
The Chief Dealer of BOC has acted without Board approval and has failed and neglected to apprise the Board of BOC thereafter;
The Chief Dealer of BOC had failed to exercise due diligence in checking the source of funding;
The lack of transparency and display in statements of the Chief Dealer of BOC and CEO of Perpetual Treasuries;
The discrepancy of statements made by each other.
If the Committee’s recommendations cast serious doubts over the bond issue it has probed, its report also notes that “highly confidential” statistics of the CBSL are in the public domain. The report says that “sentiments expressed by several Primary Dealers establish a conjecture that sensitive information of the Central Bank” and the secrecy may have been compromised on occasions. Taken as a whole, it was somewhat unfair to say that the committee had whitewashed the whole Treasury Bond fiasco involving the Governor and his son-in-law. On the contrary, the committee had said that the matter warranted further inquiry.
Debate in Parliament
The opposition in Parliament seized on the Committee’s findings to move a vote of no confidence. Speaker Chamal Rajapaksa, however, ruled that the matter be referred for probe by the Committee on Public Enterprises (COPE). Even if such a probe gets under way, it would become invalid in the event of a dissolution. Premier Wickremesinghe told the House, “It is better to refer the bond issue to a parliamentary committee than discuss it in the House. Recently, the consultative committee has been appointed and I have assured that I will summon the consultative committee of my Ministry to discuss the report of the committee that looked into the bond issue”. As far as this committee is concerned the officials have said there is no loss to the Treasury. If you look at the report it has said that private placements lack transparency. Most of these were done between 2012 and 2014. This is not only about the present Governor but the report says the former Governor acted without proper authorisation.
“We can bring the former Governor and ask how he acted without consulting the Tender Board. Who is going to safeguard the former Governor? I think it will do justice to the former Governor also if we don’t take this matter up for debate and refer it to a Committee. We must give officials the opportunity to respond to these allegations. These frauds happened during the time of previous regime”, the premier said.
However, on Thursday Speaker Chamal Rajapaksa allowed a two-hour debate on the CBSL bond issue. JVP leader Anura Kumara Dissanayake said, “This Government came in to fight bribery and corruption. When Ranil Wickremesinghe sits on the chair of the Prime Minisgter, he should not forget the mandate that brought him to power. The mandate was against the Greek bond fiasco and a loss caused in millions by the hedging deal. But in a short period of time this Government has shown it is going down the same road. This also shows that there is fraud and there is also a move to cover up those involved in fraud. If you are really against corruption, you should be against this. How can you try to shield this kind of happening. Tap your conscience and ask how you spoke three months ago and if this does not constitute robbery.
“This is far worse than a robbery that takes place when roads are is being built. This is a robbery that will rise up in waves. What is the need to safeguard the Governor? I am aware that many were against the appointment of Arjun Mahendran but on an undertaking personally by the Prime Minister the President gave his approval. Now you are forced to shield him. He was a handpicked person and in a short time he is involved in a fraud.”
/