A senior official of the Finance Ministry has expressed shock over Finance Minister Ravi Karunanayake’s ignorance over the alleged scam, which has resulted in the country, and the Finance Ministry suffering direct losses amounting to millions of rupees.
In an interview on ‘Face the Nation’ aired on the Sirasa TV on Monday, Karunanayake appeared to be unaware of the loss caused by the Bond issuance, when he asked ““what was the loss to the government as a result of the Bond deal of February 2015?” while also defending the Central Bank Governor Arjuna Mahendran.
The senior official of the Finance Ministry speaking on condition of anonymity as he is not permitted to speak to the media said “I believe that the Minister is misinformed or does not know the actual facts. The Minister of Finance, is the biggest loser in the first instance, which in turn imposed an equivalent loss on the people of the country minus the company owners in question. If he was aware of the facts, I am sure that he would have been so bold in his conviction”.
The 30 year bond carrying a fixed interest rate of 12.5% was advertised by Central Bank for Rs 1 billion. Along with every such advertisement, CB’s Public Debt Department indicates an indicative rate to Primary Dealers to submit their bids. This rate is based on the prevailing market rates for similar bonds and is intended to dissuade primary dealers from bidding at rates pretty much above or below the prevailing rates. In that way, Public Debt tries to keep the auction rates as close as possible to prevailing market rates.
“The indicative rate communicated to Primary Dealers in this instance was 9.5% meaning that the primary dealers have to submit their bids at a bond price of around Rs 131 per 100 rupee bond. At this price, the Minister of Finance would have got a premium income of Rs 31 for every 100 rupee bond he would have issued. However, the Public Debt’s indicative price was on the high side because it had been based on a 30 year bond carrying an interest rate of 13.5%. When the price is adjusted for the 12.5% rate which the bond in question had carried, it comes down to about Rs 121 per every 100 rupee bond. At this price, the Minister would still have got a premium income of Rs 21 since the market was willing to buy these bonds at around that price,” he noted.
The official noted that according to the bid details pertaining to the auction as reproduced by the Lawyers’ Committee appointed by the Prime Minister, almost all the primary dealers had bid around that price. “Even the Bank of Ceylon which had bid on behalf of one of its customers had bid at 9.5% or Rs 121. However, the very same BOC had submitted bids within the last 30 minutes before the closure of the tender at prices ranging from Rs 87 to 97 on behalf of the Primary Dealer Perpetual Treasuries. When the BOC Chief Dealer was questioned by the Lawyers’ Committee, his answer, according to the report, was that the CEO of Perpetual Treasuries had told him if they win it, there would be a big profit. It meant that this primary dealer was aware that the government would get more than Rs 1 billion which information was not available to other primary dealers,” he said.
It is learnt that the Public Debt decided to take up to Rs 10 billion on the insistence of Central Bank Governor Arjuna Mahendran, and Perpetual Treasuries was successful in getting 50% of that amount. Even the lawyers’ committee had remarked that this was unusual and need be fully investigated.
“Thus, a bond which would been sold in the market for Rs 121 was sold at around Rs 91 to this primary dealer causing losses amounting to Rs 1.5 billion immediately to Minister Karunanayake. The decline in market interest rates caused other primary dealers and investors to capture the loss by marking their portfolios to the now lower market price. The biggest loser was another state bank, namely, National Savings Bank,” he said.
“It is time for Ravi Karunanayake to come out of his narrow political affiliations and present himself as the Minister of Finance who has been entrusted with the country’s public finance of the country,” the Finance Ministry Official added.
kumaran / June 14, 2016
So arrogant. Lakshman Kiriella also says that the Supreme Court has seen no wrong!! They make money whilst they can and hope to get away with it. But a day of Judgement will come.[Edited out]
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Don Stanley / June 14, 2016
What are Ravi K’s qualifications to be Economics and fiance Minister in the Miracle of Modaya?
Just like the corrupt crook Basil Jarapassa former Minister of the subjects. Ravi K. is a joke and he is shy!
Ravi K is ashamed of exposing the rot in the finance ministry and CB and Ravi is talking about CB REPUTATION loss and currency if Mahendran’s bond scams and corruption in CB, Bank of Ceylon and other govt. banks are exposed and damage to the reputation of the country’s investment profile, because exposure of corruption at CB will drive FDI and foreign investors away.
So, Ravi K’s solution is to bury the truth and keep piling on the corruption in CB and the National DEBT so Sri Lanka will end in a Greece like situation with IMF help!
Mahendran should be arrested for hiding information and trying to erase it.
But the logic here is backward: Kiriella who is Ravi’s clown says ” There were various allegations thrown at Mahendran, none of them have been proved so far, hence there was no need to remove him from the current position of Governor.” None of the allegations against Mahendran have been proved because he is refusing to release information and blocking investigations. How can the Central Bank investigate, headed by a corrupt crook who wants to delete information investigate the Panama Papers names, when Mahendran is a financial criminal?! The Sri Lankan economy is crashing because of the corruption at the CB and not because of the EXPOSURE OF corruption in the CB. AYahalapanaya arguments to cover up Cabraal’s and Mahendran’s criminality on the basis that exposure of their financial crimes will negatively impact the already collapsed Sri Lankan economy is JOKE!
This is how IMF and World Bank think and they have legalized corruption and off shore Banking tax havens for corrupt elites in the Third World, rather than help crashing economies to go after and bring back looted funds stored in Europe and US to pay of DEBT.
Good Governance activists must challenge this non-sense and Mahendran’s and the IMF’s BULLSHIT!
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Jagath Fernando / June 16, 2016
Guys get your facts correct.
Bond scams have gone on for years. It has happened during the terms of all governors. CBSL staff is aware of all the suspected transactions but fir obvious reasons no PD Primary Dealer has been suspended or prosecuted. Successive Monetary Boards have ignited the issue.
The current bond sales is no different. Look at the interest yields before and after an auction and that tells the story.!!!
Everyone is happy under the current bond auction system and so why rock the boat?
It is simple mathematics since two PDs dominate the auctions.
This is SL and no one is held accountable.
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Rabok / June 17, 2016
Jagath – Present guys came to power with big promises — to clean the rotten muck and set the record straight – but what is happening now – is just the opposite – when are we going to see something different happening ????
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NAK / June 28, 2016
Jagath,You say this type of thing has been happening in the past too. You may be right.This whole setup of bond market smells foul in that there are gaping holes for the racketeers. But, the scale of this scoop stinks to the high heavens and it not only rocked the boat but toppled it.
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Roshan / June 16, 2016
Come on ghost expert from Ministry of Finance, no one bid for Rs.121 or even Rs.100 / BOC only had few million extra funds to invest! on long term bonds,. its a Multi Billion Rs. urgent requirement to pay state loans,. the investor who had the money only agreed to the said amount no other had a successful bid,. or the liquidity,. so its just business not a scam or lost! think twice,. don’t just blame FM.
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Shawn / June 14, 2016
I think that this bond profits of Rs 1.5b by Perpetual Treasuries end up in UNP coffers. That is why all are supporting to re-appoint Mahendran including Karunanayake, Kiriella and Ranil. If it goes to SLFP as well, MS will re-appoint without any hesitation like he did his brother to SLT in two weeks after Jan 8. Without any shame, Karunanayake is telling in the program that there is nothing wrong in appointing a brother to Ports Authority by his colleague Ranathunga. Mahendran let his son-in-law profit Rs 1.5b at the taxpayers and the country’s expense. They all came to power complaining nepotism by Rajapaksas and repeating the same things. Even if the relatives are qualified they should avoid appointing them due to conflicts of interest. In most cases, it leads to corruptions or inefficiency. They will pay a heavy price in the next poll.
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Deshapremiya / June 14, 2016
Well said comrade Shawn,
The loss to the Finance ministry is a loss to our people and country. Thsi is profit to our thieving politicians. These scams and underhand profit to those defenders like Ravi, Ranil, Marru-Sirra, Kirriella and other bandits are all benefactors from these daylight robbery. Similar thefts happened during the previous regime as well with help from Cabral, PB Jayasundara and others where Perpetual Treasuries benefited from a windfall over a billion Rupees. That is beyond what Arjun Aloysius profited from insider trading and acquisitions of state assets as revealed by SEC execs and inquiries that forced several SEC chairmen to resign. These mega financial scams or robberies that are a loss to the country and our people is a profit to politicians, public servants and their henchmen that mastermind these scams and portray to the country that this is a normal business practice. These scams happened during the previous MARA government as well. The profits are funneled back into their personal off shore accounts and profits used to inject money back into their political campaigns to re-elect the crooks back into power. This vicious cycle is what continues with this regime as well.
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thondamanny / June 14, 2016
So… you scratch my back and I’ll scratch yours……
So… our Prez will read Kiriella’s statement in the media & re-appoint Mr. Jacket to his post.
Mr. Jacket, Mr. Clean, Mr. Takaran, Mr. Perera @ Kiriells with our nicompoop Prez will live happily thereafter.
Dr.Wijewardene,Chandra Jayaratne & the masses will be left to look fOOLS.
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Raj / June 14, 2016
‘Conflict of Interest’ is a phrase not known in SL. Neither is nepotism & cronyism, which is a way of life citizens of SL have come to except.
Ravi K is responsible for the Finances but It’s time the PM realized the buck stops with him & get his Ministers to get their act together. Misuse & abuse of public funds should be investigated. In UK, public officials are always under scrutiny & any misuse of funds / privileges are investigated & claimed back by the treasury if found to be so & politician in recent times have even gone to jail for fiddling their expenses. Good governance obviously has gray areas & this is one area the govt. pretends not to exist.
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Patriot / June 14, 2016
What loss Ravi K has been looked after very well. As per Wimal Veerawansa in Parliament Ravi K’s gig at the Monach which costs USD 10,000 a month is footed by You Know Who’s Son in Laws Company. When there is such profits going around who is talking about losses here pissu yakku.
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Mallaiyuran / June 15, 2016
“It meant that this primary dealer was aware that the government would get more than Rs 1 billion which information was not available to other primary dealers,” he said. “
I can see the rest of the story. But what did this BOC Chief Dealer do after he too got that information. Did he believe the story of the Perpetual’s CEO? Did he asked the CEO if it is going to be over subscribed then why the Perpetual wanted to quote the below market value price? Did the Chief dealer explained to the above problem of they winning the auction but only ended up paying the dealer fee? If the CEO wanted still to quote did the Chief Dealer explained to the CEO if the CEO is confident in winning the auction, then it is going to amount Insider deal?
It looks like now Mahendran is the only one did know the Insider dealing was going on.
Matters seems to happened like this. Mahendran was told there is less chance of $1 billion bond getting subscribed. The price was lowered to get the needed $1 billion. It was over subscribed. Bank was having loan problem. They took the opportunity make them some money and borrow as much as possible too. Now if Mahendran goes and somebody else come, different people can share the robbery. That is why they want the change
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shankar / June 15, 2016
mahendran looks nice and chubby after dining and dining on his CB credit card.very soon he will have to get some more 2mln rupees suits,otherwise he may choke on it one day.Now most of his time is spent trying to find out who gave the credit card details and he has no time to issue some more bonds thankfully.
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Suteh / June 15, 2016
Patriot,
Why are u even bothering to parrot BOORUWANSA’S claims ?
Have either u or him Boora seen the signed rental agreement?
Stop talking BULLSHIT & try to help develop this Country that has been taken to the dogs during the CBK & MR PERIOD.
Btw I do have a dog,but he is fabulously maintained, like a prince .
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Pucci / June 15, 2016
Shankar.
Just because you must be wearing cardboard suits made in SL or probably don’t even own one, you criticize.
CB for dressing or paying whatever he wants on a suit.
It’s his money, not the Government funds.
He has more than enough money to eat & drink where ever he wants to, anywhere in the world at his own expense.
Get your facts together before writing discriminating evidence against some one you don’t know & most probably will never even meet.
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shankar / June 15, 2016
pucca
he sent the bill for the suit to the CB,which turned it down.If he has so much money why did he want the CB to pay for it,the stingy bugger.
Also if has so much money to wine and dine at his own expense why is he using his CB credit card?All these buggers have come to have a gala time while the poor people are suffering their ass off in this country.They all live in another world,not only this man,but all the politicians etc.
This is a poor country and you must have some sensitivity towards the poor people of this country without lavishly spending while they are going through nightmare after nightmare trying to make ends meet.By the middle of the month they are broke and have to take loans or reduce their calorie intake to survive while people like mahendran will have to go to the doctor due to overeating.thank god i will not meet people like him as you say,with my limited life span left i want to meet people in the opposite spectrum and help them as much as i can,make my pennance and buckeroff from this world.
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Tube Light / June 15, 2016
Mahendran should not have accepted the CB Governor’s post if his son in law’s company was going to act as a Primary Dealer during his tenure. If he wanted the job for whatever reason then Perpetual’s primary dealer licence should have been cancelled. This is good governance and being above board. But Mahendran comes out with BS such as the son in law’s family owns Perpetual, but the management is separate etc. He should realise this is Sri Lanka…
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kumaran / June 15, 2016
Good. So why is he scared to go before the COPE?? Why wont he not make a full declaration of assets (as ALL State employees are required t do?) When in the State Sector one need to be seen as doing the right thing, not only be doing the wrong.
We can theorize but the majority of the voters have different ideas.
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Dr.Rajasingham Narendran / June 15, 2016
Listening to the ‘Face the Nation’ interview, what struck me as rather perverse and bizarre was Ravi Karunanayke’s explanation that taxes accounted for the high price of the cars that were about to be purchased for some ministers. He did not of course say who was paying the taxes to the government. Was the government paying the taxes with our money for these cars, which the government was paying for with our money?
Was the minister trying to mislead us?
Dr.Rajasingham Narendran
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Ajantha / June 15, 2016
Shame… Ranil is touring the country in his [Edited out] Suddas jacket pretending to be Mr Clean.[Edited out]
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Tube Light / June 15, 2016
Ravi K has no credibility as the country’s Finance Minister. His Senior Consultant is Arjuna Mahendran’s son in law and they are the best of pals.
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Pucci / June 15, 2016
Shankar, godaya my name is not Pucca.
It’s PUCCI.
You ve got ur underpants in a twist.
That’s of course if you can afford to wear it.
He DOES NOT SPEND A CENT ON THE CB CREDIT CARD.
He has over a hundred cards from many banks worldwide.
You have NOT seen the bills neither has boruwansa.
Thank God your lifespan is limited.
Anyway neither will he want to meet some one of your ilk.
You obliviously live in a small dark twisted world, if you have to take what boruwansa says at face value.
This comment ends here.
Idiot
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shankar / June 15, 2016
pukka
so why is he going after the whistleblowers if it is not true.Terrible embarrassment isn’t he for the govrnment?he woudn’t have able to even fart in singapore without them throwing him in prison,so he comes here and has the ball of his life.He knows we are a tolerant nation and he won’t go to prison.
most importantly a disgrace to the tamils.Another fellow raj rajaratnam also disgraced us.All these high flying colombo tamils are giving the wrong impression of our hardworking honest community.i think by living and moving with the sinhalese only and not with their fellow tamils,they become corrupt.
though you use bad language on me i pardon you.May peace be upon you.
https://www.colombotelegraph.com/index.php/arjuna-mahendran-hunts-for-central-bank-whistleblower/
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justice / June 15, 2016
The Bond Auction was a planned scam by Mahendran and his son in law to enrich the latter at the expense of the people of the nation.
The persons who actually conducted the Auction, without doubt had been influenced, in the most common way now prevalent in this nation, to allow adjustments at the last minute, to enrich the Governor’s Son in Law’s firm.
The minister has to be dumb to say that there is no loss to the state.
Or, he fears that his inadequacy in performing his duties, would be exposed.
In any other democracy, this matter would be the subject of intense debate in the legislature.
The argument of the Governor and his officials to COPE,that divulging “sensitive” information would cause turmoil in the market is
patently untenable.
The peoples’ representatives must know the truth – it is their right and privilege. This is one of the reasons why they were elected – to bare scams and/or prevent them.
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Dermatologist / June 15, 2016
It’s called the ‘Mutual Back-Scratching Society’, so expect no admission of guilt!
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Sobana / June 15, 2016
Maybe RW ‘s ‘Suda jacket’
Was what was bought by the CBSL GOVERNOR.
Did the cut & fabric look good, unlike the cardboard ones one finds in that 3rd world Country.
That at least only he can make it a better place with more interaction to the outside world.
Unlike cardboard Sirisena but he wears a pair of gold rimmed Cartier spectacles that must cost at least a 100.000. $ s or more.
So much for a Gamarala,
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Sobana / June 16, 2016
Shankar.
You re a bloody goat.
Yes he will go after whistle blowers for sure as his private cc bills are his personal business & not your business or the business of the CT.
Go eat some grass , you seem to be a cow.
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shankar / June 16, 2016
sobana
what are his private bills with the central bank for?If you are twice as smart,you will still be stupid.
Why does he not come clean on this issue,publish all his bills,show how he financed them and refute booruwansa’s allegations the correct way without going after the whistle blower?We all sprang from apes,not goats,but you didn’t spring far enough.I don’t want to trade insults and jump down to your IQ level.
Your foul language does not make me angry at all.Nobody can make me angry because i always remember Lord Bhuddha who said “anger is like having a hot coal in your hand with the intention of throwing it at someone”.
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Sobana / June 16, 2016
Smear your mouth with some excreta.
Probably shut u up for awhile & then see who s smarter.
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shankar / June 17, 2016
sobana
is that all the points you have for a debate?Trying to defend the indefensible fat mahendran makes you remove your clothes on the web doesn’t it?
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Freddy / June 16, 2016
Corruption is the raw game. Live with it. Unless ousted for no confidence vote. People power might do the job and put these crooks in jail. Central Bank should be transparent and accountable to the people.
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PARAMANATHAN K / June 27, 2016
[Edited out] RAVI DOES IT AGAIN.
During the victorious election of Ranil Wickremesinghe’ Government in 2001 Ravi K was the notorious person responsible in bringing down the UNP government. Then he was the Minister of Trade & Commerce [Edited out]. He is doing it again in style to bring this government down by his wrong doings.
All wonder how on earth Ravi K was appointed as the Minister of Finance.He is totally unsuitable for this post and if he is allowed to continue we could witness some more financial scams to discredit this government. He should be tried in Supreme court for all his wrong doings.
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