The Central Bank has admitted that the highly confidential document on an on-site examination of Perpetual Treasuries Limited which was published by the media including Colombo Telegraph was in fact a leaked document, and the bank has lodged a complaint with law enforcement authorities to inquire as to who was behind the unauthorized release of the report.
The Secretary to the Monetary Board in a statement issued on October 10 said, “There has been widespread coverage in the press and electronic media regarding a report related on the on site examination of Perpetual Treasuries Ltd conducted by the Central Bank of Sri Lanka as the regulator of Primary Dealers operating in the Government securities market. The release of this report into the public domain has not been authorized.”
The bank also said that following this unauthorized disclosure, steps have been taken to strengthen the internal control mechanisms. “A complaint has also been made to law enforcement authorities to inquire into the unauthorized release of this report,” the statement said.
The bank said that the internal processes within the Department of Supervision of Non-Bank Financial Institutions have not been completed and the final report has not as yet been submitted to the Monetary Board for its consideration.
“At its last meeting held on 3rd October, 2016, the Monetary Board decided to hold a special meeting to consider issues related to the resolution of distressed non-bank financial institutions as well as the operations of Primary Dealers, including the current concerns regarding Perpetual Treasuries Ltd.
This special meeting will be held shortly and was scheduled before the Monetary Board was aware of the unauthorized release of the draft examination report on Perpetual Treasuries Ltd,” the statement said.
Meanwhile a good governance activist told the Colombo Telegraph that the bank has admitted the report was prepared inside the Central Bank. “The bank’s only worry is that it has been released without authority. So, the bank is going after the whistle blower; otherwise the facts are correct. Instead of taking action against the message, the messenger is to be shot,” the activist pointed out.
Following the leaking of the document, W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka said in his column that a ‘good-intentioned’ whistle blower from within the bank has released the document to the market.
Due to the scandals at Central Bank, during former Governor Arjuna Mahendran’s term, Wijewardena said that the damage done to the Bank’s reputation was far worse than the damage caused by the LTTE bomb explosion in 1996.
“This writer warned the Monetary Board in an article published in April 2016 that its anomalous interest rate policy would breed opportunities for market participants to borrow at low rates from the Central Bank and lend at high rates to the Government, a process known as ‘arbitraging’,” Wijewardena said in his article published on October 10.