Rs. 10b Treasury Bond controversy; CB Governor grilled on Thursday:

COPE report out next week

by Uditha Kumarasinghe

The parliamentary subcommittee looking into the controversial issuance of Treasury Bonds worth Rs. 10 billion by its current head, Arjun Mahendran, is expected to conclude its investigations by early next week. Chairman, Committee on Public Enterprise (COPE), MP D.E.W. Gunasekara said the report will be presented to Parliament, as soon as the ongoing investigations are completed. The COPE subcommittee summoned Central Bank Governor, Arjun Mahendran last Thursday (June 18) and questioned him for over one and a half hours. COPE appointed a subcommittee comprising 13 Government and Opposition legislators on May 22, 2015 to look into the controversial Central Bank Bond issue, following the Speaker’s ruling on a motion submitted by UPFA MPs seeking the dismissal of Central Bank Governor. In the motion, the Opposition MPs have alleged that the three-member committee appointed by Prime Minister Ranil Wickremesinghe to look into the matter was not independent.

A motion signed by 90 UPFA parliamentarians was also submitted to the Speaker on April 28, requesting the removal of the Central Bank Governor. The COPE sub-committee commenced its inquiry on May 26 focusing on as to whether the Central Bank Governor was involved in insider trading in the Treasury Bond issue of February 27, 2015. COPE had already summoned officials from the Central Bank and the Bank of Ceylon before the subommittee and also recorded a statement from the Treasury Secretary.

Earlier, the three-member committee appointed by the Prime Minister, to investigate the matter had observed the need for a full-scale investigation by a government authority into the unusual bidding pattern of Perpetual Treasuries and securing of some 50 percent of the accepted bids.

The three-member committee was chaired by Attorney-at-Law Gamini and included Attorneys-at-law Mahesh Kalugampitiya and Chandimal Mendis. The committee has noted: “This is serious lack of transparency pertaining to the activities of the Public Debt Department (PDD) of the Central Bank of Sri Lanka and there is no proper supervision of the activities between the primary dealers and the PDD. Given that the PDD is dealing with the most sensitive government information, the committee is of the opinion that a proper supervisory and monitoring mechanism has to be immediately implemented with regard to the activities of the PDD and the primary dealers.” Chief Opposition Whip, MP W.D.J. Seneviratne called it the biggest financial fraud that occurred in recent times, and pointed out that the Governor was a Singaporean citizen.