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The committee appointed by Prime Minister Ranil Wickremesinghe to inquire into the recent Central Bank Treasury Bond problem has stated that Governor Arjuna Mahendran had no direct part in deciding to accept bids over and above the Rs 01 billion stipulated in the 30-year bond tender and accepting up to Rs. 10 billion.

However, the committee has created far reaching recommendations to guarantee transparency and far better governance at the Central Bank of Sri Lanka.

Meanwhile, the Committee states it has noted critical lapses on the part of the Bank of Ceylon (BOC) via which Perpetual Investments, said to belong to Governor Mahendran&#8217s son-in-law, had routed an unusually huge quantity of bids for the 30-year bond.

The Committee observed that the bidding pattern of Perpetual Investments was uncommon and warranted additional investigations.

The media release issued by the Ministry of Policy Preparing and Financial Affairs:

The committee of eminent lawyers which inquired into the 30-year Treasury Bond issuance has produced far reaching recommendations to guarantee transparency and far better governance at the Central Bank.

The 3-member Committee had interviewed a big number of individuals, which includes the governor, officials from the Central Bank, primary dealers and Perpetual Treasuries.

Many deficiencies in the bank&#8217s Public Debt Department (PDD) which handles all matters relating to servicing the domestic and foreign debt of the government of Sri Lanka was observed by the Committee.

&#8220Since the PDD is dealing with the most sensitive information of the government, the committee is of the opinion that a proper supervisory and monitoring mechanism has to be right away implemented with regard to its activities,&#8221 the committee mentioned in its 19-web page report.

However, the committee found that Governor Arjuna Mahendran had no direct role in deciding to accept bids more than and above the one billion rupees stipulated in the 30-year bond tender and accept up to ten billion rupees. The PDD had projected the government&#8217s funding requirement as at 2nd March 2015 at 13.55 billion rupees.

&#8220Even though the minutes of the Monetary Board number 4/2015 specifies to problem a 30-year treasury bond, the amount of the bond has not been decided by the Monetary Board (of which the governor is the chairman).

&#8220This exercising is vested with the PDD as per the Operational Manual of the PDD. The decision to accept the excess amount has been taken by the Tender Board Committee that comprises eight members.

&#8220The governor of Central Bank of Sri Lanka is not a member of the Tender Board Committee.&#8221

The Committee concluded that there was no proof to the impact that the governor had direct participation with regard to the activities of the PDD and the Tender Board Committee.

Nonetheless, the Committee noted critical lapses on the element of the Bank of Ceylon (BOC) by way of whom Perpetual Treasuries had routed an unusually huge amount of bids for the 30-year bond.

The Committee observed that the bidding pattern of Perpetual Treasuries was uncommon and warranted a further investigation.

It noted that the Bank of Ceylon ought to also carry out a forensic audit and seek explanations from its Chief Dealer and other individuals on ad-hoc choices risking a big quantity of BOC funds involved in the 30-year bond transaction.

The 3-member Committee that looked into the 30-year bond concern comprised Gamini Pitipana (Attorney-At-Law) as Chairman and Mahesh Kalugampitiya (Lawyer-At-Law), Chandimal Mendis (Lawyer-At-Law) as committee members.

Source: Ada Derana

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