No governor is ever single-handedly responsible for anything at Central Bank – Investigative Journalist

No governor is ever single-handedly responsible for anything at Central Bank – Investigative Journalist

No governor is ever single-handedly responsible for anything at Central Bank – Investigative Journalist

Written by Staff Writer

19 Apr, 2015 | 9:06 pm

The committee investigating the alleged treasury bond scam at the Central Bank of Sri Lanka, has concluded that there is no evidence to the effect that the CBSL Governor Arjuna Mahendran, was directly involved in the process of accepting bids for the issue.

However, the Committee has also noted serious lapses on the part of Bank of Ceylon, through whom Perpetual Treasuries, had routed an unusually large amount of bids for the 30 year bond.

Issuing a statement on Sunday, the Ministry of Policy Planning and Economic Affairs noted that the Committee has made far reaching recommendations to ensure transparency and better governance at the Central Bank.

The three-member committee, comprising of Attorneys at Law Gamini Pitipana, Mahesh Kalugampitiya and Chandimal Mendis, had reportedly interviewed a large number of individuals including the governor, officials from the Central Bank, primary dealers and Perpetual Treasuries Limited.

The statement reads that the committee observed several deficiencies at the CBSL’s Public Debt Department, which handles all matters relating to servicing the domestic and foreign debt of the government.

In its nineteen-page report, the committee noted that since the PDD is dealing with the most sensitive information of the government, a proper supervisory and monitoring mechanism has to be immediately implemented.

However, the committee found that 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 at 13.55 billion rupees, as at the 2nd of March, 2015.

The committee has observed that even though the minutes of the relevant monetary board meeting specifies to issue a 30 year bond, the Monetary board, of which the Governor is Chairman had not decided on the amount.

The committee noted that while this exercise is vested with the PDD, the decision to accept the excess amount has been taken by the Tender Board Committee of which the Governor of the Central Bank is not a member.

Thereby, the committee has concluded that there is no direct evidence to the effect that Arjuna Mahendran had direct participation in the activities of the PDD and the Tender Board Committee.

However, noting serious lapses on the part of Bank of Ceylon, through which Perpetual Treasuries Limited had routed an unusually large amount of bids, the Committee has observed that the bidding pattern of Perpetual Treasuries warrants further investigation.

The Committee has also noted that the Bank of Ceylon should carry out a forensic audit and seek explanations from its Chief Dealer and others on ad hoc decisions risking a large amount of BOC funds, involved in the 30 year bond transaction.

The statement issued by the Ministry of Policy Planning and Economic Affairs, raises several questions.

1. If the CBSL Governor is not responsible for increasing the requirement to Rs. 10 Billion, then who at the Tender Board Committee should be held accountable?

2. If it was not the Governor who informed Perpetual Treasuries of the increased requirement, then who was it?

Leader  of the Democratic Left Front Vasudeva Nanayakkara says that he may not be solely responsible but he is responsible in principle, adding that he is the governor of the Central Bank and his son-in-law was with whom the loot has been shared.

Meanwhile, Investigative Business Journalist Faraz Shauketaly notes that no governor is ever single-handedly responsible for anything at the Central Bank, and they really don’t need a committee to tell them that. He went onto say that Arjuna Mahendran as Governor has admitted to a failure and it is this failure that resulted in the interest rates going up, very unusually.

Speaking exclusively to News1st on  March 16, CBSL Governor Arjuna Mahendran said that he takes responsibility for not informing primary dealers regarding the increased requirement.

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