CBSL Bond Scam Saga: Incomplete answers continue on action against Perpetual Treasuries

CBSL Bond Scam Saga: Incomplete answers continue on action against Perpetual Treasuries

CBSL Bond Scam Saga: Incomplete answers continue on action against Perpetual Treasuries

Written by Lahiru Fernando

29 Nov, 2016 | 10:03 pm

Central Bank Governor, Dr. Indrajit Coomaraswamy says the monetary board has taken action against Perpetual Treasuries. But stopped short of elaborating what those actions were.

A subject of great interest to the public and the press – The operations of Perpetual Treasuries

According to the Governor of the Central Bank, the on-sight examination of Perpetual Treasuries has been completed and the monetary board has considered the examination. He also said that the monetary board took action regarding the matter on November 7 and again on November 25.

However, Dr. Indrajit Coomaraswamy said “at this point I am afraid I can’t give you any details of the action we have taken,  for various reasons.”

The mounting pressure

Governor Coomaraswamy’s remarks come in the wake of mounting pressure from the media, the opposition and civil society groups over the delay in action against Perpetual treasuries, the primary dealer which is involved in controversial bond deals in government securities and linked to former central bank governor Arjuna Mahendran.

A parliamentary committee recommended that profits allegedly made by Perpetual Treasuries through rigged bond auctions need to be roped in and legal action taken against former Central Bank governor Arjuna Mahendran.

During the press conference, a journalist questioned if Perpetual Treasuries remains as a primary dealer and if it is considered ‘a bank’, does it have the approval from the Central Bank?

“Be patient albeit. If you are going to talk about all these things now it will upset everything, that is the problem” was the reply given by Governor Coomaraswamy

The Governor, who insisted that action taken against perpetual treasuries would be revealed in the future, announced a series of precautionary steps that have already been put in place by the monetary board to ensure transparency of bond auctions and prevent inside information leaking to dealers.

1. The public debt department has introduced pre-bid meetings to brief all primary dealers of relevant information before auctions.

2. Since end October 2016, EPF no longer participates in secondary market.

3. Decision taken from July 2016 not to accept anything more than the offered bid amount.

4. Setting up of CCTV cameras in the Public Debt Department

5. Proposed introduction of an electronic trading platform and a bond clearing house for government securities aimed at improving transparency of the operations of the government securities market.

The Central Bank is also looking at developing new rules and regulations for auctions validated by the World Bank and the IMF. CBSL is also probing alleged irregularities involving the Employees Provident Fund.

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