Collapsing Administration: Chapter 4 – The bond that shook our country’s financial system

Collapsing Administration: Chapter 4 – The bond that shook our country’s financial system

Collapsing Administration: Chapter 4 – The bond that shook our country’s financial system

Written by Lahiru Fernando

15 Dec, 2016 | 10:30 pm

February 2015 and March 2016 – The infamous Central Bank bond transactions on these two occasions shook the financial system of our country, causing losses in Billions…

July 14, 2015

Ajith Nivard Cabraal (Former Governor – Central Bank of Sri Lanka): “Perpetual treasuries owned by the son law of the governor of the Central Bank received the bond at Rs. 90 or Rs. 91 when the CBSL should have sold it for Rs. 118 or Rs. 199”

According to the former Governor –For every Billion , the Government has made a loss of Rs. 291 million. Thereby incurring a direct loss of Rs. 02 Billion and resulting in the increase of the country’s interest rates.

“When it is accounted for, it has exceeded over Rs. 5900 Billion.” he added

Former governor Cabraal stated that, though the government should have acted on this, the prime minister has covered it up and has not taken steps to rectify.

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The powerless committee and COPE

Initially, the 100-day government requested the Committee on Public Enterprise (COPE) to investigate the matter. Then a three-member committee was once again appointed to look into the matter and investigate it.

Then the Parliament was dissolved before the interim report of COPE could be presented. However a new COPE appointed after the 8th Parliament convened in 2015 continued investigations into the matter.

Interestingly though, COPE or the other committee did not have the ability or the power to prosecute the wrongdoers.

Rusiripala Tennakoon (Senior Banker): “I think from the beginning if we look back from the time it started there was evasive actions by the people in authority to see that no conclusion is reached on that matter.”

According to Rusiripala Tennakoon, a presidential commission of inquiry with full pledged powers should be demanded for -and appointed- to look into the matters and ascertain the loss that has been caused to the country, to the Central Bank, recover the money, and “bring to book the culprits who are involved.”

Do not miss:

Collapsing Administration: Chapter 1 – Poor decision making, poor governance and corruption

Collapsing Administration: Chapter 2 – The beautiful deception

Collapsing Administration: Chapter 3 – Corruption still at large

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