Treasury Bond Issue: Presidential Commission continues investigations

Treasury Bond Issue: Presidential Commission continues investigations

Written by Keshala Dias

15 Mar, 2017 | 7:09 pm

Private placements to raise funds for the government came under the spotlight,  when the Presidential Commission of Inquiry to Investigate and Inquire into the Issuance of Treasury Bonds convened, once again today, March 15.

Former Superintendent of the Public Debt Department Dhammika Nanayakkara provided evidence before the Commission for the third consecutive day.

A Monetary Board Paper dated October 07, 2008 was produced before the Commission today by Attorney-at-Law Harsha Fernando, in which the Monetary Board approval was sought to issue Treasury Bonds on a Direct or Private Placement basis to the EPF.

It was revealed to the Commission that a hand-written note had been made on the respective paper which reads “other captive sources” following the final approval of the Monetary Board was for Treasury Bonds to be issued under the Private Placement method to the EPF and other captive sources.

It was also disclosed to the Commission that “other captive sources” does not include primary dealers.

It was revealed before the Commission that since 2008, the only approval given by the Monetary Board is to do Private Placements with EPF and Captive Sources and not to stand alone Primary Dealers.

Furthermore, it was revealed that since then, more than 80% of the government cash flow requirement which was almost Rs. 800 billion a year had been obtained via Private Placements.

The matter of issuing a Primary Dealer License to Perpetual Treasuries Private Limited was also raised before the Commission, once again.

The Former Superintendent of the Public Debt Department Dhammika Nanayakkara noted that it takes three to four months for a license to be granted for a Primary Dealer. Nanayakkara was questioned as to why issues that were raised by the Commission in a single day of recording evidence were not seen by those who were involved in granting the license to Perpetual Treasuries Private Limited.

Providing evidence before the Commission, Dhammika Nanayakkara said that if there is a conflict of interest in the part of a Primary Dealer, it is the duty of the Primary Dealer to disclose it to the Central of Bank of Sri Lanka.

It was revealed before the Commission that on the 13th September 2013, the Public Debt Department was provided with the details of the Rs. 300 million credited to the current account of Perpetual Treasuries Private Limited and it was revealed that the Rs. 300 million was a minimum capital requirement for a Primary Dealer.

In addition, it was revealed that since it commenced operations as a Primary Dealer of Perpetual Treasuries Private Limited in the treasury bond market was minimal.

It was also revealed that from 2014 until the 27th of February 2015, Perpetual Treasuries Private Limited would have been active in the Treasury Bill market.

Meanwhile, President’s Counsel Romesh De Silva made an application to the Commission to represent former Governor of the Central Bank Arjuna Mahendran on the grounds that Mahendran considers it desirable to be represented.

Meantime, Former Governor of the Central Bank of Sri Lanka Arjuna Mahendran appeared before the Detectives assisting the Presidential Commission of Inquiry to Investigate and Inquire into the Issuance of Treasury Bonds, to provide a statement for the fourth day.

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