CBSL Bond Scam: “AG’s loss calculations are wrong” claims Arjuna Mahendran

CBSL Bond Scam: “AG’s loss calculations are wrong” claims Arjuna Mahendran

CBSL Bond Scam: “AG’s loss calculations are wrong” claims Arjuna Mahendran

Written by Staff Writer

19 Sep, 2017 | 10:35 pm

In the latest turn of events regarding the Central Bank Bond Scam inquiry at the Presidential Commission, the former CBSL Governor Arjuna Mahendran testified before the Commission for the first time today (September 19).

Mahendran’s evidence was led by his attorney President’s Counsel Romesh De Silva.

This is what Mahendran had to say to the Commission

The Government has had, according to the former CBSL Governor, a requirement of Rs. 13.5 billion by March 2, 2015. Rs. 172 billion were to be raised for the month of March and another Rs. 75 billion in a month for ‘urgent road development projects’.

The Rs. 75 Billion for ‘urgent road development projects’

The mammoth amount goes back to a meeting held at the Central Bank on February 26, 2015 between the following;

  • Central Bank Governor – Arjuna Mahendran
  • The Former Finance Minister – Ravi Karunanayake
  • The Former Minister of Highways
  • The Advisor to the Prime Minister
  • Several other officials

What about the letter produced by Arjuna Mahendran about the 75 billion? – When questioned, the former Governor said that it was he who made a request for the letter in June 2016 as proof of the meeting which took place, and as a requirement to COPE.

The Rs. 13.5 billion

Mahendran had discussions with the Public Debt Department on how to raise the amount during the week which lead to the controversial bond auction. Arjuna Mahendran himself testified that he visited the Public Debt Department twice, during and after the action.

What did the PDD tell Mahendran? – Advertising a higher amount would convey to the markets the government was borrowing aggressively and the interest rates would be high.

What happened? – The Public Debt Department advertised to raise Rs. 1 billion at the controversial bond auction.

The Auction

Mahendran says he visited the floor during the auction to inquire about the auction results. After being informed by the Superintendent that results would be available ‘only after an hour’, Mahendran made a second visit after noon.

The former Governor had inspected the bid sheet and asked the PDD to accept the Rs. 20 Billion rupees in bids that were placed. However, as the SPD noted there were dummy bids as well, he suggested “Rs. 10.058 was a reasonable amount to accept”.

It is the Tender Board which makes the final decision in accepting bids. After the Governor is sent their decision, he only approves it -testified Arjuna Mahendran.

He went on to testify, the Tender Board makes the final decision in accepting the bids and after they send him their decision , he only approves it.

Auction on March 2016 – Speaking of the auction which took place on March 29 & 30th, he said he was “not involved in the decision making process of the Tender Board.”

Auditor General’s calculations

Speaking on the loss calculations made by the Auditor General on the bond issue, Mahendran said that the calculations are wrong.

Why? – According to him, the calculations are based on assumptions and there are no factual basis for the allegations.

Employees Provident Fund

According to Mahendran, he was only aware of the EPF purchase and sales of bonds in the secondary market by looking at the EPF monthly reports sent to him.

Mahendran said he did not take part in the decision making process of bond transactions done by the EPF.

As said by Mahendran, he was not aware of any dealings the EPF had with Perpetual Treasuries Limited. He says he learned of PTL’s profit earnings “only after he left office”

The Mahendran – Aloysius relationship

The relationship between Arjuna Mahendran and Arjun Aloysius was known to the Colombo Elite prior to 2015.

How? – Well, here is a list of some, among many, who attended the marriage between Mahendran’s daughter and Aloysius;

  • Mr and Mrs. Ranil Wickremsighe
  • Ravi Karunanayake
  • Sajith Permadasa
  • Chandrika Bandaranaike Kumaratunga
  • The three sons of Former President Mahinda Rajapaksa

It was suggested at the commission that, even before Arjuna Mahendran assumed office as Governor, the Colombo Elite were aware that Mahendran’s daughter was married to PTL’s Arjun Aloysius.


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