Written by Staff Writer
12 Dec, 2017 | 10:39 pm
The 8th Parliament’s Committee on Public Accounts (COPA) released it’s fourth report on Friday (December 8).
One of the state bodies investigated by COPA was the Employees Provident Fund (EPF).
EPF (in 2016) had purchased a lesser volume of bonds from the primary market at a higher yield. They have also purchased a greater volume of bonds from the secondary market at a lesser yield.
COPA says this denied members of the Fund a massive financial gain.
According to COPA, the Central Bank Governor had said an internal investigation is underway regarding investments made using money from the Fund.
The Committee has directed the Governor to provide a copy of the said investigation report on the purchase of bonds in year 2016 by EPF.
The 2016 Bond Transactions were investigated by the Presidential Commission of inquiry.
One such questionable EPF bond transaction was the Auction of March 29, 2016.
On that day – EPF had purchased Rs. 1 Billion worth bonds in the primary market and Rs. 10 Billion worth bonds in the secondary market, revealed by the testimony of Monetary Board member ‘Nihal Fonseka’.
Fonseka said, “if the EPF bid the entire 10 Billion at the primary auction, the government would have generated Rs. 1.95 per every 100 rupee of debt”.
Therefore, if the EPF had purchased 10 Billion -the fund would have made a gain of Rs. 550 million, rather than a loss of the same amount.
This was the very auction Perpetual Treasuries Limited bid a large volume on its own and via Pan Asia Bank.
The estimated immediate loss: Rs. 784.898 Million
*Revealed by Auditor General
PTL had used Pan Asia Banking Corporation and DFCC Bank as Intermediaries to sell the bonds to the Employees Provident Fund.
This information was revealed by a leaked, confidential report in late 2016, and also by evidence led before the Presidential Commission of Inquiry.
Evidence revealed prices and the rates had been pre-arranged when PTL and EPF were transacting in the secondary market through PABC.
This was revealed to the Bond Commission by Deputy General Manager of Treasuries, Pan Asia Bank – Richie Dias, who described this act as PUMPING & DUMPING.
Evidence suggests PTL also used companies that are affiliated to them such as W.M.Mendis to push up the price of bonds and sell them to the EPF.
During the period under investigation, EPF purchased bonds valued at Rs. 140 Billion from the Secondary market -80% from PTL.
Attorney Generals Department exposed a pattern in trading – designed to mask real beneficiary in bond transaction and this was designed at the expense of the Employees Provident Fund.
> Allegations raised citing a serious impropriety had taken place in the treasury bond issue
> Calls for the President to take action against then Central Bank Governor Arjuna Mahendran.
> Prime Minister appointed three member committee which comprised of lawyers affiliated to his party.
> Calls for Mahendran to be removed from his position
> President decides not to extend the tenure of Mahendran as Governor
> COPE investigates and released report.
> Relationship between Arjuna Mahendran and Perpetual Treasuries Limited exposed.
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