Former CB Governor acted in ‘collusion’ with PTL | Daily News
Bond issue report finds:

Former CB Governor acted in ‘collusion’ with PTL

Irregularities occurred between 2008-2014:

The long awaited report of the Central Bank Bond issue has found the former Central Bank Governor, Arjun Mahendran to have provided Perpetual Treasuries Ltd (PTL)with ‘inside information’ and acted in ‘collusion’ with them for the benefit of the latter.

The report also found that the former Governor through his actions, lost the government Rs. 688,762,100 at the auction held on February 27 2015. The Commission recommended that legal action be instituted to recover this loss from Mahendran and PTL.

Though the report studied the issuance of bonds after 2015, the Commissioners also noted that there was ‘adequate evidence’ to form the view that there may be some irregularities in the acceptance of Direct Placements by the Public Debt Department during the period 2008-2014.

They asked that investigations be carried out to identify the officers responsible, both in the Public Debt Department and in the senior management of the Bank and into primary dealers and those responsible apprehended.

Further the report also highlighted that management of the Central Bank prior to 2015 should be studied and the reasons for the losses incurred by the Bank in the years 2013, 2014 and 2015 and the transactions entered into by the EPF on the Colombo Stock Exchange during the period 2010 onwards looked into.

President Maithripala Sirisena having submitted the report prepared by the ‘Commission of Inquiry to Investigate, Inquire and report on the issuance of Treasury Bonds from February 2015-March 2016’ to the Speaker yesterday morning, had the report uploaded on the website of the Presidential Secretariat, thus making it public.

“On February 27 Mahendran directed that Bids of the value of Rs 10.058 billion be accepted for the improper, wrongful and malefide collateral purpose of enabling Perpetual Treasuries Ltd to obtain high value of Treasury Bonds at that Auction, at low Bid prices and high yield rates and that Mahendran provided ‘Inside Information’ (Price Sensitive Information) to Perpetual treasuries Ltd which they used to its benefit at the Treasury Bonds Auction held on 27 February and Mahendran acted in collusion with Perpetual Treasuries Ltd”, stated the recommendations of the report.

The Commission has also recommended that the Commission to Investigate Acts of Bribery or Corruption and other agencies look into whether Mahendran’s action constitute ‘corruption’.

We recommend that the Attorney General and other appropriate authorities consider whether Perpetual Treasuries has used and gained and benefitted from ‘inside information’ at the Treasury Bond Auction held on February 27, the reported stated further.

They recommend that PTL be prosecuted under the provisions of Section 56A (1) of the Registered Stock and Securities Ordinance and in the event of a conviction being entered by a learned Magistrate after Summary Trial in such a prosecution, charge PTL with a fine twice the value of the aforesaid sum of Rs 688,762,100/ or such other amount determined by Court.

In addition to the February 27 2015 auction, PTL has also been found guilty of obtaining inside information during the March 29 2016 auction. The amount earned during this auction however would need a forensic audit, state the Commission and they asked that it be conducted and thereafter PTL be charged a fine twice of that amount.

The Commission has also recommend that the Attorney General investigate into whether Arjun Aloysius and Kasun Palisena are parties to and directly responsible for the commission of an offence.

Given the complete breakdown of trust within the Central Bank system, the Commission recommends that the Monetary Law Act set out criteria when appointing the Central Bank Governor and members of the Monetary Board rather than depending on the discretion of the Finance Minister and President for these appointments.

“The Governor of the CBSL is a key official who holds enormous responsibilities and that he must be a person of integrity and ability and also have the required knowledge and experience to effectively perform his duties in the best interests of the Nation and its people”, note the Commission.

They have also asked that a code of conduct be issued to monetary board members and the Registered Stock and Securities Ordinance and Local Treasury Bills Ordinance be examined with a view to repeal and enact more suitable legislation keeping with the times.


 

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