Ranil’s committee clears Arjuna
Posted on April 19th, 2015

Courtesy Adaderana

The committee appointed by Prime Minister Ranil Wickremasinghe to inquire into the Treasury Bond issue has cleared the Central Bank Governor Arjuna Mahendran saying that he had no “direct” role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept up to 10 billion rupees.

The Committee concluded that there was no evidence to the effect that the governor had direct participation with regard to the activities of the PDD and the Tender Board Committee, However, the Committee noted serious lapses on the part of the Bank of Ceylon (BOC) through whom Perpetual Treasuries had routed an unusually large amount of bids for the 30-year bond. The Committee observed that the bidding pattern of Perpetual Treasuries was unusual and warranted a further investigation.

Following is the Media communiqué issued by the Ministry:

The committee of eminent lawyers which inquired into the 30-year Treasury Bond issuance has cleared Central Bank Governor Arjuna Mahendran and stated that he had no direct role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept up to 10 billion rupees. –
Press release issued by the Ministry of Policy Planning and Economic Affairs The committee of eminent lawyers which inquired into the 30-year Treasury Bond issuance has made far reaching recommendations to ensure transparency and better governance at the Central Bank.

The three-member Committee had interviewed a large number of individuals, including the governor, officials from the Central Bank, primary dealers and Perpetual Treasuries. Several deficiencies In the bank’s Public Debt Department (PDD) which handles all matters relating to servicing the domestic and foreign debt of the government of Sri Lanka was observed by the Committee. “Since the PDD is dealing with the most sensitive information of the government, the committee is of the opinion that a proper supervisory and monitoring mechanism has to be immediately implemented with regard to its activities, “the committee said in its 19-page report.

However, the committee found That Governor Arjuna Mahendran had no direct role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept up to 10 billion rupees. The PDD had projected the government’s funding requirement as at 2nd March 2015 at 13.55 billion rupees. “Even though the minutes of the Monetary Board number 4/2015 specifies to issue a 30-year treasury bond, the amount of the bond has not been decided by the Monetary Board (of which the governor is the chairman).

“This exercise is vested with the PDD as per the Operational Manual of the PDD. The decision to accept the excess amount has been taken by the Tender Board Committee that comprises eight members. “The governor of Central Bank of Sri Lanka is not a member of the Tender Board Committee.”

The Committee concluded that there was no evidence to the effect that the governor had direct participation with regard to the activities of the PDD and the Tender Board Committee, However, the Committee noted serious lapses on the part of the Bank of Ceylon (BOC) through whom Perpetual Treasuries had routed an unusually large amount of bids for the 30-year bond. The Committee observed that the bidding pattern of Perpetual Treasuries was unusual and warranted a further investigation.

It noted that the Bank of Ceylon should also carry out a forensic audit and seek explanations from its Chief Dealer and others on ad-hoc decisions risking a large amount of BOC funds involved in the 30- year bond transaction. The three-member Committee that looked into the 30-year bond issue consisted: Gamini Pitipana (Attorney-At-Law) Chairman Mahesh Kalugampitiya (Attorney-At-Law) Committee Member Chandimal Mendis (Attorney-At-Law) Committee Member

13 Responses to “Ranil’s committee clears Arjuna”

  1. Christie Says:

    Namaste: Three lawyers looking at billions of dollars, what was their bill? Will be paid by the Emperor. Jai Hind

  2. Leela Says:

    ඔය වාර්තාව ගැන පුදුම වෙන්න දෙයක් නැහැ. තක්කඩි කලු කෝට් අැඳ ගත්ත හොරාගෙ කුඩම්ම ල තුන් දෙනෙක් ගෙන් තමයි පේනෙ අහල තියෙන්නෙ.

  3. Cerberus Says:

    I am not sure how impartial the committee is in evaluating the Central Bank Scam. Uncle Ranil had appointed his friends as the committee. They have not explained how Arjun Aloysius son-in-law of Arjun Mahendran got insider information nor has it explained why he was allowed to buy the bonds at 12.5% while others bought at 9.5%. All they have said is that Arjun had no direct involvement in deciding to accept the bonds. Is it not a clear case of insider trading? Like Arjun Mahendran’s friend Raj Rajaratnam, Arjun Mahendran deserves to go to jail for 10 years if he is found guilty of insider trading. Here is a quote from Asoka Bandarage’s article in Lanka Web on “Good Governance in Sri Lanka”. Is this good Governance?

    “On February 27 Sri Lanka faced what is being called the “biggest ever public financial fraud committed” in the country’s history by alleged blatant abuse of power by Arjuna Mahendran to help his son-in-law, Arjun Aloysius.

    The story is that the Central Bank’s 30 year treasury bond rate had suddenly changed from 9.5 percent to a high 12.5 percent as did its decision to accept bids of Rs.10 billion, ten times more than the earlier requested Rs.1 billion. Mahendran’s son-law, who apparently had insider information gained high profits as the main bidder at the expense of banks and other financial institutions who made their bids according to the public information given by the Central Bank.

    The “entire business community was shocked” by the alleged treasury bond fraud. Petitions and demands for financial accountability and demands for Mahendran to resign are mounting. The government appointed a committee to investigate the “insider trading” allegations and Mahendran has been put on leave. However, the public and the media are not kept informed of the progress of the investigation or when a decision on the case can be expected. Mahendran continues in the position of Governor of the Central Bank while the country bears the economic and social costs of the failure of good governance and corruption control.

    Financial irregularities combined with the stoppage of infrastructural and economic projects begun by the previous government is contributing to the loss of confidence of investors, employment opportunities and economy stability. Recently, the government of Singapore refused to accept the Sri Lankan government’s request to obtain a foreign loan of USD 1 .5 billion through the Singapore stock market on grounds that it cannot honor a Sri Lankan government document signed by two individuals facing charges of financial corruption, namely Sri Lanka’s Finance Minister Karunanayake and Governor of Sri Lanka’s Central Bank, Mahendran.”

  4. Senevirath Says:

    somebody should take legal action against this mahendran

  5. Sooriarachi Says:

    I believe, about a month ago, this Bond issue matter was taken to the Supreme Court by three eminent citizens, and a request made to appoint a neutral panel to investigate it and report direct to the Supreme Court. I do not know what this process is nor its current status.

  6. Fran Diaz Says:

    Soori,

    The ‘neutral panael’ must be Sir Pottu Ranil’s 3 schools pals !

  7. AnuD Says:

    It was a political panel to clear up the name of Ranil. So, what else they should have found.

    It is not an independent commission. three UNP lawyers appointed by the Prime minister.

    Already Ranil proved he is corrupt.

    He should not be the prime minister in Sri lanka.

  8. Fran Diaz Says:

    To expand on Cerberus’ extract on Prof Asoka Bandarage’s article on Good Governance :

    Of the Bonds issued at a high 12.5% interest on Rs 10 Billion, 5 Billion worth Bonds were bought by Arjun Aloysius’ company, Perpetual Enterprises, using the Bank of Ceylon officials do this scam.
    Also according to MP Bandula Gunawardene’s speech on the matter, the Governor of the Central Bank, Arjun Mahendran was present at the Bond auction. This is breaking with common practice and regulations of the Central Bank. Mr Mahendran’s behavior in the whole scam matter is highly questionable.

    Correct me if I am wrong in the above information.

  9. Fran Diaz Says:

    But wait, there’s more …

    Comment from Ada Derana below. Is it true ?

    “Why did Aloysious resign from Perpetual and why hurried sale to Ishara. Far too many loose ends and drama like a thriller by John Grisham. – See more at: http://www.dailymirror.lk/69549/committee-clears-arjuna-mahendran#sthash.9IOcq2ii.dpuf

  10. Lorenzo Says:

    LTTE has found a new route to control SL through the central bank and supreme court.

    We have to WIN THE WAR AGAIN.

  11. Independent Says:

    LTTE was controlling Sri Lanka since its defeat in 2009.

  12. Sirih Says:

    Some one is masking real questions.
    Who authorise the original margin call? This will point the finger to the brains behind this scam.
    Who authorise the massive loan to Perpetual ? Same people who authorise this loan is part of the scam.
    As I said before, this was going on with Perpetual, even MR time with his eldest son and Perpetual. I have full facts how Aloysious bought S$ 12 million apartment well before the scam.

    I told the banks directors that I will forward all documents to COPE and you should have seen their faces… I heard they are concern with my threat but somehow all these rogues will get together and put these under the carpet.
    All political animals are involved. I was in Colombo for 6 months, and I was thoroughly disappointed about countries welfare.

  13. crobe Says:

    Is anyone surprised???

    Looks like most everyone expected a different decision.

    Lets see – 3 “eminent” attorneys(with no financial background) from the UNP loyal to the party leader/PM is appointed to investigate a fraud perpetrated by a close friend of the party leader/PM. hhhmmmm……. and we thought that these 3 lackeys would do anything different?

    We all know who is responsible….. of course, it MR and his cronies…..

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