Mahendran decided to accept bids upto Rs.10 bn -CB official CBSL bond scam
Posted on April 7th, 2017
by Sarath Dharmasena and Shyam Nuwan Ganewatte Courtesy The Island
April 7, 2017, 11:03 pm
The Inland Operations Director of the Central Bank P.W.D.Rodrigo testifying before the Special Presidential Commission to investigate the alleged bond scam yesterday said Chairman of the Tender Board P. Samarasiri had on February 27,2015 told of the tender board that the decision taken by the then Governor of the Central Bank to accept bids upto Rs. 10 billion at the treasury bond Auction had to be carried out.
Director of the Public Debt Department Deepa Seneviratne had informed the Tender Board that the then Governor had visited the Public Debt Department and told that bids upto Rs.10 billion should be accepted.
Everybody in the tender board objected to Mahendran’s decision saying that they should meet the Governor and explain their position.
But instead of getting an appointment with the Governor, Chairman of Tender Board P. Samarasiri informed the tender board had informed the Tender Board the Governor’s decision had to be carried out Rodrigo told the Commission.
Evidence was led by Deputy Solicitor General Milinda Gunatillake.
Rodrigo said he had joined the Central Bank in 1993,
The duties of Inland Operations Department was to operate the financial dealings of the Central Bank in such a manner that the country’s financial stability could be maintained.
It was the responsibility of the his department to handle treasury bonds sales according to market requirements.
The inland operations had to be conducted in accordance with the article 90 of the Central Bank Ordinance, Rodrigo said.
The Governor ordered that the 5% interest at that time be done away with, Rodrigo said.
Central Bank had informed the market of the decision via e-mails he said.
Suddenly the interest rate had risen to 7.5 percent dealing a blow to the country’s economy.
Commission member Justice Jayawardena:
Do primary dealers enjoy the liquidity facilities.
Was the 5% interest changed at the behest of a single person
Rodrigo: Yes Your Lordship. We had no alternative but to comply.
Justice Jayawardena: You said acceptance of bids upto Rs.10 billion and changing of interest rate of five were inimical to the country. Was it done on the instructions of Arjuna Mahendran?
Rodrigo: Yes. The Governor explained why he had taken that decision. He said the liquidity in the market had to be reduced.
Did he ask you how the officers arrived at this figure
Deputy Solicitor General:
Has such an incident ever happened in the bank in the past
Justice Jayawardena: If one defaults on payment could it be recovered from another transaction of the same party with Central Bank.
Rodrigo: Yes. Arjuna Aloysius telephoned and said he wanted to meet me. I told him that since it was the weekend we had to meet on Monday.
Justice Jayawardena: Did you by then know the relationship between Arjuna Maahendran and Arjuna Aloysius
Rodrigo: Yes. Mehendran wanted to meet me on a Saturday and I gave him a time.
Aloysius informed the Additional Director of my department karunaratne and others that he was coming to see me. Subsequently the Governor told me to meet him. Thereafter five officers including me met the went to meet the Governor.