Bond scams probe Mahendran admits PM ordered auction method
Posted on October 2nd, 2017

By Shyam Nuwan Ganewatta and Sarath Dharmasena Courtesy The Island

Former Governor of the Central Bank Arjuna Mahendran, testifying before the Presidential Commission of Inquiry probing the bond scams, yesterday, said it was Prime Minister Ranil Wickremesinghe who had instructed him to issue Treasury bonds only through public auctions.

Mehendran was answering a query raised by Commission member Justice Prasanna S. Jayawardena. He said Prime Minister Wickremesinghe had instructed him to stop direct placement and he (Mahendran) had, on Feb. 27, 2015, instructed the Public Debt Department to do so.

Answering questions from the Commission members, Mahendran said the Prime Minister had directed him to stop direct placement following a Cabinet subcommittee meeting on Economic Affairs on Feb. 24, 2015.

Questioned by Senior Additional Solicitor General Dappula de Livera, Mahendran said he had advised the Director of the Public Debt Department of the Central Bank on February 27, 2015 to stop direct placement.

He said the Monetary Board of the Central bank had been informed of his decision on March 6, 2015.

At this juncture the Senior Additional Solicitor General Livera told Mahendran that the Monetary Board of the Central Bank had never taken a decision to stop direct.

In reply, Mahendran said he didn’t agree with what Livera said.

2 Responses to “Bond scams probe Mahendran admits PM ordered auction method”

  1. Ratanapala Says:

    Arjuna Mahendran aka AM

    A person who has not signed an oath of the office occupied the position of the Governor of the Central Bank of Sri Lanka. Although he feigns not to know the law, he did not have any hesitation in affixing his signature in the new currency notes. This bugger is lying through his teeth! Not knowing the law does not absolve one’s responsibilities under the law of the country he was and is serving. 

    He should be tried for being complicit in a crime to defraud the people of Sri Lanka and incarcerated in a maximum security prison with hard labour for a very long time.

    Central Bank Bond Scam is far worse. At least Sil Redi are in the hands of religious devotees. The ill-gotten funds from scam are still in the hands of the Bond Thieves. Not stopping at the first Bond Scam they went on to commit a second Bond Scam in March 2016! All because the perpetrators were not apprehended and the loot not recovered.

    It did not take even 50 days for the First Bond Scam to take place. The plans for this scam were executed meticulously. The timeline was impeccable. First, the commandeered votes of the minorities were used to overturn the administration that rescued the nation from a 30 year Terrorist War. A political non-entity (who himself did not know – according to his own words that he would be the next Presidential Candidate – was elected President.) Then he goes onto appoint a person who did not command the majority in the parliament as the Prime Minister of Sri Lanka. The Prime Minister commandeers a part of the Finance Ministry which includes the Central Bank to be under his purview. He then appoints a foreigner – non citizen Arjun Mahendran a personal friend of his, a Singaporean citizen, as the Governor of the Central Bank of Sri Lanka. He never takes an oath of allegiance to the Government of Sri Lanka in taking one of the highest administrative positions in the Government of Sri Lanka.

    Son in law of the Central Bank Governor, Arjun Aloysius a co-owner of Perpetual Treasuries is a registered primary dealer with the Central Bank on Bond issues. He resigns his position as Chairman of the company but is and was the hand that guided the company during the Bond issues. Arjun Mahendran lives in the house of his son-in-law.

    In a nut shell Perpetual Treasuries borrows money from the Bank of Ceylon at a low interest close to 9% per annum, buys 30 year bonds payable at close to 14% interest rate and sells the same to Employees Provident Fund keeping a tidy profit running into millions and worth Billions in the future. The bonds can be sold and resold in the secondary market up to their maturity in 30 years time. Rs 1000 bond at 14% pa rate will be worth Rs 51,000 in 30 years time. Whereas the same at 10% rate will be worth only Rs 17,000 a third of the previous amount mentioned.

    Perpetual Treasuries goes onto make Rs 550 Million profit for the year 2015/16. In doing so what has Perpetual Treasuries added to the GDP of the nation? This money is still in Perpetual Treasuries hands. This is different from what happened to Sil Redi. Neither Lalith Weeratunga nor Anusha Palpita profited from Sil Redi and they are already sentenced.

    The second Bond Scam or Scams take place an year later 29 Mar and 31 Mar 2016. The then Finance Minister Ravi Karunanayagam intervenes with Government Banks and advice them to place low interest bids for the bonds on issue. On the both occasions the higher interest rate bids from Perpetual Treasuries were accepted.

    Those who testified before the Commission included Chairman People’s Bank Hemasiri Fernando, Chairman Bank of Ceylon Roland Perera and Chairman National Savings Bank Ashwin de Silva and some key officials of the three institutions.
    The senior officials of the three banks also said that though they had followed the instructions given by Minister Ravi Karunanayake, the latter had failed to honour his promise that the Central Bank would not accept bids at rates higher than the yield rate range he had mentioned to them.

    The profits made by Perpetual Treasuries at the Second Bond Scam are yet to be divulged.
    What prevents the “Yahapalana” from arresting the Central Bank Bond thieves and filing charges? Is this not Financial fraud? Is this why FCID was disbanded in a hurry?

    Adventures of Arjuna & Arjuna continues!

  2. Senerath Says:

    This simple crime of the centuray is dragging so long due to brainlesness of our people. Even the article heading is stupid.
    1. If government banks are bidding, there is no need forcompetition at all. Banks will determine the minimum interst rate and directly quote to CB and CB can sell.
    2. If more competitive rates can be obtained using private investors, then obviously going for tender is a MUST. Governement banks and EPF money should not be allowed to be borrowed by the bidders.

    There is no problem of Ranil asking Mahendran to go for tender, as long as accepted rates cannot be supplied by governement banks maintaining profitability.
    Here the BIG CHEATING is governement banks provideing fulds to Perpetual cheaters. Nothing to do with the bidding nonsence , this itself is cheating.

    Pprcedures as per 1. and 2. were not even considered because of the Central Bank Mafia existed to many many years, supply PAGA cut to ministers, officials and blood suckers of the nation.
    It is not a fault of thieves, but it is the fault of justice system and political system – all corrupt to the core, head to toes.

Leave a Reply

You must be logged in to post a comment.



Copyright © 2024 All Rights Reserved. Powered by Wordpress