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New York property: CBSL violating monetary laws
The Central Bank of Sri Lanka (CBSL) has been violating the Monetary Law Act by renting out a property in New York to the Ministry of Foreign Affairs for a monthly payment of US$ 68,000 or Rs. 9 million since 2012.
The Monetary Board granted approval on January 10, 2011, for the CBSL to buy a building in New York. The 12,000 square foot property was bought in August that year for US$ 5,807,116 or Rs. 777,456,690 (at the prevailing rate of exchange). An additional US$ 400,000 or Rs. 53,552,000 was spent on refurbishing the space.
The transaction was first flagged in a report by the Auditor General’s Department. It said the CBSL had then rented out the building to the Ministry of Foreign Affairs for three years starting June 1, 2012. The monthly payment was US$ 68,000 or Rs. 9,103,840 at prevailing rates.
This was in direct violation of Section 117 of the Monetary Law Act, the Auditor General has pointed out. It states that the CBSL shall not “engage in trade or otherwise have a direct interest in any commercial, industrial, or other undertaking except such interest as it may in anyway acquire in the course of the satisfaction of any of its claims, provided that all such interests shall be disposed of at the earliest possible opportunity”. The law also precludes the CBSL from granting “loans or advances on the mortgage of, or otherwise on the security of, immovable property or documents of title relating thereto.”
The Ministry of Foreign Affairs confirmed that it continues to pay US$ 68,000 for the property on the prestigious 2nd Avenue in New York. The Permanent Mission of Sri Lanka to the United Nations in New York moved into the building on June 1, 2012. The lease agreement was signed on May 28, 2012.
Mahishini Colonne, the ministry’s spokesperson said, there was no provision to transfer the ownership of the property to the Ministry of Foreign Affairs. The Central Bank is the financial regulator. The Monetary Board, which took the decision regarding the property, comprises the Governor, the Secretary to the Ministry of Finance and three non-executive members.
It is responsible for making all policy decisions related to the management, operation and administration of the regulator.
The Sri Lanka mission in New York was earlier located at 3rd Avenue. When it was shifted to the new address, a media statement said, “The Government has been renting space for the mission for over 57 years.”
“Last year, the Government of Sri Lanka made a decision to purchase premises and the acquisition was facilitated by the Central Bank of Sri Lanka,” the statement said. “The new premises which exceed 10,000 square feet will save the country foreign exchange in excess of Rs. 30 million annually.”