Opposition politicians are reiterating demands that Central Bank (CB) Governor Arjuna Mahendran should be sacked over what they claim is the irregular Rs. 10 billion Treasury Bond deal, saying they were equally shocked that he had returned to work this week despite investigations that are pending. The Janatha Vimukthi Peramuna (JVP) and the Jathika Hela [...]


Opposition to ask for sacking of CB Governor Mahendran when House meets tomorrow


Opposition politicians are reiterating demands that Central Bank (CB) Governor Arjuna Mahendran should be sacked over what they claim is the irregular Rs. 10 billion Treasury Bond deal, saying they were equally shocked that he had returned to work this week despite investigations that are pending.

Arjuna Mahendran

The Janatha Vimukthi Peramuna (JVP) and the Jathika Hela Urumaya (JHU) said on Saturday that they had no faith in the report submitted by the committee of lawyers appointed by Prime Minister Ranil Wickremesinghe on this issue and have asked President Maithripala Sirisena to appoint an independent committee.

Separately, Parliament Speaker Chamal Rajapaksa is expected to receive a motion from the Opposition tomorrow urging that the Governor be sacked over the issue. Mr. Mahendran on Friday confirmed to the Sunday Times that he had returned to work but declined further comment. CB sources said he chaired a meeting of the Monetary Board the same day and was in the office on Saturday morning with much of his work dealing with the delayed issue of the CB’s annual report for 2014. The report is normally released in the first week of April but has been delayed due to the issues over the Governor’s self-imposed leave over the bond issue probe.

Wasantha Samarasinghe, the JVP’s anti-corruption spokesperson, said they have in writing requested the President to appoint an independent committee to probe the corrupt deal adding that, as reported in the media, the Wickremesinghe-appointed committee has exonerated the Governor. “How did the Governor’s son-in-law know that the CB was going to accept Rs. 10 billion instead of the advertised Rs.1 billion, and then offer bids of Rs. 5 billion unless he had inside information?” asked Mr. Samarasinghe, saying many questions appear to be unanswered in the report and thus it was shocking that the Governor had returned to work.

JHU spokesperson Nishantha Warnasinghe said they were rejecting the contents of the report and expressed disappointment that Mr. Mahendran was back at work when the investigations are still incomplete. He said they have also asked the President to appoint an independent committee and also for Parliament scrutiny over the issue. In the meantime, the Bribery Commission is also investigating a complaint against the Governor whose passport has been impounded. On Monday, the Governor’s attorneys submitted papers on his behalf. One of their complaints is that the Governor’s statement was recorded in Sinhala, a language he was not familiar with. Deputy Economic Planning and Policy Affairs Minister Harsha de Silva declined to comment when asked whether it was advisable for the Governor to return to work when the report of the committee is yet to be tabled in Parliament. “All I can say is that we hope to submit the report to Parliament shortly,” he told the Sunday Times yesterday, adding that 250 copies of the report have been prepared to be given to MPs.The committee report was submitted almost a fortnight back but the PM’s office only released a statement on Monday after the Sunday Times political column said that the committee had felt there was a need to further investigate the matter.

The PM’s office statement said that the committee had said that there was no “direct involvement” of the Governor in any dishonest act, but the statement also said that the committee had found reason for the need for further investigation.

Prime Minister Ranil Wickremesinghe in an interview with the State run Independent Television Network (ITN) responded to a question regarding the investigation.

He said, “I set up the committee in order to find out who took the final decision in this case. It was revealed by the committee that the final decision was taken by a tender committee. The Governor of the Central Bank was not a member of that committee. The Governor did put his signature, but he was himself not part of making the decision.

“In this case we also had to find out the connection between the two companies that bought these bonds: Perpetual Treasuries and the Bank of Ceylon.

“The Bank of Ceylon has bought bonds on behalf of Perpetual Treasuries. Both these companies are primary dealers. Why did one primary dealer buy for another primary dealer?

“We have to find out if this is part of the mafia which was operating in the past couple of years. I have handed over the investigation on this to the police as well as the Securities and Exchange Commission headed by Thilak Karunaratne. Mr. J.C Weliamuna has also been asked to investigate.
“Another issue I have asked to investigate is, usually, Treasury Bonds have to be sold in public. But previously this did not happen. If Rs. 5 billion had to be sold, only Rs. 1 billion was auctioned. The other four billion was obtained through friends. Even regarding the amount that was auctioned, it was not the tender committee that signed but the Governor of Central Bank and two others. That is not in keeping with the law, the tender committee should sign.

“There are reports that over a period classified information had been leaked out. That too should be investigated.”

In the meantime, UPFA MP Bandula Gunewardena said a motion from Opposition members is due to be handed over tomorrow to the Parliament Speaker calling for the sacking of Mr. Mahendran.

He told the Sunday Times signatures for the motion will be collected from Opposition MPs tomorrow as allegations against the Governor were serious and it involved the country’s finances for which Parliament is responsible. “If any MP refuses to sign the motion then he or she will be perceived as those endorsing the corruption of the Governor,” he said.

The yet-to-be-released 19-page report by the probe committee is said to have stated that the transaction including the unusually high bids and high interest rates merit further investigation.

Other Government sources, who declined to be named, said while the CB’s Public Debt and Domestic Debt Committees (and not the Governor) made the decision on the quantum of bonds to be accepted, as per usual practice, the committee hasn’t fully exonerated the Governor. “Questions of how did one primary dealer make a bid for Rs. 5 billion (directly and indirectly) when the normal practice is for dealers to make bids of 10 per cent or slightly over the advertised amount (Rs. 1 billion of which 10 per cent is Rs. 100 million) and whether they had inside information, have been raised. It is on these issues that the committee is believed to have recommended that further investigation is necessary,” one source said.

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