The picture shows CPC Deputy General Manager Lalith Karunaratne walking out of the court after he was suspended from his post. Pix by J. Weerasekera. |
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The Central Bank (CB) has ordered the Standard Chartered Bank (SCB), Citibank and three other banks involved in the controversial oil hedging deals not to go ahead with the transactions, a ruling which effectively means the agreements will be discontinued senior CB officials said.
They said a circular went to the banks on Monday, December 16 saying the transactions have violated CB regulations and that they should be discontinued. “The only way the banks can object to this is to petition the Court,” one official said.
Last month, the Supreme Court suspended payments by the Ceylon Petroleum Corporation (CPC) to the banks following petitions filed opposing the deals on the grounds that the hedging contracts were one-sided and would result in a loss, which according current crude price, could be as much as $1billion.
CPC Chairman Asantha de Mel was also suspended. The case has taken many twists and turns with the prices of local fuel now coming into the picture. Banking industry officials said this could lead to a payment crisis with these banks having to pay their hedge providers overseas following the CB ruling which came after the Supreme Court instructed the CB to probe the deals and take action.
Treasury Secretary Sumith Abeysinghe (above) leaves the Supreme Court on Wednesday after the Treasury-recommended formula to reduce petrol prices to Rs 100 per litre was accepted. |
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When the case came up this week – also on Monday -- intervenient petitioner Nihal Sri Ameresekere, and lawyer M. Sumanthiran for Vasudeva Nanayakkara, another intervenient petitioner, submitted that there have been certain payments made by banks for facilities provided to CPC Chairman Asantha De Mel and other officials. In particular, a document has been produced marked X10 in the intervention papers which shows that Standard Chartered Bank has paid for an air ticket purchased for Mr. De Mel amounting to Rs.92,500.
It was submitted that there is evidence of several such payments and that there is a likelihood of such information being removed. The court then directed the Monetary Board of the CB to take immediate action to impound all such documents if necessary by getting the assistance of the Criminal Investigation Department of the Police. The Inspector General of the Police was directed to afford all necessary assistance to the Monetary Board to carry out these investigations.
CPC DGM Lalith Karunaratne, involved in the deals, was also suspended.
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