CB New York deal: Who’s the broker?
View(s):Opposition Parliamentarian Eran Wickramaratne this week persisted in seeking details about the ‘broker’ involved in the Central Bank (CB) purchase of a US$5 million property in New York last year. A day after the CB said it had followed all laid-down processes in the August 30, 2011 transaction, Mr Wickramaratne asked in a media statement: “What was the process (followed)? Was a broker utilized? Who was the broker? And what was the brokerage fee and from whom was the building purchased?” The government on Monday disclosed for the first time that the country’s banking regulator had (unusually) gone into property development overseas with the purchase of a New York property, now leased for use to the Sri Lankan diplomatic mission. The disclosure came only after Mr Wickramaratne asked in Parliament as to why this (August 2011) purchase was not reported in the CB’s 2011 annual report released in April this year. He said that while there may be a case for purchasing properties overseas to accommodate Sri Lankan diplomatic missions, such purchases should be done by the government and approval for such expenditure made through the budget provision.
“It will be normal to invest a country’s foreign exchange reserves in US Treasuries and similar instruments in other markets. (But) an investment in an isolated property in New York naturally arouses curiosity,” he said, adding: “It is a time to be vigilant as it may be another questionable avenue that is being opened in the management of Sri Lanka’s foreign reserves. In this context, Mr Wickramaratne referred to the CB’s colossal blunder of using approximately $3 billion in defending the Sri Lankan rupee against the dollar and US$, and the investment in junk Greek Bonds.
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