News
Probe committee report on disputed bond issue before Avurudu
The report of the three-member committee probing the controversial February 27 Treasury bond issue would be submitted to parliament, according to Deputy Economic Planning Minister Harsha de Silva
“The fact remains that parliament is the final authority on public finance and once the report is submitted, parliament can decide on the next steps. Having said that, I am not sure when the report will be submitted to us,” he told the Sunday Times. Dr. de Silva’s ministry oversees the Central Bank (CB) and its regulatory functions.
The committee headed by senior lawyer Gamini Pitipana is likely to complete its fact-finding mission next week and thereafter submit a report to Prime Minister Ranil Wickremesinghe.
Members of the committee have declined to comment on their ongoing work except to say that the report will be submitted as soon as possible. Sources, familiar with the committee’s progress, said the committee had interviewed a few primary dealers and also CB officials while being helped in the process by bond market experts.
The committee is examining whether there was anything unusual in the February 27th 30-year bond deal, the bidding patterns for this transaction and before that, and the secondary market interest rates and its processes.
This deal where 10 times the advertised amount was accepted at 300 basis points (3 per cent) more than the normal interest rates drew a lot of suspicion. The demand for an inquiry led to Central Bank Governor Arjuna Mahendran going on leave pending the inquiry and a ministerial-level committee being appointed by the Prime Minister’s office to report on the entire issue. Mr. Mahendran took leave as his son-in-law’s family firm, Perpetual Treasuries Ltd, had received 50 per cent of the bond issue at high interest rates that raised suspicions of insider dealing.
Primary dealers are urging the authorities to bring a quick end to whatever investigations which are ongoing.
“We need a quick end to this and ascertain what went wrong, who was wrong and if so what action can be taken. Then we can move on with a hopefully more transparent and effective market mechanism and put any more doubts to rest,” one senior dealer said.
Market sources said that Perpetual Treasuries had recently sold a part of its Rs.5 billion worth segment of the 30 year bond at 11.5-11.7 per cent, which is a good profit to make in the secondary market. “They may have sold Rs. 500 million to Rs. 1 billion at a gain of 50 basis points (0.5 per cent) which is a good profit,” one source said.
Meanwhile the fundamental rights petition in the Supreme Court urging an independent inquiry into the bond issue filed by three good governance activists including former Ceylon Chamber of Commerce Chairman Chandra Jayaratne will be taken up for inquiry on April 28 and May 5.