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Secrecy has no place in CB transactions that can affect 20 million people- AG
Gamini Wijesinghe
The Central Bank must shed the cloak of secrecy about how it does business and be more transparent by allowing the public access to information on how it raises funds from bond sales, treasury bills etc., Auditor General Gamini Wijesinghe said.
“There can be some sensitive information I agree and in cases like bond auctions secrecy has to be maintained up until the process is completed, but thereafter it should be completely open. Otherwise one person can blunder and 20 million people have to pay the price for years to come,” Mr. Wijesinghe said.
Mr. Wijesinghe’s comments come in the wake of the recent release of the COPE report on the Central Bank bond controversy which raised serious questions about the process adopted by the CB in raising monies through auctioning of bonds. The report also said the former Central Bank Governor Arjuna Mahendran was directly responsible for the questionable transaction and that he had interfered and influenced the process. The findings of the Committee on Public Enterprises (COPE) were based on the report of the AG who initially inquired into the matter and submitted a comprehensive report to Parliament.
Mr.Wijesinghe who assisted COPE in its work said he fully stands by the report which he prepared on the bond issue in which he concluded that the “Governor of the Central Bank had not acted with professional due care in the performance of his functions, expected of a Governor of a CB.”
“I stand by every comma and full stop in the report. My staff and I spent hours reading 1000s of documents scrutinising all the details pertaining to this transaction on this matter and we have no doubt about our findings,” Mr.Wijesinghe said.
He dismissed attempts by some members of COPE who had tried to undermine the report. ” I told the Committee members that I have given them the core and if they want they are free to put icing on it.”
As in all other reports, the AG had specified the “Limitations of Scope” as is the standard practice in report writing. “I have acted within the powers and scope of the area vested with the AG by law.”
In his report, the AG said,” As matters of criminal nature and those unlawful activities do not fall within the powers and scope of the AG, they have not been dealt with in the report and if such investigations are considered necessary, the assistance of specialized institutions should be obtained.”
When the investigation into the bond issue first began, there was resistance from the CB side to the query by the AG and COPE Chairman MP Sunil Handunnetti had to intervene on his behalf to get full access to all documents relating to the bond transaction. The Attorney General was consulted in this regard and he too had ruled that as far as the Auditor General was concerned no secrecy can be maintained but if there was sensitive information that had to be withheld, the two sides would have to discuss and come to a compromise on how such information can be dealt with.
“No government entity can maintain any secrecy from the Auditor General. I have to safeguard government money. I have to ensure that the concerned officials have done their job with professional due care and done it with minimum costs and minimum risk to the government,” he said.
The AG added that he understood the need for some secrecy but there should be a limitation on the time period for keeping such information from public scrutiny. “Within a week, a month or even a year after such transactions are complete, all the details must be made public,” he said.
Mr. Wijesinghe said that In the US details pertaining to bond purchases of up to five years is made available on their websites.
“The total number of bonds, value of bonds should be open information. At the beginning of the year everybody should know what the budget deficit is as that amount has to be obtained from loans for the year. Then you identify the sources from which you are going to raise the loans such as treasury bills, bonds, soft loans etc. and the information should be made public so that people are aware how the monies are going to be raised,” he said.
In the AGs report, he has noted the need for the CB to maintain all necessary data as lack of adequate data in the CBSL for the regulation of the secondary markets results in the inability to regulate the financial markets.
He also said the CB must maintain all information on bonds issued to cover all transactions from the date of issue to the date of producing it to the bank for encashment on maturity.
“Most of the decisions of the CBSL have long term impact on the overall economy and whether such important complex and sensitive decisions have been taken on the correct basis should be subject to review by an independent party as the good and bad impact generated by them would be faced by the general public,” the report said, adding that such information should not be shielded in the name of safeguarding confidentiality mentioned in Section 45 of the Monetary Law Act and that there is the need to take action to amend this said section in a suitable manner.
Section 45 relates to the duty of CB officials and servants to maintain secrecy.
| AG directed to probe bond deals between 2009 and 2015 The Auditor General has been asked to look into Central Bank bond auctions between 2009 and 2015, analyse the data to ascertain if the due process was followed and report if any malpractice had taken place. The directive has come from the Finance Minister. Auditor General Gamini Wijesinghe said his department has already begun the inquiry and a report would be ready within two to three weeks. The Finance Ministry’s directive comes in the wake of the release of the COPE report on the bond issues. The COPE probe also studied AG’s observations of the bond issue. The AG concluded that authorities concerned should be held responsible for the avoidable losses amounting to Rs. 1,674,256,805 in the two bond auctions. In the February 27, 2015 auction, which became the center of an investigation by the parliamentary Committee on Public Enterprises (COPE), the avoidable total loss has been estimated at 889,358,050 while in the March 29, 2016 auction, the avoidable total loss has been estimated at 784,898,755. The AG also said he could not rule out the possibility of an increase in the estimated gains or losses relating to other issuance of bonds from February 27, 2015 to May of 2016. Meanwhile the AG in his report that was sent to COPE has said that guidelines should be introduced to regulate inter-transactions of bonds among primary dealers. He also recommended that the extensions of published date and time of bond auctions should be limited to unavoidable and justifiable matters only unlike the manner in which it is done in some instances at present. | |