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Top CB official, Govt. Printer to testify; vital details emerge
View(s):Commission of Inquiry into the issuance of Treasury Bonds
Government Printer (GP) Gangani Kalpana Liyanage and Central Bank (CB) Statistics Dept’s Additional Director Dr M.Z.M. Azim, who was its Debt Dept’s former Additional Superintendent, will appear before the Commission of Inquiry (CoI) appointed by President Maithripala Sirisena to probe irregularities in the issuance of Treasury Bonds (TB).
Ms Liyanage will appear tomorrow while Dr Azim will appear on Tuesday. Dr Azim was among the CB officials who gave detailed evidence before the Parliamentary Committee On Public Enterprises (COPE) on the TB issue. The GP has been summoned to answer queries about the discrepancies in the issue of a Gazette notification dated January 1, 2015, under the Registered Stock & Securities Ordinance, under the name of former President Mahinda Rajapaksa who also was the Minister of Finance & Planning at the time.
Finance Ministry Secretary Dr R.H.S. Samaratunga appearing before the CoI on Thursday, was asked about the January 1, 2015, gazette number 1895/19, authorising the issue of TBs for Rs 10 billion, by the then Finance Minister.
Dr Samaratunga told the CoI he was not the Finance Ministry Secretary at the time the said gazette was issued and was not aware of it. He said the Ministry Secretary at the time was Dr P.B. Jayasundara. Dr Samaratunga too will appear before the CoI on Monday to continue with his evidence.
The CoI headed by Supreme Court Judge (SCJ) K.T. Chitrasiri with SCJ Prasanna Jayawardana, and Retired Deputy Auditor General Kandasamy Velupillai as its members, began sittings on Tuesday (21).
The CoI has been mandated to investigate and inquire into and report on the issuance of TBs during the period February 1, 2015 to March 31, 2016.
Its first two witnesses were CB Governor Dr Indrajit Coomaraswamy and Finance Ministry Secretary Dr R.H.S. Samaratunga. The Governor gave evidence before the CoI on Tuesday and Wednesday, while Dr Samaratunga appeared before the CoI on Thursday.
Senior Additional Solicitor General Dappula de Livera, P.C. who heads the nine-member team from the Attorney General’s Dept, leading evidence on behalf of the CoI, said in his opening statement, “The writ of the CoI includes inquiring, investigating and reporting back to the President, if any irregularity has taken place in the issuance of TBs during the period February 1, 2015 to March 31, 2016, and if, there has been a loss to the country, due to flaws in the process.”
“The CoI has also been directed to ascertain, if there was discriminatory award of TBs, whether proper procedures and adequate safeguards were adopted to ensure there was optimum price or benefit for the Government and if so, the person or persons responsible for any act, omission, or conduct,” he said. On February 21, Dr Coomaraswamy appearing before the CoI, was questioned at length on the methodology adopted by the CB on the issuance of TBs and in particular, the TB issue of February 2015.
The Governor said the TBs in question were issued during the tenure of former Governor Arjun Mahendran and he, Dr Coomaraswamy, was not in the country at the time. He explained that TBs are issued to manage the finances of the countr y and for its economic development, keeping with government requirements, and the scheme was started in 1997.
He said the procedure has been to issue the TBs to Primary Dealers (PD) and thereafter, traded in the Secondary markets. Dr Coomaraswamy explained that the CB’s Public Debt Dept is in charge of issuing TBs, while its Superintendent is in charge of the procedure. He said that, if necessary, a Technical Evaluation Committee is appointed to decide on the quantum of funds to be raised and the CB Governor is empowered to change the composition of these Committees.
Dr Coomaraswamy explained that, while TBs are issued for a long period above two years, while Treasury Bills are issued for a shorter period- usually a year.
When asked whether TBs are issued to mature for periods of 40 to 50 years, the Governor said he was not aware of such instances.
He said that, an ordinary person cannot purchase TBs and Treasury Bills and they are issued to PDs. He said there were 8 Banks and 7 PDs, and the conditions are laid down by the CB.
He said the Governor is not involved in the transactions of TBs, and is informed of its final outcome. He said the CB can remove a PD, but the Governor cannot get involved in the process. Dr Coomarasway said that, it is the Finance Minister who decides on the quantum of loans to be raised and the information conveyed to Parliament through the Appropriation Bill. If the Bill is passed, the decision is conveyed to the CB Governor.
He said the decision to issue TBs is thereafter decided by the Treasury Secretary, the Governor and the Finance Board In response to a question as to whether the Direct system or the Auctioning system was better for Sri Lanka, Dr .Coomaraswamy said it is decided on the monetary reserves.
Explaining the process, he said the Auction system is fully computerised and there was transparency in the scheme. He said there was a system where the Auction system and the Direct system are combined in addition to other systems, and the CB was looking for the best possible system.
In response to a question about the expertise required for the TB transactions, Dr. Coomaraswamy said normal persons cannot engage in such transactions, as it requires specialised knowledge and knowledge on State monetary policies. Dr. Coomaraswamy responding to a question whether undue advantage could be obtained, if prior information is available, he said it could happen. He said, usually, two national newspapers publish the relevant advertisement.
Responding to a question by Commissioner Justice Jayawardena, whether audio or video recordings are made during the time of the transactions, he said no such recordings had taken place. He said CCTV facilities too were not available. On queried whether there was a requirement for the CB Governor to visit the location where the TB transactions were taking place, Dr. Coomaraswamy said there was no such requirement.
Dr Samaratunga giving evidence, explained the procedure of repaying debts and the policies which govern the decisions.
He said that, between 2014 and 2015, there were 3 Budgets presented, and after the election of the new government, there was an interim Budget presented.
He said that, in 2015, the loan requirement was Rs 1,780 million.
Explaining the government’s borrowing ceiling, he said the loans are divided as local and foreign, and the final decision is taken by Parliament and the CB.
On a question whether there was a limit to the issuance of TBs, he said there was no such limit.
The CoI will recommence sittings tomorrow.