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Auditor General says PM’s word not the law
View(s):By Manopriya Gunasekara and Ranjan Katugampola
Auditor General Gamini Wijesinghe has strongly defended his special report on the losses caused to the country over the issuance of 30-year Treasury Bonds.
He has insisted that whatever the accusations of bias levelled by anyone, he, as the AG, had prepared his report based on detailed analysis of data made available to him. He made these comments while giving evidence before the Commission probing the Central Bank’s bond issues from February 1, 2015 to March 31, 2016.
The Commission comprises Supreme Court Justices K.T. Chitrasiri, Prasanna Jayawardena and retired Deputy Auditor General V. Kandasamy.
The AG testified before the commission throughout the week and refuted claims made by attorneys appearing on behalf of Perpetual Treasuries Ltd. and others that his report was biased. On Thursday, Mr. Wijesinghe said his report was compiled with the assistance of some 1,500 employees of his department and it was a collective effort. He said the purpose of his report was to calculate losses incurred in the issuance of treasury bonds as a result of the failure to adhere to the direct placement method.
During cross-examination, Attorney Harsha Fernando, who appeared on behalf of P. Samarasiri, former Chairman of the CBSL’s Tender Board, pointed out that Prime Minister Ranil Wickremesinghe had told Parliament in March 2015 that the Government had decided to stop the direct placement method because of various irregularities.
Mr. Wijesinghe, however, said that just because the Premier made a statement in Parliament, it did not become law unless a motion was passed by a majority. Hence, there was no reason to do away with the direct placement method, which had allowed the Government to obtain loans at minimal cost and which did not cause massive market fluctuations, he said.
He added it was his opinion that a new, transparent method should be introduced for the issuance of treasury bonds to minimise the loss to the State and protect the market.
Testifying on Wednesday, the AG stressed that his task was to only calculate losses caused to the country due to the bond issue and he was not prepared to withdraw a single word contained in his report.
During cross examination by Perpetual Treasuries lawyer Nihal Fernando, it was revealed that CBSL was even now not adhering to the direct placement method. Mr. Wijesinghe said the CBSL Monetary Board officials should take the responsibility for the losses incurred by the State.
On Tuesday, the AG said he had been unable to calculate the losses incurred in the secondary market because the CBSL had not provided information requested by his department. If he had been able to do so, he said the losses might come to an even higher amount. The commission, however, ordered the AG to conduct an audit on losses caused to the secondary market from 2015 to 2016.
Mr. Wijesinghe told the commission that the Government was being forced to obtain funds by auctioning treasury bonds as State expenses were regularly exceeding the budgetary allocations. The situation could have been avoided, had the Government been able to reduce its expenses, he observed.
In his testimony on Monday, the AG said that during the treasury bond auction held on February 27, 2015, some 905 percent more bonds had been issued than was necessary.
While the Government had auctioned bonds to generate Rs.10.058 billion in this instance, it had received only Rs. 9.658 billion in the end. As such, a loss of Rs. 400 million was incurred at the beginning of this particular auction itself, he revealed.