Former CB Governor says Treasury bond scam incurs Rs.59 bln loss for SL

    Ajith Nivard Cabraal, appearing before journalists for the first time since stepping down from the post of Central Bank Governor in January, said on Tuesday that the government has incurred a loss of Rs.59 billion so far due to increase in interest rates as a result of the controversial bond issue on February 27. In addition, by issuing the bonds at a sharp discount, the Government has suffered a loss of nearly Rs. 291 million per each bond of a face value of Rs. 1,000 million, in respect of the vast majority of the bonds issued on that day, the bulk of which was issued to Perpetual Treasuries Ltd (PTL), he said. He was speaking at a media conference convened by newly formed group called the “Intellectual people’s rampart “Vidvath Jana Pvura” in Colombo Tuesday. The group is widely believed to be linked to the opposition UPFA. PTL, a primary dealer company connected to the son in law of present Central Bank Governor Arjuna Mahendran, had been given a financial facility of Rs 13 billion for this Treasury bond issue and this was the first time that such a vast sum of money has been provided by the Bank of Ceylon, he said quoting a statement made by bank officials to the COPE subcommittee appointed to probe the deal. He alleged that this massive financial facility helped the company to commit this fraudulent transaction, adding that the ultimate issue had been sold 10 times more than its original issue value. Former Chairman of the Securities and Exchange Commission Udayasri Kariyawasam disclosed at the same briefing that the stock market fell by 27.7 per cent and the market capitalisation has also dropped by Rs.138 billion in recent months. This was a clear indication of an erosion of investor interest as a direct result of the Treasury bond scam, he alleged. (Bandula)