Parliament debates bond issue tomorrow as CB, Police probe EPF-bond scam nexis

The Central Bank (CB) and the Police have begun separate probes into EPF transactions in government securities including bonds during 2015 and 2016, connected to the infamous Treasury bond scam.
A statement to this effect was made by the CB on Monday as a response to several media reports recently raising concerns with respect to the Employees’ Provident Fund (EPF). The CB assurance comes on the eve of the full-day Parliament debate on Tuesday, January 24 on the Committee on Public Enterprise (COPE) report on the bond scam. 
The Business Times in an exclusive November 6, 2016 story spoke of how a former EPF manager was involved in pump-and-dump trading patterns in the money markets in which Perpetual Treasuries Ltd (PTL) allegedly played a primary role.
“One of the dealers from a division from the Employees Provident Fund (EPF) was apparently transferred to this bank (not the Bank of Ceylon) as the head of its treasury division and had been engaged in heavy trading along with PTL during first half 2016 when the second bond scam hit the market,” one source, who spoke on condition of anonymity, told the Business Times according to that report.
The CB statement on Monday said an internal examination is currently underway under the direction of the Monetary Board on transactions of EPF in Government securities during 2015 and 2016. “The law enforcement authorities have also been requested to carry out an external independent investigation into the issuance of Government securities in 2015 and 2016 and related matters, as it involves examining internal operations carried out by the staff of the Central Bank,” it said.
“With regard to the operations of the EPF, the Monetary Board, during the past six months, has taken several measures to strengthen the decision making process with respect to investments. These serve to safeguard the interests of the members of the EPF,” the statement added.
In its report, COPE held former Central Bank Governor Arjuna Mahendran responsible for the controversial deal and urged legal action. Mr. Mahendran is the father-in-law of Arjun Aloysius, whose family owns Perpetual Treasuries.
Earlier a leaked report by the CB’s non-bank supervision department referred to unusual trading patterns and a nexus involving PTL, Pan Asia Bank and DFCC Bank (as primary dealers) with EPF buying these securities in the secondary market. That report bared details of the extraordinary profits by PTL, its trading practices and recommended that a further probe is merited. – ENDS -