Prime Minister Wickremesinghe before the PCoL

Prime Minister Ranil Wickremesinghe arrived before the Presidential Commission of Inquiry (PCoI) into the Central Bank Bond issue today.

The Prime Minister was requested by the Commission to make a statement today.

It marked the first time a Sri Lankan prime minister has appeared before an investigation panel and responded to questions raised by the Attorney General’s Department.

According to media, Mr. Wickremesinghe, during an hour of questioning, said he requested the then central bank chief hold a new public Treasury bond auction after finding gray areas in the previous government’s borrowing.

“Trillions of rupees have been taken without any authority. Many borrowings did not appear on government books,” he said adding that up to 100 billion rupees ($650.62 million) had been borrowed for highways without being included in government books.

The auction, originally intended to sell 1 billion rupees ($6.51 million) of 30-year bonds, eventually grew to over 10 times that amount to meet government borrowing needs.

More than half of the issue was sold to Perpetual Treasuries, a subsidiary of a company owned by the son-in-law of former central bank governor Arjuna Mahendran, whom Wickremesinghe had appointed.

Wickremesinghe, Perpetual Treasuries, Mahendran and his son-in-law have all denied any wrongdoing. Wickremesinghe’s supporters also say there was nothing wrong with the sale.

Wickremesinghe, prime minister since January 2015, said the additional amount was needed for highways payments and was not included in government books under the previous regime. The auction system, instead of private placement, was introduced to ensure transparency.

Opposition lawmakers have said the bond auction in question lost the state more than $1 billion because of rising borrowing costs. But the central bank has dismissed the opposition’s claims.