By Saman Indrajith
Prime Minister Ranil Wickremesinghe yesterday said in Parliament that there had been no transparency in treasury bonds issued during the period of 2008 and 2014 and they too should be investigated.
Making a statement he said that the majority of the bond issuances during the period 2008 to 2014 were done as direct private placements.
“There was absolutely no transparency. During this period bonds to the tune of Rs. 5,147,751,210,000 had been issued while of this amount bonds to the tune of Rs. 4,702,232,210,000 had been issued as direct private placements. None of these transactions had received the approval of the Monetary Board.”
The Prime Minister’s statement is as follows –
The final report of the Presidential Commission of Inquiry (PCoI) into the Bond Issuance of the Central Bank of Sri Lanka during the period from February 01, 2015 to March 31, 2016, was handed over to President Maithripala Sirisena on December 31, 2017.
Accordingly, the President made a special statement on January 03. Today I want to clarify further the Committee on Public Enterprises report or the COPE report.
The initial dialogue on the Treasury bond issue was initiated in March 2015. As soon as I informed about this, I appointed a three member committee headed by Attorney Gamini Pitipana. On March 31, 2015, I informed this council. The Pitipana Committee investigated this issue and reported to me. This commission recommended that further investigations were required. This report was tabled in parliament on May 19, 2015. On May 21,2015 we debated this issue in parliament and later it was submitted to COPE.
Thereafter the COPE Committee headed by MP, Sunil Handunnetti, commenced investigations. Through the COPE Committee too, investigations continued into this incident. On October 28, 2016 the COPE Committee report was tabled in parliament. Subsequently, on January 24, 2017 this was debated in parliament.
Meanwhile, on October 31, 2016, this report and the special Audit report presented to the COPE Committee by the Auditor General were both forwarded to the Attorney General by me through the Speaker’s Secretary. Subsequently, through the Prime Minister’s Secretary, I sought the advice of the Attorney General on whether the Central Bank Officers had committed some fraudulent activity and acted beyond their delegated responsibilities, if the Central Bank Governor Arjun Mahendran should be held responsible, and if so what the legal measures are that could be taken against them, based on the recommendations of the COPE Committee.
Accordingly, the AG has appointed a special committee comprising members of the Attorney General’s Department to act in this regard. The Attorney General had notified us in writing in this regard.
Further the Central Bank Governor notified me that there was suspicion of misappropriation of funds of the EPF. Hence, I notified the Central Bank Governor to seek the advice of the AG and conduct an inquiry. Accordingly, the Central Bank Governor had conducted an investigation and on June 09, 2017, handed over its report to the Auditor General.
In addition, I inquired in writing from the International Monetary Fund and the World Bank on the Treasury bond issuance mechanism and of the losses incurred by the Central Bank bond issuance. However, they notified me that they were not aware of an internationally accepted mechanism to determine a previously issued bond auction loss. They said the losses or gains are determined by the market factors on the particular day that the bond auction was held. I have tabled a copy of the letter sent by the World Bank Sri Lanka Director on December 07, 2016.
Since March 2015, our government has taken appropriate measures regarding this issue. All details have been submitted to the Parliament, COPE Committee and the Attorney General’s Office. In addition the President appointed a special commission, which uncovered further details. Now the report has been submitted to the Attorney General.
Meanwhile, on November 07, 2016 the Monetary Board issued an order limiting the operations of Perpetual Treasures Pvt. Ltd and prevented the company’s funds from being taken out. On July 06, 2017, all their business activities were banned. On January 05, 2018 the ban on Perpetual Treasuries was further extended by six months. Accordingly, Rs. 12 billion of Perpetual Treasuries is being held in the custody of the Central Bank. According to the Presidential Commission report, the loss inflicted on the Central Bank in this transaction is Rs. 11 billion. Now what remains to be done is for the Attorney General to initiate the required legal action in order to recover the losses caused to the government through this transaction. Through this the government too could recover any losses incurred.
This is the first time in Sri Lanka’s history that such an investigation was carried out in a fair, unbiased and expeditious manner. This is a very complex investigation process. This is a special victory for the government we established on January 08, 2015. We were able to once again bring the country’s financial control under the supervision of the parliament, after ten years. During the past, parliament was unaware of any such transactions. To say the least, not even the relevant ministers nor responsible officers were aware of certain transactions. But, fortunately we were able to change that situation.
The President further stated that it was noted in the Presidential Commission report that an investigation was necessary to scrutinise the financial misappropriations of the Treasury bond issuances during 2008 to 2014. I have advised the relevant units to investigate these embezzlement expeditiously and take measures to punish the perpetrators.
The majority of the bond issuances during the period 2008 to 2014 were done as direct private placements. There was absolutely no transparency. During this period bonds to the tune of Rs. 5,147,751,210,000 had been issued while of this amount bonds to the tune of Rs. 4,702,232,210,000 had been issued as direct private placements. None of these transactions had received the approval of the Monetary Board.
The Finance Minister at the time should make a statement in parliament regarding this matter. We the representatives of the people, as well as the general public have the right to know about these transactions.
We continuously worked towards strengthening the financial control of the parliament. We have constantly reported to parliament on the country’s financial status. Following that same policy, I reported all matters to parliament.
I intend to discuss with the Chairman of the parliamentary Public Finance Committee regarding the bond issuances during the period 2008 to 2014. It is indeed surprising that the COPE Committee had approved of the Central Bank financial reports during that period.
Today the Treasury bond issue has become a political issue. This bond issue has become a fine goldmine for the various media, political parties and mudslinging factories. Some claim that due to the Treasury bond issue the country’s interest rates had increased, while others claim that the dollar rate had gone up. But let’s not get mislead by all these mudslinging campaigns and seek the truth. By uncovering the truth let’s take the appropriate measures.
As I have reiterated, the President and I are committed to establishing a new political culture in this country. This is a new experience that is complex and hard for those parties who attack each other in political vengeance, to fathom. As the experience is unfamiliar, there could be inadequacies and wrongs that occur, but we must correct them and move forward.
However, no matter what, we are not prepared to sweep everything under the carpet and trample the rule of law, as the previous regime did. We are not prepared to bury social equality.
On January 08 we inherited a country that was caught up in a debt trap. A country that has no law would engulf in corruption and fraud. A country kept in fear over state terrorism.
President Maithripala Sirisena, myself and our government have steered the country on a different path. That path is arduous and treacherous. But we are committed to establish a just and democratic country evading all potholes and booby-traps obstructing our path.