By Maheesha Mudugamuwa

Communist Party (CP) leader D.E.W. Gunasekera on Monday urged President Maithripala Sirisena not to extend the term of the Central Bank (CB) Governor Arjuna Mahendran, which is scheduled to end in June, without a thorough investigation into alleged bond scams during his tenure.

Former Chairman of the Committee on Public Enterprises (COPE) Gunasekera told a media briefing at Dr. N.M Perera Centre in Borella that the appointment of the CBSL Governor was the President’s prerogative.

Referring to the good governance activist and former Ceylon Chamber of Commerce Chairman Chandra Jayaratne’s recent letter written to the Securities and Exchange Commission (SEC) requesting it to oversee the activities of Sri Lanka’s government bond market, Gunasekera stressed that the CBSL was not providing information regarding government bond issuance since its first scam was revealedby the media last year.

“I haven’t seen any media reports on recent bonds scams of the CB and the reason was that the CB was hiding the bond issuance details from the public,” he said.

The former COPE Chairman noted that though it was necessary to keep the privacy of the bond issuance till the end of the transaction there was no barrier for the CB to provide the necessary information to the public thereafter.

He alleged that the government was trying to exempt the CB from the proposed Right to Information (RTI) Act.

If the CB was certain that there was no scam in its bond issuance, then they should reveal the information and should ensure transparency, he added.

Highlighting the latest bond scam that had taken place at the CB, Gunesekera said, “In the recently issued bonds, when the government requested the CB to issue Rs. 30 billion worth of bonds, the CB put up a notice asking bids for Rs. 1 billion. Now the government monetary institutions like the People’s Bank, Bank of Ceylon, EPF and ETF come forward start bidding at the auction. At the initial stage the private institutions do not come for bidding. Once the government institutions quit then the private institutions come forward and start bidding. The process go beyond the required amount and at the last scam it had gone up to Rs. 80 billion. And now the private institutions buy the bond at a higher interest rate at about 14 percent. The government has to pay 14 percent as interest for Rs. 80 billion. Now a new trend has started that the private institution which had obtained the bonds are again selling it to government banks and the government lost a large sum of money due to the scam.”

He stressed that it was one of the biggest scams in the Sri Lankan history and unfortunately many people kept their mouth shut as they lacked technical knowledge.

Courtesy:The Island