3 state banks' chairmen pull the trigger on Ravi K

Former Finance Minister Ravi Karunanayake instructed three State Banks to bid at lower rates during two Treasury Bond (TB) auctions held last year, the Chairmen and senior officials of the State Banks told the Commission of Inquiry (CoI) probing the TB issue this week.

Those who testified before the CoI last Wednesday included People’s Bank Chairman Hemasiri Fernando, Bank of Ceylon Chairman Roland Perera and National Savings Bank Chairman Aswin De Silva.

Their evidence was led by Additional Solicitor General Priyantha Nawana, Senior State Counsels Shahida Barrie and Dr Avanti Perera.

Testifying before the CoI on Wednesday (4), the three Chairmen of the State Banks said that, at two meetings held for senior officials of State Banks at the Finance Ministry on Mar.28 and 30 in 2016, former Finance Minister Karunanayake instructed them to bid at lower yield rates at two TB auctions held at the CBSL on Mar.29 and 31, 2016. Mr Karunanayake even gave them a range of yield rates at which they should bid. The rates which the former minister instructed them to bid were lower than the rates which prevailed in the market at the time, but Mr Karunanayake had assured them at both meetings that rates which were higher would not be accepted. These promises were not kept when the auctions took place. This resulted in the Banks losing out on the opportunity to make substantial profits and consequently, suffered heavy losses, they stressed.

People’s Bank General Manager Wasantha Kumar meanwhile, testified that Senior Adviser to the Prime Minister, S. Paskaralingam, was also present at the meeting held on Mar.28. Mr Kumar had sent him an email about the CBSL accepting bids at higher rates, contrary to assurances given by Mr Karunanayake. Mr Paskaralingam, however, did not reply, he added.

The Bank lost an opportunity to make a large profit by bidding at lower rates according to the former Finance Ministers instructions, which in effect was a colossal loss to the Bank, Mr Kumar testified.

The CoI is probing the issue of CBSL TBs from February 1, 2015 to March 31, 2016 and comprises Supreme Court Justices K.T. Chitrasiri (Chairman), Prasanna Jayawardena and retired Deputy Auditor General V. Kandasamy.