CB bonds: Committee urges fullscale probe

The committee appointed to inquire into the controversial sale of Central Bank bonds had called for a full-scale investigation by a proper government authority on the bidding pattern of Perpetual Treasuries owned by Central Bank Governor Arjuna Mahendran's son-in-law.

The three-member committee report which was presented to parliament states that Perpetual Treasuries securing 50 per cent of the accepted bids is unusual.

“The committee observes that the bidding pattern by Perpetual Treasuries and the securing of 50 per cent of the accepted bids is unusual. The committee is not empowered to make any assumption with regard to the aforesaid. However in the interest of the public and since the transaction involves public funds and comes under the fiscal regulations of the government, a full-scale investigation by a proper government authority is warranted,” the report said.

It states that the Board of Directors of the Bank of Ceylon (BOC) should hold a full-scale investigation and if necessary a forensic audit into the activities in the BOC dealer room given the fact that it is a state bank.

The report also calls for an explanation from the dealer and his superior officers with regard to ad hoc decisions made considering the large portfolio of BOC funds involved.

It states that there is a serious lack of transparency pertaining to the activities of the Public Debt Department and the Central Bank. Other observations are that the private direct placements when made are erratic and have no rationale and that the auctions have been carried out without the proper functioning of the tender board. The report recommends that further remedial measures be taken with regard to the situation.