CB made arbitrary decision by investing in Greek Bonds: Petitioner

The country lost nearly Rs. 2.14 billion of public funds due to the illegal transaction of investing in Greek Government Bonds violating the rights of the people of the country, a UNP Parliamentarian complained to the Supreme Court on Wednesday.

Petitioner UNP MP Sujeewa Arjuna Senasinghe, filing the petition on behalf of the country’s citizens who are the beneficiaries of the Consolidated Fund, said this public property should not be alienated from them through unlawful, arbitrary and irresponsible exercise of authority of the respondents.

He complained to the Court that the respondents invested Rs.3,472,576,045 in Greek Government Bonds purchased from the secondary market through

intermediaries, namely, Morgan Stanley, Jefferies & Com. Inc., Royal Bank of Scotland Plc., Commerzbank AG on April 5, 2011.

He cited Central Bank Governor Ajith Nivard Cabraal, Monetary Board of the Central Bank (MB), Finance Ministry Secretary P.B.Jayasundara, members of the MB, namely,Nimal Welgama, Mano Ramanathan, and N.A. Umagiliya, International Monetary Cooperation Minister Sarath Amunugama, the Auditor General and the Attorney General as respondents.

The petitioner stated it was a widely accepted fact that it was only a matter of time before the Greek Government would default on the Bonds.

The petitioner stated that despite the alarming risk fact being so obvious, the CB did not pay any heed to take into consideration market trends and the projections based on the research papers that were then available as at the date of the investment and chose not to obtain prior approval of the Monetary Board as required by law despite the clear credit risk, thus acting in a surreptitious manner with no transparency.

The petitioner stated that the sale of the Bonds with a face value of EUR 5,000,000, had been purchased by the CB at EUR 4,103,500 and sold at EUR 3,300,000 on July 13, 2011, only three months after their purchase, thus acting in conflict with all accepted principles and practices followed by financial experts in making investments in such high risk financial products and in violation of the rights of the petitioner and the public.

The petitioner states that according to the seventh and eighth respondents the loss of public funds to the State is approximately Rupees 2.14 billion. However, petitioner stated that the sum is not conclusive as the present market value of the remaining bonds is not known.

The petitioner sought a host of orders including an order declaring that the respondents violated the fundamental rights of the petitioner and the country’s citizens guaranteed under the Constitution.

He also sought an order declaring that the first, third and the sixth respondents have carried out an illegal and fraudulent act in contravention of the objectives and interests of the Central Bank by investing in Greek Bonds.

He also sought an order on the Commission to Investigate Bribery or Corruption to inquire and report to Court on the investment in Greek Bonds.