Court cannot direct CB Governor as no law has been broken: Counsel

Good governance damaged by fraud, say petitioners’ lawyers requesting court to direct CBSL to formulate new systems Carry out independent inquiry by panel of professionals

The Supreme Court cannot guide or direct the Central Bank Governor since he has not breached any legal provision, Romesh de Silva, PC., appearing on behalf of the Governor Arjun Mahendran in a fundamental rights case said on Friday.

He said that there was no complaint by a primary dealer who has the right to bid at the auction on Treasury Bonds.

The Supreme Court this week heard submissions of a fundamental rights petition against the controversial Central Bank Treasury Bond sale.

The Bench comprised Chief Justice K. Sripavan, Justice Priyasath Dep and Justice Rohini Marasinghe.

The FR petition was filed on March 26 by three ‘good governance activists’, Economist and former UN official Dr. G. Usvatte Aratchi, former member of the Public Service Commission Dr. A.C. Visvalingam and former Chairman of the Ceylon Chamber of Commerce Chandra Jayaratne.

The petitioners have cited the Monetary Board of the Central Bank of Sri Lanka (CBSL), Governor Arjuna Mahendran, Deputy Governor P. Samarasiri, Registrar of Public Debt Department (PDD), Secretary to the Ministry of Policy Planning and Economic Affairs, Perpetual Treasuries Ltd, CEO of Perpetual Treasuries and Arjun Aloysisus son-in-law of the Governor as well as the Attorney General as respondents.

Mr. de Silva argued that ethics were not a matter for the Court and the Supreme Court should consider only whether there were any violations of legal provisions or not.

He said the Governor being being a relative of a primary dealeris not illegal whether it is ethical or not.

Mr. de Silva stated that after receiving bids, the Government has the authority to continue with the auction or hold back the auction.

He said in this case the Government has taken the decision to continue the auction because the transaction is profitable and the Government was also working in a proper manner, not in an arbitrary manner.

K. Kanag Isvaran, PC., appearing for the Monetary Board, Deputy Governor and the Registrar of Public Debt Department, stated that his clients have acted according to the systems formulated by the Monetary Act which is the controlling instrument of the Monetary Law of the country.

Further he said that the Monetary Board and the Tender Committee of CBSL have authority to make decisions on Treasury Bond auctions of Government requirements. Treasury Bond auctioning is a day-to-day process related to primary dealers and not a special incident to highlight in the media, he added.

He said that the Government, not the public, should inform the primary dealers about the biddings of Treasury Bonds.

The Monetary Board has published the bid notice on its website. Therefore the Counsel denied the allegations of his clients’ lack of transparency.

“There is a proper way of bids acceptation conducting by an electronic online process. The Monetary Board works on a system monitoring by the International Monetary Fund (IMF) and it annually assesses the systems in place. The Public Debt Department works on an operational manual with the usual criteria and the practices mentioned,” he said.Mr. Kanag Isvaran submitted that the petitioners cannot conduct the case under any fundamental right article in the Constitution since the Monetary Board has not violated any fundamental right of the petitioners.

Senior Counsel Saliya Peiris on Tuesday submitted on behalf of the petitioners that the fraud on Treasury Bonds has inflicted huge damage to the practice of good governance and is steeped in seri- ous irregularities and lack of transparency.

Mr. Peiris further submitted that PDD has published a newspaper advertisement on February 25 informing about a Treasury Bond auction to be held on February 27 to bid for Rs. 1,000 million, but decided on February 26 to increase the amount ten 10 fold without informing the public or primary dealers.

Mr. Peiris said that out of the Rs. 10,058 million of accepted bids, Rs. 5,000 million made up of 5 bids had been allocated to Perpetual Treasuries and these bids were at prices ranging from Rs. 98.878 to Rs. 90.1699 per Rs. 100.

Mr. Peiris said that the maximum benefit of the transaction has gone to Arjun Aloysius and his company since he obtained internal information of CBSL as the son-in-law of the Governor.

He said there was a lack of transparency, as to how Perpetual Treasuries was backed by a State Bank to submit a bid for three times the auction bid amount.

Senior Counsel submitted that the State lost millions of rupees on this transaction and therefore the Governor and his office have failed to fulfill their duties entrusted to them in the public trust.

Mr. Peiris also questioned the validity of the committee appointed by the Prime Minister to investigate the Treasury Bond issue. He said that the members of the committee were not banking professionals.

He said that the petitioners are not pleading to cancel the fraudulent Treasury Bond transaction but are seeking an order from court directing CBSL and the Governor to formulate new systems, processes, rules and regulatory frameworks which assure transparency and best good governance practices and to carry out an independent inquiry by a competent panel of professionals on the bond transaction.

Further submissions from the respondents will be heard tomorrow.