New Governor says Central Bank will fully cooperate with COPE probe on the tainted Treasury bond issue
Sri Lanka's Central Bank will fully cooperate with the Parliamentary probe on the tainted Treasury bond issue and await its finding, newly-appointed Governor Indrajit Coomaraswamy told reporters on Tuesday.
Responding to questions, Dr. Coomaraswamy said an internal inquiry was not warranted as the Committee on Public Enterprises (COPE) was a high powered body. The new Governor was meeting the media for the first time after being appointed to the post by President Maithripala Sirisena at the weekend.
During former Governor Arjuna Mahendran's tumultuous 17-month tenure, the bank was reluctant to release information to the Auditor General on bond issues saying these trades were 'too sensitive' for public dissemination, triggering a row between COPE, the AG and the Central Bank.
But the new Governor said he would abide by the findings of COPE on bond issues in which Mahendran is accused of 'fixing' in favour of his son-in-law's firm, Perpetual Treasuries, a charge the former Governor has strenuously denied.
Dr. Coomaraswamy, an accomplished economist with impeccable credentials for the job with the only black mark being serving as a one-time advisor to jailed Sri Lankan-born bond trader Raj Rajaratnam in the US, told reporters that he would uphold the honour and integrity of the Central Bank in the discharge of his duties.
When questioned about his relations with Rajaratnam, who was convicted in 2011 on insider trading charges, Dr Coomaraswamy said that he did macroeconomic research for his company whom he knew as a friend. He noted that he has provided some professional services involving macroeconomic research before Rajaratnam was charged with insider dealing.
He said that he had a friendship with him for a long time starting from the days when he was a research student at the University of Sussex.
Rajaratnam helped a lot in Sri Lanka. "He helped this market, he helped after the tsunami, and he had done a lot of positive things." He had set up a charitable fund which helped projects in the north and south of the country, Dr Coomaraswamy said.
He said Sri Lanka has a great chance to develop having missed many opportunities in the past decades, partly due to the conflict. He said the country needs to leapfrog its development path with the use of modern technology.
Responding to a question from the Business Times, the new Governor said under consideration is for departments dealing with the Employees Provident Fund, Staff Training and Public Debt to move out and allow the bank to focus on its core functions. "These are still under consideration," he added.
He pointed that Sri Lanka needs to stabilise the economy and get strong macro economical fundamentals. "That is the key building block and the central bank has a key role to play towards this end," he said.
"Sri Lanka now has the best chance to make a great leap forward in terms of its development trajectory as it has developed excellent relations with all countries he said adding that we have an excellent opportunity to leverage our strategic location to our advantage."
Referring to financial sector consolidation, he noted that it will be allowed to happen organically as the overall sector remains stable.
"If you look at the non-performing loans and capitalisation taken as a whole, the system is in good shape. If we look at the non-bank finance companies there is quite a long tail where there is vulnerability. The Central Bank is vigilant and has instructed the more vulnerable organisations to restructure themselves. So it is a process that will take some time but we are very vigilant," he said.
He emphasised that it was the responsibility of his institution to provide the foundation for the country to leverage its geographical location and strong relations with other nations to attract investment to promote strong
economic growth.