Reuters
Colombo
A panel set up to investigate a suspect auction of Sri Lankan government bonds said yesterday that it had cleared the central bank chief of any direct role, while calling for tighter supervision of the
government’s borrowing office.
Central Bank Governor Arjuna Mahendran has taken a voluntary leave of absence while awaiting the outcome of the probe into the February 27 auction. The government raised more than Rs10bn ($75.2mn) from a 30-year treasury bond at 11.73%, after initially offering just Rs1bn with an indicative price of 9.5%.
The three-member investigative committee appointed by Prime Minister Ranil Wickremesinghe said it had observed several deficiencies in the central bank’s public debt department (PDD), the government’s local and international borrowing
office.
“Since the PDD is dealing with the most sensitive information of the government, the committee is of the opinion that a proper supervisory and monitoring mechanism has to be immediately implemented with regard to its activities,” the ministry of policy planning and economic affairs said in a press release quoting the committee’s findings.
“However, the committee found that Governor Arjuna Mahendran had no direct role in deciding to accept bids over and above Rs1bn stipulated in the 30-year bond tender and accept up to Rs10bn.”
Mahendran, a Sri Lankan-born Singapore national, was questioned by Sri Lanka’s anti-corruption authority on Thursday and banned from
travelling abroad.
The committee said further investigation was needed into what it called the unusual bidding pattern of Perpetual Treasuries, a dealing house that took part in the auction.
A spokesman for Perpetual Treasuries said it had no comment on the report, but would offer one on Monday.
Besides the Mahendran investigation, Wickremesinghe has also launched an inquiry into allegations of corruption in government bond sales by the central bank since 2012.
