Treasury bond scam is all imagination - Counsel


By Chitra Weerarathne

The loss to the government alleged by three petitioners, claiming a Treasury bond scam, was all imaginary, said President’s Counsel Nihal Fernando in the Supreme Court yesterday. He appeared for Perpetual Treasuries Pvt Limited, cited as a respondent.

The petitioners are Frederick Uswatta-aratchchi and two others, who had alleged an irregular bond auction by the Central Bank on March 27, 2015.

Counsel Romesh de Silva PC appearing for the governor of the Central Bank said that the decision on a tenfold increase in the Treasury Bonds had been taken by the Minister of Finance and not the Governor of the Central Bank. Therefore, there could not be an allegation against the Governor. A Hansard report indicated that the decision permitting a tenfold increase had not been made by the Governor, he added.

Leave to proceed could not be given against the Governor of the Central Bank. The decision was by the government and not by the CB.  The first twenty six bids were taken when the ten billion rupee level was reached. The bids numbered twenty seven and twenty eight were also from Perpetual Treasuries. But, those two were not accepted. 

In answer to a question by the court, the Counsel said that the decision to increase tenfold had not been published because the non-publication was beneficial to the state.

He submitted that duties and powers of the Central Bank rested with the Monetary Board. If there was anything wrong, the Monetary Board should be faulted and not individual members, such as the chairman, who was the Governor.

In the petition no relief was asked against the Monetary Board. The petition did not show precisely, the breach of the prescribed functions of the Governor. The petition was vague. If the governor had done something wrong, the petitioners should complain to the Minister of Finance, who in turn will request the President to remove the governor. The petitioners had asked the Supreme Court to conclude that the Governor acted illegally. The Central Bank was the agent of the government in collecting debts. There was no allegation against the Governor that he had acted in contravention of the Section 19 of the Monetary Act. It was a matter for the Monetary Board to investigate breach of Section 19. If the MB had not done so, it was the fault of the Monetary Board, President’s Counsel De Silva contended. 

Nihal Fernando PC appearing for the Perpetual Treasuries Pvt Limited said that his client had not been allocated Rs. 5 billion. The company had, in fact, purchased five billion. The purpose of an auction was to adjust the effective cost to the government to get a better rate.

The auction system had not been explained in the petition.

The petition would ruin the credit rating of the country. No foreign country would give loans.

The loss of Rs. 650 million to the government, alleged in the petition was imaginary, Counsel Fernando said. The auction of March 27, 2015 had caused no loss to the government. Hence no need to emphasise on public importance, he added.

Saliya Pieris appeared for the petitioners, Chandra Jayaratne, Dr Fredereck Uswatte-arahchi and Dr Alagan Caruppiah.

Romesh de Silva PC appeared with Sugath Caldera, for the governor of the Central Bank Arjuna Mahendran.

K. Kanag Ishwaran PC appeared for the Central Bank of Sri Lanka.

Nihal Fernando PC appeared for the Perpetual Treasuries Pvt. Limited.

S. Parathalingam P.C appeared for Arjun Aloysius, the son in law of the Governor.

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


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