Mahendran sold bonds in public auction sans Monetary Board approval -Treasury Secy


By Shyam Nuwan Ganewatta and Sarath Dharmasena

Secretary to the Ministry of Finance Dr RHS Samaratunga yesterday informed the Commission of Inquiry investigating the controversial bond sale that former Central Bank Governor Arjuna Mahendran had opted to sell Treasury bonds through public auction without approval from the Monetary Board.

In answer to a question by Senior State Counsel Yasantha Kodagoda, Dr Samaratunga said the former Central Bank Governor had decided on the public auction and informed the Monetary Board only after carrying out the controversial bond sale on Feb. 27, 2015.

Asked by Supreme Court Judge Prasanna S. Jayawardena whether a decision to opt for the public auction should have been made by the Monetary Board Dr Samaratunga answered in the affirmative.

State counsel produced minutes of the last Monetary Board meeting on Feb 23, 2015 before the controversial bond sale on Feb. 27, 2015 and pointed out that no mention had been made of moving for public auction.

Dr Samaratunga said that though the Monetary Board had decided to go for the bond sale for a period of 30 years, there had been no agreement on the amount of bonds to be sold.

Asked who had suggested the sale of 30-year-bonds, Dr Samaratunga said the decision had been made following a presentation by Director of Economic Research.

When Dr Samaratunga attempted several times to make clarifications without providing direct answers to the questions posed to him, the Commission of Inquiry warned him against it. He was asked to give exact answers to the questions he was asked and to make additional clarifications, if any, thereafter.

Dr. Samaratunga said that he had seen the press release pertaining to the gazette relevant to the bond sale only in newspapers. The particular release had been issued by the Ministry of Finance to media without his approval.

Secretary to the Ministry of Finance is scheduled to give further evidence today when the Commission resumes sittings at 10 am.

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