CB rules out investigation on primary dealer unless audited accounts peculiar

The Central Bank (CBSL) will not launch an investigation into the controversial primary dealer Perpetual Treasuries Limited unless the audited financial statements of the company reveal anything out of the ordinary, while there will be no internal CBSL investigations either.

In a true free market spirit, CBSL Governor Dr. Indrajit Coomaraswamy said that profits should not be discriminated.

“Simply because one made a lot of profits, I don’t think one can jump to the conclusion that there is something amiss,” he said at the latest policy review media briefing in response to a question raised by Mirror Business on if the Central Bank would investigate Perpetual Treasuries for its uncharacteristic profits.

Perpetual Treasuries recorded an after-tax profit of Rs. 5.1 billion for the year ended March 31, 2016, a massive gain from the Rs. 959.5 million a year ago, mainly originating from gains from bond trading.

The primary dealer is connected to former Central Bank Governor Arjuna Mahendran. During his tenure allegations of insider dealings and bond market rigging were raised at least on two occasions. Mahendran has denied any wrongdoing. 
At the end of the past financial year, Perpetual Treasuries held Rs. 11.3 billion in government securities compared to Rs. 977 million at the end of the 2015 financial year.
Dr. Coomaraswamy said that since Perpetual Treasuries is a privately registered company, the Central Bank will analyse its audited financial statements and the regular supervision examinations.
“Presumably they have an auditor for an audit, and our people do regular, as a matter of course, supervisory examinations of private primary dealers. If they see something untoward, we will look at that,”  
Dr. Coomaraswamy said he is now committed to increasing transparency of both the primary and secondary bond markets.
However, he noted that there won’t be any internal investigation into the period of the previous Governor,

“If the COPE (Committee on Public Enterprises) report does find some fault in the Central Bank there should be an inquiry, but it should be an external inquiry. If the Central Bank has done something wrong, it should not be the Central Bank that should check that,” Dr. Coomaraswamy said.
He added that launching internal investigations will also bog down the productivity of the monetary regulator. (CW)