Although asserting that action has been taken to curtail the operations of the controversial primary dealer Perpetual Treasuries, Central Bank Governor Dr. Indrajit Coomaraswamy yesterday refused to give the details by taking refuge in the secrecy provisions afforded to the Central Bank under the Monetary Law Act.
“The Monetary Board has taken some action to curtail the activities of Perpetual Treasuries and those actions are proportionate to the violations that were identified in the Central Bank’s onsite examination report of Perpetual Treasuries,” Dr. Coomaraswamy said.
When he was pressed on exactly what action has been taken, he replied, “I can’t give you details, but nobody can say we haven’t taken action. We have taken action.”
He went on to say that two internal investigations in addition to a police investigation are also underway, based on some portions of an onsite report, which require further investigation.
Perpetual Treasuries is linked to Arjun Aloysius, the son-in-law of former Central Bank Governor Arjuna Mahendran, during whose tenure the infamous bond scam occurred.
A Central Bank onsite report noted that Perpetual Treasuries made an after-tax profit of Rs.5.1 billion for the 2016 financial year, up fivefold from a year ago, while also making an after-tax profit of Rs.10.1 billion for the 14 months from April 2015 to May 2016.
In contrast, all other primary dealers made a profit of Rs.544 million in total during the 2016 financial year.
Allegations have been levelled against Perpetual Treasuries of dumping bonds, which were bought at higher yields (low prices), to the Employees’ Provident Fund in the secondary market at low yields (high prices), making thumping capital gains. The onsite report, which was leaked to the public and of which the Central Bank confirmed the authenticity, had a big part to play in parliament’s Committee of Public Enterprise (COPE) headed by MP Sunil Handunnetti finding Mahendran was responsible for the bond scam.
However, parliament was dissolved in July last year, days before the first inquiry on the bond scam was to be published by the COPE headed by MP D.E.W. Gunasekara.
Both Prime Minister Wickremesinghe and Finance Minister Ravi Karunanayake still hold on to the claims that there was no bond scam.
Another Central Bank report was recently leaked, citing how Rs.66 million Central Bank funds were allegedly utilized by Mahendran for his personal expenditure. However, Mahendran in a statement to Daily Mirror refuted such charges.
“I don’t want to comment on the past governors but we are taking the due process,” Dr. Coomaraswamy said in response to a question on what action the Central Bank is taking against Mahendran.
Dr. Coomaraswamy said that whoever is leaking the documents is being unprofessional and to leak the documents before the due process is completely disrupting the process.
Further, he said that unlike the Auditor General, the Central Bank cannot disclose whether it is conducting investigations, the results of them or what action has been taken.
“The Central Bank is different from many institutions.
There are very, very strong secrecy provisions in the Monetary Law. We can’t operate as openly as other institutions can,” he said, and denied the claims that no action would have been taken had the documents not been leaked.
He said that if suitable information to warrant an investigation is collected, the Central Bank always follows the due process.
When asked if information is not being provided due to Dr. Coomaraswamy’s friendship with the prime minister and several other top ministers in the government, he replied, “The prime minister should determine who his friends are.” Wickremesinghe last week said that Dr. Coomaraswamy and Mahendran are his friends and that Mahendran’s predecessor Ajit Nivard Cabraal was an
acquaintance as well.