ECONOMYNEXT - Perpetual Treasuries, a gilt dealer linked to ex-Central Bank Governor Arjuna Mahendran, acquired tens of billions of rupees of bonds from auctions and unloaded 95 percent on the Employees Provident Fund, causing a loss of 14.9 billion rupees, a parliamentarian said.
Anura Dissanayake, leader of Sri Lanka's Janatha Vimukthi Peramuna, told parliament that a report presented to the governing Monetary Board of the central bank showed that Perpetual Treasuries had bought 227 billion rupees of bonds directly and indirectly.
About 141 billion rupees were bought directly and another 86 billion rupees of bond had been bought indirectly through other parties including state banks from February 2015 to May 2016, according to the report, Dissanayake said.
Perpetual Treasuries is linked to Arjuna Aloysius, the son-in-law of ex-Governor Mahendran.
Dissanayake said 95 percent of the bonds had then been unloaded to the Employees Provident Fund, a pension fund of private sector workers, managed by the Central Bank.
It is alleged that bond were taken at high yields (low prices) from rigged bond auctions and dumped on the EPF at high prices (low interest rates).
Dissanayake said according to the report, the EPF had lost over 14.9 billion rupees, from the deals.
Current Governor Indrajit Coomaraswamy has suspended the purchase of bonds by the EPF from the secondary market.
During the 22 months ending November 2016, assets of Perpetual had rocketed, Dissanayake said.
When assets of all other primary dealers had grown 31 percent, Perpetual Treasuries' assets had grown 1853 percent, Dissanayake said.
The funds have been used to purchase stock in other banks and financial institutions he said.
Up to now no legal action had been taken against the perpetrators, he charged. (Colombo/Jan24/2016 - Update II)