Sri Lanka bond commission asks central bank to revamp laws, overhaul EPF, audit
ECONOMYNEXT – A commission of inquiry into rigged bond auctions and dumping then at state funds during the tenure of then-Governor Arjuna Mahendran has recommended a revamp of laws and departments of the central bank and a probe into bond sales and a provident fund going back to 2008, President Maithripala Sirisena had said.
The commission faulted Mahendran for irregular interference in bond auctions which allowed his son-in-law Arjun Aloysius’s gilt dealership, Perpetual Treasuries to make at least 11 billion rupees in ill-gotten gains by dumping bonds on state managed funds.
At least 8.5 billion rupees of the profits came from the Employees Provident Fund managed by the central bank, Mahapola Scholarship Fund, National Savings Bank and Sri Lanka Insurance Corporation the commission had said.
The commission had recommended the recovery of funds from Perpetual Treasuries, through a new law if necessary.
It had recommended that then Finance Minister Ravi Karunanayake be prosecuted under Sri Lanka’s bribery laws over an apartment provided to his family by Walt and Row, a related firm of the Perpetual group and also for lying to the commission of inquiry.
Arjuna Aloysius and Kasun Palisena, the CEO of Perpetual Treasuries are among people against whom criminal prosecution has been recommended.
The President said a number of central bank officials have been named. Actions of EPF dealers figured prominently in the inquiry.
The commission had recommended a complete overhaul of the EPF and audit divisions of the central bank and a revamp of the monetary law act and the law under which Treasury bonds and bills are sold.
President Sirisena said he expected a statement from Central Bank Governor Indrajit Coomaraswamy on the actions he would take on the commission’s recommendations.
A code of ethics is also needed for central bank officials and guidelines for primary dealers in government securities should be updated, the commission had said.
Changes would also be needed for the country’s bribery laws, the commission had said.