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Sri Lanka President says will act on Treasury bond probe report

COLOMBO (EconomyNext) – President Maithripala Sirisena said he will act on the recommendations by a three member committee that went in to a controversial bond sale involving a firm connected to the son-in-law of Sri Lanka’s Central Bank Governor.

The Treasury bond deal, where insider dealing was alleged is the first major scandal to hit the new administration and the opposition made it a key issue.

President Sirisena told media owners and editors Wednesday that a fact-finding committee that went into the scandal has made a number of recommendations.

"I will discuss with officials to act on the recommendations," he said.

A three member committee appointed by Prime Minister Ranil Wickramasinghe recommended more investigations, saying its terms of reference was limited.

The case involves the auction of 30-year bonds at a high interest rate to Perpetual Treasuries, a company connected to the son-in-law of Central Bank Governor Arjuna Mahendran.

The firm was given half of a bond auction where the volume was ratcheted up 10 times. The firm bid two billion rupees on its own account and 13 billion through state-run Bank of Ceylon for an auction where only a billion rupees of bonds was originally offered.

The committee report said the digital footprint of senior central bankers should be tracked and that the government securities auctioning process should be overhauled.

The report faulted a system where large volumes of bonds were sold outside the auction process by the last administration, which has been discontinued by Governor Mahendran.

It also recommended a probe into Bank of Ceylon. However it said it could find no direct between the Central Bank Governor and a decision to sell the bonds at this stage.

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