Sri Lanka Prime Minister to Appear in Investigation on Central Bank Bond Auction

Sri Lankan Prime Minister Ranil Wickremesinghe will attend the panel investigating alleged irregularities in a central bank bond sale earlier this year, the panel’s chairman said on Thursday.

The panel was assigned to the presidential commission of Inquiry into a central bank bond deal which has potentially offset the government’s balance sheet.

The bond auction, issued earlier this year, intended to sell 20-year government bonds for 1 billion rupees ($6.51 million) but was eventually issued at almost 10 times its expected amount in order to satisfy the government’s borrowing requirements.

Sri Lanka lawmakers claimed that the bond auction in question has induced a 1 billion dollar loss due to the increasing cost of borrowing. However, the Central Bank of Sri Lanka has now dismissed such statement.

Perpetual Treasuries, a subsidiary of a company owned by the son-in-law of former central bank Governor Arjuna Mahendran appointed by Wickremesinghe, purchased over half of the bond issued. Many lawmakers question the potential involvement of the prime minister in the regularity of the action.

(Wickremesinghe and Mahendran arrived for the 20th anniversary of the Colombo Exchange Ceremony. Credit: Ishara S. Kodikara/AFP)

Perpetual Treasuries and Mahendran denied the assertion and the potential issues with the bond auction.

Earlier this year, Wickremesinghe defended the action of Mahendran and the Central Bank on the bond auction in one of his statements in the Parliament.

“I insisted on a public auction because private placements have led to corruption and of transparency,” Wickremesinghe said in the statement.

Since the beginning of the inquiry, several witnesses have mentioned Wickremesinghe in their testimony which led to voices suspecting his personal involvement in the auction.

Wickremesinghe said that he is prepared to offer clarification on the issue to the presidential commission “at any time” in reference to the questions raised.

Chairman K.T. Chitrasiri of the panel said that Wickremesinghe would appear before the commission on Monday to clarify and address all questions.

Political analysts have suggested the possibility of opposition lawmakers discrediting Wickremesinghe’s anti-corruption policy through the bond scam, intending to break the coalition government formed by Wickremesinghe’s center-right party and Sirisena’s center-left party.

The investigation has entered its final stage as it is mandate on December 8, 2017.