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Bond scam, a tsunami to destroy country

Oct 10, 2016 12:34:47 PM - lankatruth.com

The harm inflicted on Sri Lanka due to the bond scam of the Central Bank is equal to the destruction the tsunami caused to the country says former Deputy Governor of Sri Lanka Central Bank Dr. W.A. Wijewardene in an interview he had with Mr. Faraz Aly a renowned financial analyst.

He said the Monetary Board should immediately take action to save the country from this situation and added the interest rates had risen to 5% due to the menace.

He said Arjun Mahendran willfully manipulated interest rates to get advantage for his son-in-law’s company Perpetual Treasuries so that people’s money flowed to the Central Bank allowing his son-in-law’s company to earn large amounts of money.

This was stated when talking about a leaked on-site examination report said to have been prepared by Central Bank’s primary dealer supervision staff, on the controversial primary dealer, Perpetual Treasuries that went viral.

What is important is how a company with very small resources could earn such a massive sum of money within a short period of 15 months.

The on-site examination report states the opportunity made available by the father-in-law was used to get money for low interest and the same money was made available to the Central Bank keeping a 5% profit to earn a large profit. The report also states such moves give the market bad precedents, it should be stopped and an investigation should be carried out immediately.

At the interview between Dr. W.A. Wijewardene and Mr. Faraz Aly it transpired that the move was a big loss to the government as well as the interest ratio of government’s borrowings would go drastically up and the economy of the country would be severely affected. It also surfaced in the interview that the examiners have found out that the profit earned by the company was not 5200 million but 10,000 million and the company had obtained money from EPF and from several government institutions. The company has bought money from the government for low interest and has sold it back to the government at higher rates.

Former Deputy Governor has said despite government’s intention is to make Sri Lanka a financial hub, such incidents would make would be financiers suspicious, the credit rating would go down and the financial city would not be able to achieve its goals.