Auditor General Gamini Wijesinghe yesterday testifying before the Presidential Commission of inquiry probing the bond scam at Central Bank stated that doing away with the direct placements and opting for the auctions had caused losses to the government and though the mixed policy which was implemented with direct placements had some shortcomings it was accepted as the best system thus far.
He told the Commission that he examined the bond issues of 27 February 2015 and March 2016 and he calculated the losses incurred by taking into consideration the value of the bonds first issued by the Central Bank under direct placement and value of bonds after it went into auctions.
Allegations have been made that the treasury bonds issued on February 27, 2015 and March 20, 2016, caused massive losses to the country, and that it was done through a Primary Dealer named Perpetual Treasuries owned by Arjun Aloysius who is the son-in-law of then Governor of the Central Bank of Sri Lanka Arjuna Mahendran.
Earlier observations of the Auditor General had reported that during both bond issuances, the country suffered a loss of Rs.1674 Million.
A report released by the Central Bank had noted that during the first seven months of 2016 , the debt burden of the country had increased by Rs.70.1 Billion due to the sale of bonds for higher prices.
Media reports also stated that Perpetual Treasuries generated a profit of Rs. 5 billion during the first year in which the treasury bonds were issued.
Meanwhile, Attorney-at-law Chanaka de Silva presenting a copy of a hanzard to the Commission yesterday said Prime Minister had made a statement in Parliament on 17th March, 2015 to the effect that “issuing Treasury bonds will be done through auctions instead of direct placement as the latter has been found to lack transparency.” He also stated that the Central Bank was an institution which came under the purview of the Prime Minister.