The Tender Board and the Public Debt Department was not in agreement with the decision making of the former CBSL Governor Arjun Mahendran regarding the questioned Treasury bond issuance on February 27, 2015,the CBSL Additional Director of the Statistics Department Dr.M.Z. Asim said.
The Tender Board was reluctant but compelled to comply with the former CBSL Governor’s decision to accept 10.5 billion bids at the said auction, Dr. Asim further said.
Dr. Asim, who was one of the then Additional Superintendents of the Public Debt (ASPD) during 2015, was testifying at the Presidential Commission to investigate and Inquire into the Issuance of Treasury Bonds yesterday.
The Public Debt Department, Asim said, recommended the former CBSL Governor and the Tender Board to accept 2.6 million biddings at the questioned auction, for which they prepared the auction sheet.
“But the former CBSL Governor along with the two Deputy Governors visited the PDD for the second time around 12.30 p.m. Myself, ASPD Muthugala, S.P.D.Seneviratne and the Head of the Front Office were just outside my office.” Asim explained.
Then, the Governor requested the Superintendent of the Dept Department, Seneviratne for the second time in the day on the auction details to which she said there are 20 plus bids made at the questioned auction.
Asked on how the conversation then proceeded, Asim went on to explain that the former CBSL Governor told S.D.P. Seneviratne to accept all 20 plus bids.
“I immediately reacted to this. I pointed out to the former CBSL Governor, if we accept all 20 plus bids, the interest rates will go high.” Asim said.
“SPD Seneviratne also held the same opinion that I did,’ Asim said.
“Despite my confrontation, the former CBSL Governor took the bid sheet room to examine its content,” he further said.
The Commission questioned does that mean Mahendran was able to see the names of the Primary Dealers who had made bidding, to which Asim replied that it may have been the case.
When asked if he did not confront the two Deputy Governors who were present at the discussion, Asim replied he did indeed, but they remained silent about the issue raised.
“It was at this moment, the former CBSL Governor mentioned that this would be the time the bid placing that can move away from direct placement method.” Asim said.
With the decision given by the former CBSL Governor to accept 10.5 billion bids at the auction, the PDD had to prepare a second auction sheet complying with the new decision, Asim pointed out.
The Presidential Commission then pointed out that it seems neither any COPE committees or the Auditor General’s examination on the same matter, have not examined the second auction sheet. Asim confirmed that there is a second auction sheet, the original copy can be derived from the documents of the Public Debt Department.
Asked whether the Tender Board confronted the second auction sheet, Asim said to his view all the members of the Tender Board immediately started to express their concerns over the matter and demanded to clarify the decision with the Governor Mahendran himself.
Asked if the Chairman of the Tender Board held the same view, Asim said it was the case and Seneviratne also said to the Tender Board that he wants to get the decision clarify with the CBSL Governor Mahendran himself.
“Firstly, Samarasiri attempted to inquire on this from the former Governor via telephone, but, was unable to reach him. Then, he went outside the conference room where the Tender Board meeting was held, and came back in after about 45 minutes. He had contacted the former Governor via his office telephone,” Asim explained.
After the Tender Board Chairman Samarasiri came back in, he said the governor had provided three points on the rationalisation on the questioned decision making.
“The three points were, tight financing requirements of the government, prevailing high liquidation and the structure of interest rate, “ Asim said.
Asked on as to why as the secretary to the Tender Board, he did not keep a minute on the Tender Board members, Asim said the minute keeping was dictated by the Chairman of the Tender Board and that he was not able to do so.
Asked if the former CBSL Governor’s direction to raise a 40 billion through issuance of 20. 30 and 40 years Treasury Bonds was an order, Asim said he cannot say so and the direction was forwarded as a request to push the treasury bonds to a longer tenure. He also said however, any extension of maturity period of a treasury bond is usually always discussed extensively in the Tender Board.
Meanwhile, the legal representative of Tender Board Chairman Attorney Harsha Fernando pointed out to the Presidential Commission, if the former Governor had instructed to opt for auction method, why had the CBSL raised 3.5 million on the same day,February 27, 2015, using the direct placement method.
Fernando pointed out, if it is really the case where Treasury Bond issuance method that has stemmed the doubts regarding the auction.
The Presidential Commission is to summon the former SDP Seneviratne on February 6 for inquiry.
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