The Public Debt Department’s principle of giving same rates to different Primary Dealers when issuing direct placements has been violated, it was revealed at the Presidential Commission inquiring into the Treasury Bond issue yesterday.
The Public Debt Department has raised funds to fulfill government borrowing requirements prior to 2015 issuing approximately 80% direct placements and the rest using auction method. The former Governor Arjun Mahendran has introduced the solely auction based system in February, 2015.
The information came to light when Harsha Fernando, the legal counsel to Deputy Governor P.Samarasiri, questioned Assistant Governor S.S.Ratnayake at the Commission yesterday.
Fernando, taking a direct placement issuance done in 2011 as an example, contradicted AG Ratnayake’s stance that the Public Debt Department has issued direct placements with the same tenure, same date, and same volume on the same rates as well.
According to the example shown by Fernando, the PDD has issued direct placements on a particular date to the Employment Provident Fund and the People’s Bank for two different rates. The People’s Bank has placed two bids for 50 million each and the EPF has bid for 50 million.
Supreme Court Justice P. Jayawardane questioned AG Ratnayake on certain direct placements done in June and July 2014, where Primary Dealers have received different rates on the same day placements.
Meanwhile, Nihal Fernando PC, legal counsel to former Governor Arjun Mahendran, raised the importance of conducting a forensic audit on the direct placements issued by the PDD prior to 2015.
The necessity of a forensic audit was previously emphasized by Deputy Governor P. Samarasiri when he testified before the Commission as well.
Chanaka de Silva, questioning on a series of documents including graphs and charts provided by AG Ratnayake on the after effects of the questioned treasury bond issuance, suggested that said information is not based on detailed statistical analysis to which the witness agreed.
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