Treasury Bonds issued to SriLankan as capital infusion not included in Govt. cash flow - Witness

Treasury Bonds issued to SriLankan Airlines (SLA) as capital infusion between the 2012- 2014 period were not included in the government cash flow as they were a budgetary allocation, the Assistant Governor of the Central Bank of Sri Lanka (CBSL) Dhammika Nanayakkara told the Presidential Commission of Inquiry (PCoI) into malpractices at SriLankan Airlines, SriLankan Catering and Mihin Lanka yesterday.

The General Treasury had issued those bonds to SriLankan Airlines through a direct placement via the Bank of Ceylon (BoC), which is a primary dealer at a yield rate of 10.20 per cent.

When asked by Additional Solicitor General Neil Unamboowe, PC as to whether the General Treasury had issued any other bonds that matured in such a long period of four months and 11 months at a yield rate of 10.20 per cent through direct placement, the witness answered in the negative.

Nanayakkara said the General Treasury’s Treasury Operations Department decides the yield rate on the bonds issued and the Public Debt Department, which he was the then head (Superintendent), is only issuing bonds. However, the bonds are issued at the lowest possible yield rate, he added.

However, heated arguments were seen between Assistant Governor and Additional Solicitor General during the testimony on Monday over the acceptability of issuing those Treasury Bonds to the SriLankan Airlines under the direct placement method.

Then Nanayakkara pointed out that the Public Debt Department of the Central Bank of Sri Lanka (CBSL) has not violated the Registered Securities and Stock Ordinance (RSSO) in issuing Treasury Bonds to SriLankan Airlines between 2012 - 2014 through direct placement.

He said the RSSO does not prohibit the Central Bank of Sri Lanka (CBSL) in issuing Treasury Bonds through direct placements.

Considering the situation, the Chairman of the Commission, Retired Supreme Court Judge Anil Gooneratne at the beginning of the yesterday’s testimony told ASG Unamboowe not to allow any heated arguments to take place during the proceedings.