Pitipana Committee Unknowingly Exposes Arjuna Mahendran

By Hema Senanayake –June 7, 2015

Hema Senanayake

In this analysis, I use Pitipana Committee report. Also I use the Minute Paper of Monetary Board and Minute Paper of the relevant Tender Committee of Central Bank which have been attached to the said committee report. I use nothing else.

On February 27th of this year, Central Bank of Sri Lanka issued a certain amount of Treasury bonds in order to raise funds for the government. Many people, including opposition politicians, a good segment of economists and some analysts & dealers in the financial market alleged that the government has to incur heavy losses in terms of interest payments due to the acceptance of some bids submitted with disadvantageous price and yield rates. Such criticisms created a huge uproar in the country.

Especially, certain bids submitted by the company (Perpetual Treasuries) which is owned by the son-in-law ofthe Governor of the Central Bank of Sri Lanka (CBSL) were required to pay higher cost of interest than the prevailing rates. Accepting those bids by CBSL would cause the government to pay excessive interest up to 30 years which is the maturity time of those bonds.

The Central Bank Governor – Arjuna Mahendran

Further, the government would have to incur additional losses in relation to the Treasury bills, notes and bonds issued from that day onwards, due to the reason that the interest rates went up after the acceptance of bids with higher yields on 27th February 2015.

Are all these allegations true? If true, is the Governor of CBSL responsible personally? In regard to these two questions my answer is “YES.” Perhaps you may wonder if I declare that I am going to submit undeniable evidences from the Pitipana Committee report itself in support of my above conclusion even though you may rightfully think that the Pitipana Committee was appointed as a cover up; the cover up was very clear from the three mandated terms of references listed for the Committee by the appointing authority.

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