ECONOMYNEXT- Sri Lanka’s Finance Minister Basil Rajapaksa during his budget speech on Friday (14) transferred 8.5 billion rupees earned by Perpetual Treasuries, which is alleged to be involved in a 2016 bond scam for breaching the code of conduct.
The move comes as the cash-strapped government is desperately looking for revenue to boost post-pandemic economic revival.
The finance minister said as per a Presidential Commission of Inquiry report, Perpetual Treasuries Limited has made profit mainly through “price-sensitive inside information” and “market manipulation”.
“Therefore, this report identifies that Rupees 8.5 billion is received by willfully violating the provisions of the code of conduct issued by the Central Bank of Sri Lanka under the Registered Stock and Securities Ordinance No. 07 of 1937, to the primary dealers on best practices,” Rajapksa told in his budget document.
“According to the recommendations of this Commission, and without hindering the legal actions taken by the Attorney General, it is proposed to transfer the Treasury the Rupees 8.5 billion that the Perpetual Treasuries Limited has earned in violation of the Code of Conduct of the Central Bank of Sri Lanka.”
Perpetual Treasuries, a central bank licensed primary dealer in government bonds’ activities were suspended on several occasions after a bond scam that ran between 2006 to 2016 came to light.
The dealership was owned by Arjun Aloysius, the son-in-law of ex-Central Bank Governor Arjuna Mahendran (2015-2016).
A presidential commission of inquiry found that Mahendran had interfered in a bond auction and has leaked inside information to help his Perpetual Treasuries make billions of rupees in profits.
Mahendran raised a policy rate floor outside the regular monetary policy meeting and pressured a tender board to sell bonds at high prices, the inquiry found.
The inquiry also found that Perpetual Treasuries had paid central bank dealers, who were managing the country’s largest pension fund to buy bonds at high prices and other state funds.