The committee of eminent lawyers which inquired into the 30-year Treasury bond issuance has found that Central Bank Governor Arjuna Mahendran had no direct role in deciding the amount of bond.

However, the three-member committee made far reaching recommendations to ensure transparency and better governance at the Central Bank, the Ministry of Policy Planning and Economic Affairs said in a press release on Sunday (19).

The Committee had interviewed a large number of individuals, including the governor, officials from the Central Bank, primary dealers and Perpetual Treasuries.

Several deficiencies in the bank's Public Debt Department (PDD) which handles all matters relating to servicing the domestic and foreign debt of the government of Sri Lanka was observed by the Committee.

"Since the PDD is dealing with the most sensitive information of the government, the committee is of the opinion that a proper supervisory and monitoring mechanism has to be immediately implemented with regard to its activities," the committee said in its report, the press release stated.

"Even though the minutes of the Monetary Board number 4/2015 specifies to issue a 30-year treasury bond, the amount of the bond has not been decided by the Monetary Board (of which the governor is the chairman)” the report by the three member committee observed.

"This exercise is vested with the PDD as per the Operational Manual of the PDD. The decision to accept the excess amount has been taken by the Tender Board Committee that comprises eight members.

"The governor of Central Bank of Sri Lanka is not a member of the Tender Board Committee," the report further said.

The Committee concluded that there was no evidence to the effect that the governor had direct participation with regard to the activities of the PDD and the Tender Board Committee, Ministry of Policy Planning and Economic Affairs said.

However, the Committee noted serious lapses on the part of the Bank of Ceylon (BOC) through whom Perpetual Treasuries had routed an unusually large amount of bids for the 30-year bond.

The Committee observed that the bidding pattern of Perpetual Treasuries was unusual and warranted a further investigation, the press release noted further.

Perpetual Treasuries was the company associated with Arjuna Mahendran’s son-in-law. Its role in the Treasury bond issuance was the reason for the allegations of insider dealing leveled against Mahendran.

The three member committee of inquiry further noted that the Bank of Ceylon should also carry out a forensic audit and seek explanations from its Chief Dealer and others on ad-hoc decisions risking a large amount of BOC funds involved in the 30-year bond transaction.

Attorney-at-Law Gamini Pitipana was the Chairman of the three member committee of eminent lawyers. The other members were Mahesh Kalugampitiya and Chandimal Mendis.