The special Presidential Commission of Inquiry to investigate and inquire into the issuance of Treasury Bonds which was appointed by President Maithripala Sirisena had its sittings on four consecutive days this week too.

The Commission was appointed following the controversial bond issuance to primary dealer, Perpetual Treasuries Private Limited, to which former Governor of the Central Bank of Sri Lanka (CBSL), Arjuna Mahendran’s son-in-law Arjun Aloysius is affiliated to. Since then, it became the main topic in the country and resulted in the removal of Mahendran from the post.

Frist Day : Incumbent Governor of the CBSL Dr. Indrajit Coomaraswamy was the first person to give evidence before the Commission.

The Commission which had already recorded statements from Dr. Coomaraswamy and several other officials, this week commenced with Deepa Seneviratne who was the Superintendent/Registrar of the Department of Public Debt during the period the questionable transaction took place in February 2015. Seneviratne making her statement to the Commission said that the controversial much bigger transaction of Rs.10 billion took place due to an order by Mahendran.

She also said that the Public Debt Department officials had no other option than to follow Mahendran’s orders. According to her, explanations by the officials not to do so had been disregarded by Mahendran. She also added that Deputy Governor of the CBSL P. Samarasiri had said that Mahendran would not change his mind and subsequently the Tender Board had to reluctantly approve the bid by Perpetual Treasuries.

The Commission also recorded that she had been transferred to the Public Debt Department just two days before the transaction and it was her first bond auction. Monday’s (March 06) public hearings were concluded, inviting CBSL’s Superintendent/Registrar of the Public Debt Department Buddhika Sarathchandra to appear before the Commission next day.

Second Day :   On Tuesday at 10.00 a.m., the Commission met again and Sarathchandra was questioned over the bond issuances which took place during the period under his supervision. The expected monetary amount from a day’s auction, the accepted amount of bids, releases prior to the auctions and the Tender Board’s decisions after the transactions of each and every auction date were separately questioned by the senior officials of the Attorney General’s Department.

Third   Day:  The public hearings on Wednesday also began again with Sarathchandra, as the day which had been allocated for him was not sufficient to record all the information expected from him by the Commission. The Commission was initially planning to record the statement of UL Muthugala who is the Additional Director of the CBSL’s Bank Supervision Department. The day ended with Sarathchandra’s statement and cross examination, by the lawyers representing the Attorney General’s Department, the CBSL and Perpetual Treasuries.

In response to a question by Attorney-at-Law Harsha Fernando, Sarathchandra said that his Department gives out minimum information to the market regarding bond auctions. He also said that the CBSL had not taken any measures of change immediately following the impugned Treasury Bonds auction dated February 27, 2015 except for a few transfers made by the Human Resources Department. He made the revelation responding to a question by Additional Solicitor General Dappula de Livera PC.

Meanwhile, Nihal Fernando PC who is appearing for Perpetual Treasuries objected to the way in which the senior official of the CBSL was being questioned. He pointed out that he fully admitted that the Attorney General’s Department was there to assist the Commission in the proceedings, but the witness should not be treated like in a murder case. Livera said that they questioned the witness in order to elicit facts and that is purely to assist the Commission’s proceedings.

Fourth Day: Thursday’s hearings began with the recording of a statement from the United People’s Freedom Alliance MP Bandula Gunawardana who represents the Joint Opposition (JO). The Commission prior to recording the MP’s statement severely warned the MP over a statement made by him in a television programme that the JO had made a written request to the Commission to testify before it. The Commission said it was false and warned him to refrain from making such statements in the future.

Chairman of the Commission Supreme Court Judge Justice K.T Chithrasiri clarified that nine persons had made written requests to testify before the Commission and the JO was not among them. The Commission also told the MP that it (Commission) will take into consideration any fact by anyone which was authentic. However, the MP raised the issue why the Bank of Ceylon being a primary dealer represented Perpetual Treasuries and proceeded to show that the damage done to the country’s economy was bigger than previously shown. The Chairman of the Commission reiterated that it (Commission) was still looking into the fact that the deal had caused damage.

Afterwards, it was Muthugala’s turn and she explained to the Commission her job of supervising the primary dealers. She also admitted that Mahendran’s unusual arrival during the controversial auction had in fact taken place. However, she said that Mahendran’s intervention was not a demand or a request. “But, his intention was for us to follow his words,” she said.

When being cross-examined, Muthugala also firmly said that the refusal of all the bids which they received on March 24, 2015 was a wise decision, as the interest rate of a bid directly affects the next auction. Sarathchandra who testified the previous day also took the same stance.

Muthugala’s statement also revealed that a meeting had taken place with Minister of Finance Ravi Karunanayake and the primary dealers and that she described the meeting as being “unusual”.

“The meeting which took place two to three weeks after the controversial bond issue was unusual and probably the first time such a meeting took place,” she told the Commission. Questioned by the lawyers, she said that she had no idea as to why the meeting was held.