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Sunday, April 14, 2024

Biggest Sri Lanka Rupee Bond Fraud

[Arjuna Mahendran accepting letter of appointment from President Maithripala Sirisena]
The entire business community was shocked with the blatant abuse of power of the Central Bank Governor Arjuna Mahendren to help his infamous son in law Arjun Aloysius, known for his infamous EPF deals with the previous government, resulting in the fund losing over 2 billion Rupees. To date the government has not investigated a single transaction and it will never happen under the current regime. To add to all this the Central bank recently announced its 30 year bond and according to Central Bank expectations the rates were expected to be in the range of 9.5%. However, the rate went up to 12.5% on a directive of the new Governor Mahendran. His son in law however new about this well in advance and cashed in raking in a big profit.

The main bidder his son in law who bid at 12.5% obviously had inside information and as a result gained high profits where as the banks and the other financial institutions who made their bids according to the public information given by Central Bank lost out to the company owned by Mr. Mahemdren’s son in law.

Also, during the last week several 5-10 year bonds at low rates were sold by CB Governors’ Son in law Arjuna’s company and reinvested in the 30 year bond , because he had inside information from the Central Bank that the rates would go up to 12.5%.

CB governor’s son in law were involved in the previous regime’s EPF dealings amounting to Billions as well, no action has been taken so far against his company Perpetual ltd. Now he has taken it to another level because he has the support of his Governor Father in law and the Prime Minister whom he refers to Uncle Ranil in conversations.

God save mother Lanka , we have jumped from one frying pan to a bigger frying pan.

Good Governance Activist

    The Sunday Times reports

Interest rate furore over Central Bank bond issue

A major furore has broken out in Colombo’s money markets after a ‘favoured’ primary dealer with high connections was seen singularly benefitting from a Central Bank (CB) bond issue at what dealers said was an ‘unbelievably’ high interest rate.

The issue came to a head on Friday when bids closed for the CB’s 30-year bond of Rs.1 billion which was oversubscribed by 20 times, prompting the market to suspect whether there was insider trading or ‘inside knowledge’ that this dealer had on the rate the CB would accept the bids.

“Rather than accept the lowest bids, the CB accepted a range from 9 + per cent to the highest bid of around 12.5 per cent,” a dealer said, adding that this particular primary dealer was said to be the only one to submit a bid at 12 +per cent and that too for a quantity of Rs. 3 billion. The CB had accepted Rs. 10 billion in bids after seeking only Rs.1 billion.

Normally bids made by the 16 registered primary dealers are each around 10 per cent of the total amount required, which in this case would have been Rs. 100 million per dealer. Market traders said they believed the dealer-company in question was Perpetual Capital controlled by Arjun Aloysius, son-in-law of CB Governor Arjuna Mahendran. CB officials were not immediately available for clarification on the issue.

Dealers said a few weeks ago, before the 30 year bond was floated, the CB had announced a private placement bond issue where the prescribed rate was 9+ per cent. Going by this rate, dealers bidding for the 30 year bond which was auctioned on Friday had used this earlier rate as a benchmark but to their dismay found that the CB had accepted a higher rate.

“Also what is surprising is that the said dealer had routed the deal through a state bank instead of making the offer themselves which is also unusual and raises questions,” one dealer said. – ENDS –


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