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Probe on controversial bond sale

Additional Director of the Statistics Department of the Central Bank (CB) Dr. M. Z. M. Azim told the Special Presidential Commission probing the controversial bond issue, yesterday, that former Central Bank Governor Arjuna Mahendran had instructed the Superintendent of Public Debts to accept Rs. 10 billion worth bids on Treasury bonds despite the Public Debt Department’s recommendation that Rs 2.6 billion bids during the treasury bond sale on Feb 27, 2015 be accepted.

Asked by counsel whether he had received it as an order from the former CB Governor to the Public Debt Superintendent, Dr. Azim responded in the affirmative.

Dr Azim said that all members of the Treasury bond tender board had expressed their displeasure at Mahendran's proposal to raise more than Rs. 10 billion by selling Treasury bonds. The members had opined that it was not prudent to raise such a huge amount of funds through a bond sale as it would lead to an increase in the interest rates, he said.

Dr Azim said that he had attempted several times to convince Mahendran that raising such a vast amount of funds through bond sales would push the interest rates up, but his efforts had come a cropper.

Mahendran's proposal had been implemented and bids for more than Rs 10 billion accepted, Dr Azim said.