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Presidential Commission Investigating into CB Bond Issue: Treasury Deputy Secretary unaware of additional cash requirement

Treasury Deputy Secretary S.R. Attygalle yesterday said that he was unaware of an additional cash requirement for February in 2015, which could have prompted an acceptance of Rs. 10.5 billion at the auction held on February 27, 2015.

Attygalle was giving evidence before the Presidential Commission Investigating into the Central Bank Bond Issue yesterday.

Attygalle said so when questioned by Justice Commissioner P.S. Jayawardena. He said he cannot recall whether there was such an additional requirement. He said, “Neither the Finance Minister or the Finance Ministry Secretary told me that there was such an additional debt requirement.”

Justice Jayawardena asked the witness if there is a process followed by the Treasury Operations Department (TOD) lest there shall be a sudden cash requirement, to which Attygalle answered in affirmative. He said the general structured borrowing process would be to notice the Central Bank in written form regarding the cash requirement.

It was also revealed that there was no short fall in the cash requirement in January 2015.

Justice Jayawardena asked Attygalle whether “there would always be a written request sent to the Central Bank when notifying a sudden cash requirement,” to which Attygalle said ‘mostly’ it would be so.

“Even if we communicate such information to the Central Bank via telephone for example, they make sure we send the request through the written form as well.”

The decision by former Governor Arjun Mahendran to accept 10.5 billion bids at the auction, has been argued for on the basis that there was an additional cash requirement for February and March.

According to previous evidence led at the Commission, the details of such an additional cash requirement was discussed at the ‘Breakfast-meeting’ which took place on February 23, 2015 at the Central Bank premises, among several ministers and high ranking Central Bank and ministry officials. More evidence has led to suggest that the Public Debt Department was unable to raise the government’s debt requirement for the same months.

On May 16, 2017 Mahendran’s lawyer Chanaka de Silva produced a letter signed by the then Finance Minister in which it mentions that a decision was taken to raise Rs. 75 billion to fulfill government requirements. The produced letter was undated.

Chanaka de Silva is to examine Attygalle today.

Meanwhile, lawyer Harshana Nanayakkara appeared before the Commission to seek permission to represent B.H.I. Saman Kumara, the interdicted EPF senior officer who is involved in the Treasury bond auction on February 27, 2015. The Commission granted Nanayakkara permission to represent Saman Kumara under section 16 of the Commission of Inquiry Act.