Mahendran arriving at the Bond Commission to testify yesterday. Pic by Wasitha Patabendige

Former Central Bank Governor Arjun Mahendran testifying before the Treasury Bond Commission yesterday said he was in full agreement with the Tender Board decision taken on February 27, 2015 auction to accept 10.5 billion bids.

Mahendran also disagreed with the Auditor General’s position that a loss was incurred by the government at the said auction. Mahendran also expressed his disagreement with Auditor General’s loss calculation in his special audit report on the Treasury bond issue. Mahendran also stated that he was not involved in the decision making processes of March 29 and 31, 2016 auctions, under the Commission’s probe.

Mahendran’s legal representative, President’s Counsel Romesh de Silva made a submission reserving their rights to withdraw from giving evidence at any point that his client was not treated with dignity and fairness. De Silva PC pointed that Mahendran is not legally inclined to testify before the Commission since he is not a citizen of Sri Lanka.Mahendran gave evidence before the Commission on changes he made at the Central Bank when he was appointed as the Governor and also reasoned out why he thought public auction was a better method to raise debts more than the private placement method. He also gave evidence on the decision making process of the February 27,2015 auction. He also gave reasons for walking into a Market Operations Committee meeting on the same day morning, which was chaired by Deputy Governor Dr. Nandalaal Weerasinghe.

Mahendran said following his appointment, he wanted to address serious issues in the Central Bank which has caused the CBSL to incur losses up to Rs. 39 billion in 2013 and 2014.

Speaking of the backdrop at which the February 27, 2015 auction was held, Mahendran said the biggest economic issue the newly appointed government faced in 2015 was the large debts it had to service. For March 2015, the government requirement was Rs. 72 billion which was a large sum of money, and drastic actions were necessary to meet the demand, Mahendran said.

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