I am not foolish to divulge market sensitive information: Mahendran

Former Governor of the Central Bank Arjuna Mahendran told the Treasury Bond Commission that he never did such “a foolish thing” as to divulge market sensitive information with regards to February 27, 2015 auction to his son-in-law Arjun Aloysius. “It would be foolish to give such information and destroy my career of 35 years as a banker!” said Mahendran.

Mahendran was answering to a question raised by Acting Solicitor General Dappula de Livera suggesting that he (Mahendran) conveyed about ending private placement method to Arjun Aloysius between days from February 24 to 27, 2015. De Livera pointed out that Mahendran was aware of a Rs. 15 billion urgent funding requirement. There is no other tenable reason as to why Perpetual Treasuries Limited bid 15 times higher than the advertised amount on February 27, 2015, De Livera suggested.

Answering to the suggestions, Mahendran said he would not have done such a foolish thing as to divulge market sensitive information. “I did not give any information to Arjun Aloysius.” Mahendran emphasized.

De Livera asked “Mr. Mahendran you did such a thing because you thought it will never leak?” to which Mahendran said that he does not understand what De Livera meant by the question. At this juncture, Mahendran’s legal counsel Romesh de Silva PC stood to ask, “What leak are you talking about?” to which no answer was given but a change of question.

De Livera then asked Mahendran about the conflict of interest between him and his son-in-law. De Livera suggested that Mahendran failed to disclose the conflict of interest between him and his son-in-law while living under the same roof. Mahendran previously informed the Commission that he was living with his daughter, son-in-law and the little child, from January 22, 2015 in Sri Lanka.

Mahendran said that he was dealing at arm’s length with his son-in-law with regards to their conflict of interest. De Livera asked “what is your arm’s length?” and a smiling Mahendran who was sitting at the witness box stretched his hands to display his arms length. De Livera, in a lighter tone commented “Oh, is that it?” to mean the arm’s length is not enough distance.

De Livera then asked Mahendran on Aloysius’s resignation from the CEO position of the PTL. He pointed out that the resignation was tendered on January 16, 2015, which was prior to Mahendran’s appointment as the Governor. “Does not this mean you started talking about your job with your son-in-law?” De Livera asked.

Mahendran said he was already “packing bags” to return to Sri Lanka and his family got to know about his appointment including Aloysius. “My appointment was not market or price sensitive information!” Mahendran pointed out.

De Livera then asked Mahendran as to why he did not decline the position of CBSL Governor because of the conflict of interest.

Mahendran said he discussed about the conflict of interest with Prime Minister, Finance Minister and several other ministers. “I acted at arm’s length. I never discussed about my official endevours with my family. I had already told him not to expect any sort of favourations from my part regarding his company. I stayed out from all Monetary Board meetings where documents relating to PTL were discussed. I have also asked not to mention Primary Dealer names in the progress reports as well.” Mahendran explained. The Commissioner Justice P. S. Jayawardena commenting on the matter of conflict of interest said that it was the same case with former Governor Ajith Nivaard Cabral who had his sister as a Director of the Perpetual Capital Holdings. “However, I am not for a moment suggesting that it is correct to have a conflict of interest. Two wrongs do not make a right.” Justice Jayawardena said. It is a matter of what is good for the goose is good for the gander, Justice Jayawardena also added a comment amusing those who were at the hearing.

The Commission will continue the cross-examination today as well.

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