People’s Bank, BoC, NSB heads reveal: Ravi asked state banks to bid at lower interest rates

Ravi Karunanayake

Chairmen and senior officials of three major state banks––the Bank of Ceylon, the People’s Bank and the National Savings Bank–– testifying before the presidential commission of inquiry probing the bond scams yesterday said that on two occasions in 2016, the then Finance Minister Ravi Karunanayake had instructed them to make bids at the treasury bond auctions at lower interest (yield) rates and their institutions had therefore been deprived of an opportunity to make substantial profits.

Those who testified before the Commission yesterday included Chairman People’s Bank Hemasiri Fernando, Chairman Bank of Ceylon Roland Perera and Chairman National Savings Bank Ashwin de Silva and some key officials of the three institutions.

The senior officials of the three banks also said that though they had followed the instructions given by Minister Ravi Karunanayake, the latter had failed to honour his promise that the Central Bank would not accept bids at rates higher than the yield rate range he had mentioned to them.

A telephone recording of Perpetual Treasures Pvt. Ltd owner Arjun Aloysius mentioning the Finance Minister’s directions to his Chief dealer Kasun Palisena, was played before the commission yesterday.

General Manager of the People’s Bank N. Wasantha Kumara said it was the first time in the country’s history that a finance minister had asked the state banks to bid for treasury bonds at lower interest rates.

Wasantha Kumara further said that at meetings held on March 28, 2016 and March 30,2016, chaired by the then Finance Minister Ravi Karunanayake the aforesaid instructions had been given to the state banks and Prime Minister Ranil Wickremesinghe’s Senior Advisor R. Paskaralingam had also been present there.

In addition to the Chairmen of the three state banks and the General Manager of the People’s Bank Wasantha Kumara, Consultant to the Treasury Department of the National Savings Bank and its former Deputy General Manager P. A. Lionel , Assistant General Manager (Treasury Department of the Bank of Ceylon Shantha Kumar Wickramaarachchi, Chief General Manager of the Bank of Ceylon D. M. Gunasekera, Retired Deputy General Manager of the Bank of Ceylon Sarathchandra Jayasuriya also testified before the Commission yesterday.

Chairman People’s Bank Hemasiri Fernando said that at the meeting chaired by Finance Minster Karunanayake on March 28, 2016, in addition to R. Paskeralingam, former Deputy Governor of the Central Bank P. Samarasiri had also been present.

Questioned by Senior State Counsel Dr. Avanthi Perera, National Savings Bank Chairman Ashwin de Silva also confirmed that Samarasiri had been present at that meeting. He further said that the then Finance Ministry Secretary Dr. R. H. S. Samaratunge had also attended the meetings.

The senior state bank officials and chairmen besides testifying before the Commission gave affidavits to corroborate what they had said about the proceedings of the aforesaid meetings summoned by the then Finance Minister Karunanayake.

There were no counsel representing Katunayake yesterday. Chairman Justice K. T. Chitrasiri said Rienzie Arsacularatne had been informed of the witnesses appearing before the commission.

In answer to a question why the state banks had carried out Karunanayake’s instructions, Hemasiri Fernando said the state banks belonged to the Treasury and therefore they had to abide by those instructions. He also said Karunanayake was the line minister therefore they had followed those instructions.

(Source: The Island – By Shyam Nuwan Ganewatte and Sarath Dharmasena)