COLOMBO, March 10 A Sri Lankan commission
investigating possible irregularities in government bond sales
recorded a statement on Friday by former central bank governor
Arjuna Mahendran, who oversaw a controversial sale.
Mahendran, who has denied any wrongdoing, declined to
comment after a police criminal investigations department
attached to the commission recorded a statement for three hours.
The secretary of the commission said the statement was not open
to the public.
Mahendran made the statement days after central bank
officials confirmed to the commission that he came to the
government's debt office on Feb. 27, 2015, when the bond sale
President Maithripala Sirisena appointed the commission to
investigate the sale after opposition lawmakers demanded an
independent inquiry. They charge that the sale has cost the
state more than $1 billion in rising borrowing costs over the
past two years. The central bank rejects those claims.
Sirisena appointed career central banker Indrajith
Coomaraswamy to replace Mahendran in July last year, after civic
organizations that backed Sirisena in a January 2015 election
demanded Mahendran not be re-appointed.
The commission questioned Coomaraswamy on the alleged
irregularities in the issuance of treasury bonds two weeks ago
The February 2015 bond auction was originally intended to
sell 1 billion rupees ($7 million) of 30-year bonds. It
eventually grew to more than 10 times that amount, to meet
government borrowing needs.
More than half of the issue was sold to Perpetual
Treasuries, a subsidiary of a company owned by Mahendran's
son-in-law, in what has been criticised as a conflict of
Both Mahendran and his son-in-law, Arjun Aloysius, have
denied any wrongdoing. So do officials at Perpetual Treasuries.
Coomaraswamy told reporters in early February the central
bank had taken some action against Perpetual Treasuries after a
preliminary investigation, but he declined to elaborate on the
(Reporting by Ranga Sirilal; Writing by Shihar Aneez; Editing
by Larry King)