Bond: Who Scammed Whom?

By Aruna Kulatunga –August 13, 2015

Aruna Kulatunga

Lankans loose Rs. 10,000 per person due to looses incurred under Cabraal

It was in 1992 that I returned to Sri Lanka from Hong Kong to start Forbes Research, one of the first independent equity research houses in Sri Lanka. During my two year stint with Forbes Research, before leaving to Hong Kong again to take up an offer with one of Asia´s top stock broking firms, Credit Lyonnais Securities Asia (CLSA) as their institutional sales head for the Indian sub-continent based in HK, I was a member of the USAID-ISTI primary debt committee that made a series of recommendations which laid the foundation for the change of what was previously known as rupee loans to treasury bonds.

This background left me in some consternation when I read the report of the committee appointed by the government to look into the Bond issues of the Central Bank last week. Before I delve more, I have known Central Bank governor since his days as a young advisor to the then Minister of Industries Mr Ranil Wickremesinghe in the early 90´s, and have worked in parallel while he was head of research for Society Generale Cross Asset Research ( Soc-Gen Crosby) and I was at Credit Lyonnais. I have been in regular contact since 2012 with Charlie Mahendra, a contemporary of my father at the University of Peradeniya and his neighbour at the Ramachandra Hall and an advisor to the Prime Minister Mr Ranil Wickremesinghe. The senior Mr Mahendra tolerated my chatter during the time we both visited the office of the leader of the opposition since 2012. When the first indications of the Bond issue becoming an issue became apparent through a Facebook post, I was amongst the first to defend Arjuna Mahendra – not because I had knowledge of him, but also because it made no sense – and still does not.

Lets take the events and construct a timeline taking from the Committee report.

01-Feb-15

The Public Debt Department (PDD) of the Central Bank in consultation with others estimates the debt requirement for the next month – in this case for month beginning 01 March 2015. No evidence has been presented as to what this amount wasRead More