Mahinda vows legal action over gazette on the bond sale

The false gazette on the bond sale is an attempt to mislead the public and palm off the Yahapalana government’s crooked bond issues on me and my government, former President Mahinda Rajapaksa said. 

In a statement on Sunday, Rajapaksa added that “I will be taking legal action in this regard.”


Full statement:

It is with regret that I inform the public of a diabolical attempt by the yahapalana authorities to foist the blame for the Central Bank bond scam on my government. The established practice in relation to government finance is that towards the third week of each month or even earlier, the Treasury determines the financial needs of the government for the coming month and informs the Public Debt Department which functions under the Central Bank that a certain amount of money is required by a certain date. The Public Debt Dept. then takes steps to borrow the required amount from the market by issuing the appropriate instruments such as Treasury Bills and Treasury Bonds. The Gazette notifications relating to such bond issues are published only after the transactions have been completed. The reason for this is that until the transaction is complete no one will know its final details because many variables are determined by the market.


For example, when bids are called for a bond issue at a certain interest rate, all the bids received may end up being rejected. Furthermore, the bids may exceed the amount of bonds offered and then the Public Debt Dept. will have to decide how much to accept. Since none of these factors can be known beforehand, the Gazette notification relating to a bond issue is issued only after the entire transaction has been completed. The great Central Bank bond scam began with the bond auction of  27 February 2015. What happened in this instance was that following the usual practice, on or around 20 February 2015 the Treasury informed the Public Debt Department that the government would need Rs. 13.5 billion by 2 March 2015. The Public Debt Department was able to raise about Rs. 3 billion immediately but needed another Rs. 10.5 billion.  They called for bids for Rs. one billion worth of 30 year bonds with a face value interest rate of 12.50%. Bids amounting to Rs. 20 billion were received and a little over Rs. 10 billion was accepted.


How this particular bond issue became a major scam is well known and need not concern us here. The issue at hand is that the yahapalana government has tried to foist the entire responsibility for this bond issue on me through the extraordinary Gazette No: 1895/19 dated  01 January 2015. This Gazette contains details of bond issues going back to 2011 and in the midst of this, the bond issues made during the year 2015 on 1 March, 15 March, 1 May, 15 May,1 August and 15 December have also been gazetted under my name. Through such devious means they are attempting to suggest that I issued a Gazette notification on 1 January 2015 in relation to a transaction that took place about seven weeks after a new President and a new finance minister had assumed office.


It is obvious that I could not possibly have known back on 1 January 2015 that the Treasury will need Rs. 13.5 billion on 2 March 2015, that the Public Debt Department would call for bids for Rs. one billion in 30 year bonds at the face value rate of 12.50%, and that they would receive Rs. 20 billion in bids of which Rs.10 billion would be accepted. As I pointed out earlier, Gazette notifications relating to bond issues are published only after the transaction not before it. Even though Gazette No: 1895/19 bears the date 01 January 2015, it is clear that it has been published long after that date.  The small print on the Sinhala version of the Gazette seems to indicate that it was actually printed only in November 2016. Therefore, I see this as a diabolical attempt to mislead the public and palm off the yahapalana government’s crooked bond issues on me and my government. I will be taking legal action in this regard.