Sri Lanka’s Highways and Investment Ministry clarifies controversial bond issue

L to R: Samantha Ranatunga, Chairman, HVA Foods PLC; Jan Müggenburg, Chief Executive Officer, Müggenburg Group; Graham Stork, Chief Executive Officer, HVA Foods PLC; Sarva Ameresekere, Group Chairman, George Steuart & Co. Ltd.

Mar 09, 2015 (LBO) - Sri Lanka's Highways and Investment Promotions Ministry said that it had asked for funds from the Finance Ministry but had no control over the decision to issue an extra 30-year bonds two weeks ago. ''The Ministry of Finance determines the manner in which the said funding is raised.''

This statement issued with regard to the alleged insider dealing by Perpetual Treasuries shortly before interest rates were raised on February 27, 2015 and for the 30-year bond sale on the same day.

Sri Lanka's Central Bank sold 10 billion rupees of bonds at rates around 200 basis points above recent off-market placements, after offering a billion rupees at the auction.

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It was found that half the bonds had been sold to Perpetual Treasuries.

President Sirisena has today ordered to appoint a 3-member Committee to probe alleged malpractices on Treasury Bonds issued by the Central Bank of Sri Lanka.

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The Ministry said in a statement that most of the projects carried out by the then Ministry of Highways, Ports and Shipping during the previous regime were done so without following proper procedure or a strict competitive bidding process. Numerous lands belonging to citizens were also forcibly acquired, and compensation has yet to be paid.

The statement explains the compensation for the land acquisition amounts to 40 billion rupees, while a further 12 billion rupees is required to complete the balance road construction.

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''The Ministry has requested urgent funds amounting to 15 billion rupees from the Ministry of Finance to make the existing payments and continue the development work without disruption,'' the statement said.

''The Ministry of Highways, Higher Education and Investment Promotion requested these funds from the Ministry of Finance,''

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