A massive loss of RS 8.7 billion has incurred by Sri Lanka's Employees Provident Fund, a from off-auction direct placements made by the central bank at rates below the market, a forensic audit has estimated.
The report said the EPF had been made to buy bonds below the previous auction average or below the secondary market rates between 2007 and 2015 by the Public Debt Department of the Central Bank.
“In 94 out of 346 instances, the PDD offer yield rate was lower than the Secondary Market yield rate,” the forensic report said.
“There was no previous Auction conducted two weeks prior the placement arranged on date in 346 placements made. Hence the secondary market rate was compared.
“Due to lower yield rate, the EPF had incurred a loss of Rs8,716 million.”
Sri Lanka may have lost up between Rs. 9.9 to 10.4 billion r in over 1,100 direct placements of bonds made by-passing auctions, between 2005 and 2015, a forensic audit has estimated.
The audit by BDO India was assigned to conduct the forensic inquest following a recommendation of a presidential commission of inquiry into ‘bondscams’ in 2015 and 2016 through rigged auctions.
Losses are estimated as deviations from a ‘base rate’ calculated from secondary market yields.
A separate report revealed that between Rs. 6.6 billion rupees and Rs.9.6 billion may have been lost in 2015 and 2016 through rigged auctions, where insider dealing mayhave been used by dealers like Perpetual Treasuries Ltd, connected to a relative of then-Central Bank Governor Arjuna Mahendran.
(LI)