The Central Bank yesterday in a statement admitted that the report on the controversial primary dealer Perpetual Treasuries, which has been given widespread media coverage, was in fact a leaked internal document, establishing its authenticity.

Until yesterday, despite the much media coverage given to the report, the Central Bank kept mum over it, neither admitting nor denying the existence of such a report.

“The release of this report into the public domain has not been authorized. The Central Bank of Sri Lanka’s internal processes within the Department of Supervision of Non-Bank Financial Institutions have not been completed and the final report has not as yet been submitted to the Monetary Board for its consideration,” the Central Bank said in a statement.

“At its last meeting held on October 3, 2016, the Monetary Board decided to hold a special meeting to consider issues related to the resolution of distressed non-bank financial institutions as well as the operations of primary dealers, including the current concerns regarding Perpetual Treasuries Ltd. This special meeting will be held shortly and was scheduled before the Monetary Board was aware of the unauthorized release of the draft examination report on Perpetual Treasuries Ltd,” it added.

The Central Bank also said it is strengthening its internal control mechanisms to prevent any future unauthorized disclosures. A complaint has also been made to law enforcement authorities to inquire into the unauthorized release of this report, the monetary authority said. Perpetual Treasuries hit the headlines again last week as the primary dealer reported an extraordinary profit of Rs.5.1 billion for the year ended March 31, 2015, up over 400 percent year-on-year, even surpassing profits of some of the mid-size commercial banks.The financial accounts, which were published on a weekend English newspaper, as such publication is made mandatory by the Central Bank as the regulator of the primary dealers, showed the stellar performance was purely due to the Rs.5.2 billion net capital gains made by way of trading government securities.

The country’s bond market was hit by a series of controversial bond auctions involving allegations of rigging and insider dealing in 2015 and 2016 during the tenure of former Governor Arjuna Mahendran, whose son-in-law was the owner of Pepetual Treasuries.

On February 27, 2015, when the Central Bank called bids to raise Rs.1 billion for 30 years but ended up accepting Rs.10 billion, of which a larger share had allegedly been purchased by Perpetual Treasuries at higher rates.

A year later, on March 29, 2016, when the Central Bank called for bids to raise Rs.10 billion (2030 bond), it accepted bids up to Rs.29 billion – thrice the amount offered— at an extremely higher rate of 14.23 percent.

However, the bond yield significantly came down two days later in the secondary market, opening up an avenue for those who bought the bonds to make thumping profits by selling them.