Home / Front Page/ Cabraal says SC decision in 2014 ‘unambiguously exonerated’ Monetary Board over Greece Bond allegati

Cabraal says SC decision in 2014 ‘unambiguously exonerated’ Monetary Board over Greece Bond allegati

Comments / {{hitsCtrl.values.hits}} Views / Saturday, 26 August 2017 00:28


dfcvxFormer Central Bank Governor Ajit Nivard Cabraal yesterday issued a statement to reiterate that the Supreme Court decision in September 2014 “unambiguously exonerated” all members of the Monetary Board over allegations on the investment in Greek Bonds. 

His comments follows the Government renewing charges that the previous regime’s Central Bank investment in Greek Bonds must be investigated. 

Following is the full text of Cabraal’s statement. 

Several MPs and politicians have been regularly referring to the Greece Bonds investment by the Central Bank, insinuating that a massive fraud has been perpetrated by persons in authority at the Central Bank including myself. I have refuted these allegations on many occasions with detailed explanations, but these politicians and their followers have continued to make their baseless allegations, ignoring the explanations and contentions that clearly disprove their allegations.  

Therefore, I now wish to refer them directly to the Fundamental Rights Case No: 457/2012 in relation to the Greece Bonds investment which was filed against the Monetary Board in 2012 by Sujeewa Senasinghe, MP, and argued by Upul Jayasuriya, PC, at which the Attorney General appeared for the Monetary Board. 

In that FR action, after 17 hearings that spanned about 2 years, “leave to proceed” was refused by a 3-Judge Bench of the Supreme Court comprising Justice K. Sripavan, (later Chief Justice), Justice R. Marasinghe and Justice S. De Abrew in September 2014 with the order that, “Considering the totality of the circumstances, it is neither possible nor desirable to hold that the Members of the Monetary Board in taking a decision to invest in Greece Bonds, have acted arbitrarily, unreasonably and in a fraudulent manner.”

 Refer SC Judgement of 18.09.2014 in the website of the Supreme Court at: http://www.supremecourt.lk/images/documents/scfr_application_457_2012.pdf

In the light of such a clear and unambiguous decision of the Supreme Court, it is shocking to see some politicians and their followers attempting to maintain the canard that there has been a fraud in relation to the investment in the Greece bonds. In this connection, a few extracts from the Supreme Court decision may also be significant to understand the context.  

 “The Auditor General …has stated though the Central Bank had incurred a loss from the investment in Greece Government Bonds, it has earned a total net profit of US$ 430.2 million on International Reserve Management during the year 2011…. 

 “The investment in Greece Bonds and its trade forms part of the risk management strategy. If all investments are maintained as risk free investments the return would be negligible. The Central Bank therefore has to select a mix of low risk and risk bearing investments expecting a reasonably high return.

 “The decision to invest in such Bonds was based on the trade-off between different risks faced and the Central Bank’s tolerance for higher risk on a very small part of its portfolio…

 “Investing in high yielding sovereign paper is an integral part of fund management of many funds in the world and the Central Bank too had followed a similar practice in investing a tolerable proportion of its resources (0.6%) in Greece Government Bonds.” 

From the above Supreme Court decision, it would be patently clear that the accusations by the various politicians and their followers are only designed to tarnish my reputation and that of the senior officials of the Central Bank. Unfortunately, those efforts seem to have intensified in recent times because some of the current government politicians have been caught red-handed in scams which have caused losses amounting to hundreds of billions of rupees to our country. 

It is also relevant to reiterate that the Central Bank made its highest ever profit from International Reserve Management in the year 2011 amounting to US$430.2 million, even after setting off the loss arising from the investment in Greek Bonds. As a percentage, this profit represented a yield of 6.6% on the average International Reserve. In comparison, in the years 2015 and 2016, the profits from International Reserve Management has crashed to just US$111 million and US$53 million respectively, which represented return of a mere 1.5% and 1.1% on the average International Reserves in the respective years. 

Further, it is also to be noted that in April 2011, when the Central Bank invested in the Greece Bonds, the international credit rating of Greece was BB+ which was 3 notches higher than Sri Lanka’s current rating of B+ (negative). Accordingly, If any criticism is levelled by any person with regard to the Central Bank’s investment in Greece Bonds, those persons would also need to acknowledge that an investment today in the Sri Lankan Government Securities (namely, Treasury Bills, Treasury Bonds, Development Bonds, and International Sovereign Bonds), poses a much higher credit risk than that faced by investors who invested in Greece Bonds in April 2011.

Share This Article

Facebook Twitter


1. All comments will be moderated by the Daily FT Web Editor.

2. Comments that are abusive, obscene, incendiary, defamatory or irrelevant will not be published.

3. We may remove hyperlinks within comments.

4. Kindly use a genuine email ID and provide your name.

5. Spamming the comments section under different user names may result in being blacklisted.


Today's Columnists

Our Cricket Board simply cannot deliver – why not they all quit honourably?

Tuesday, 18 June 2019

“It is necessary, therefore, for the Government to pay serious attention to the doings of Sri Lanka Cricket [board] and take immediate action to lift their game for the progress of our glorious game.” Question for Sri Lanka Cricket (board) Sri La

Yesterday Tamils, today Muslims and tomorrow who?

Tuesday, 18 June 2019

From the time of S.W.R.D. Bandaranaike’s election victory in 1956, one and only one issue had dominated political party campaigns in this country; and that was communalism. The Tamil community was the main focus of these campaigns for over 50 years

Those who go by social proof are easy prey to crafty schemers

Monday, 17 June 2019

Going after social proof Swiss writer and novelist, Rolf Dobelli, in one of the essays in his 2013 book ‘The Art of Thinking Clearly’, has given a fine warning to his readers. He has warned against going by ‘social proof’ or ‘majority view

Poson ponderings on positional power: ‘Authority vested’ vs. ‘authority wasted’

Monday, 17 June 2019

We witnessed a serene Poson Poya, in a far more improved security setting in Sri Lanka. Whilst the Sri Lankan life slowly returning to normal, political fronts do not appear to show the same. Has the political power become the people ‘pava’ (sin)

Columnists More