Eran pulls up New York property purchase

Tuesday, 27 November 2012 00:00 - - {{hitsCtrl.values.hits}}

By Ashwin Hemmathagama

Our Lobby Correspondent

Deviating from its main mission to maintain economic and price stability and financial system stability to support sustainable growth through policy stimulus, advice, commitment and excellence, the Central Bank has entered into a new line of business – purchasing property in foreign countries and giving it on rent.

However, neither details of the respective property purchases nor the rental are included in the CBSL Annual Report, revealed United National Party MP Eran Wickramaratne yesterday in Parliament.

“The respective purchase came up in the audit report on Monetary Board where auditors have raised questions,” Wickramaratne said while raising a series of questions at Ministry of Finance.

This was in relation to the lack of disclosure on the purchase of 12,000 sq. ft. floor area on the second floor of the diplomatic centre condominium at No. 820, 2nd Avenue in New York (USA) for US$ 5,075,000 last year in the Central Bank Annual Report for 2011.

In response, Minister of International Monetary Cooperation and Deputy Minister of Finance and Planning Dr. Sarath Amunugama stated that the Central Bank had significantly expanded its operations during the recent years to increase international reserves, issue sovereign bonds, and for investor promotions of the Government securities, where such expansions, emerging economic activities, and foreign exchange liberalisation were envisaged and the need for opening of offices in selected cities were expected.

“Accordingly, the Central Bank sought legal opinion from the Attorney General for the purpose of purchasing premises abroad. The Monetary Board on the meeting held on 10 January 2011 approved on a case-by-case basis having considered the opinion of the Attorney General and the low property prices prevailing in the market. The Monetary Board also approved renting out of such buildings to diplomatic missions of Sri Lanka at the market rates until such times the Central Bank requires these buildings for its own use.

“Team consisting of the Government Valuer, senior officers of Ministry of External Affairs and the Central Bank inspected the suitability of several buildings in New York and recommended the purchase of this property for $ 5,250,000. After negotiating with the owner, the purchase price was reduced to US$ 5,075,000. The Monetary Board at the meeting held on 25 July 2011 approved the purchase of this building for the same price on 30 August 2011. Cabinet Paper 11/2076/504/171 kept the Ministers informed about this purchase by the Ministry of Finance on 18 October 2011. Subsequently the respective property was rented to the External Affairs Ministry through an agreement dated 28 May 2012 for a period of three years starting from 1 June 2012 for a monthly rental of US$ 68,000, which is payable in Sri Lankan Rupees. Since this is a new subject for the Central Bank, the respective entry in the Annual Report would have not been included,” explained Minister Dr. Amunugama.