Eran wants CB to disclose broker to NY purchase

Thursday, 29 November 2012 00:04 - - {{hitsCtrl.values.hits}}

UNP MP Eran Wickramaratne, who raised the matter in Parliament on Monday, issued the following statement yesterday:

I have noted that the Central Bank has issued a statement defending its acquisition of a property in New York City in response to a legitimate question I asked the Deputy Minister of Finance in Parliament on Monday. The question was posed based on a report by the Advisory Audit Committee of the Monetary Board of the Central Bank of Sri Lanka.

The clarification I sought from the Minister was to state when the property was purchased, for what purpose, and for what price. The Minister confirmed the purchase, its location, the extent of the building, and the price paid. As this was an unusual transaction, I wanted to ensure that proper process had been followed. What was the process? Was a broker utilised? Who was the broker? And what was the brokerage fee? From whom was the building purchased?

The property is currently being used by Sri Lanka’s Foreign Ministry to house one of its diplomatic offices. While there may be a case for purchasing properties overseas to accommodate Sri Lankan diplomatic missions, such purchases should be done by the Government of Sri Lanka and approval for such expenditure made through the Budget provision.

It is normal for a central bank to invest its reserves in financial instruments and gold. There are established international markets, products and processes to do so. It will be normal to invest a country’s foreign exchange reserves in US Treasuries and similar instruments in other markets. An investment in an isolated property in New York naturally arouses curiosity. It is a time to be vigilant as it may be another questionable avenue that is being opened in the management of Sri Lanka’s foreign reserves.

It is not so long ago that the Central Bank dissipated approximately US$ 3 billion defending the parity of the Sri Lankan Rupee against the US Dollar. The colossal blunder was more costly than the 2.6 billion that was obtained from the IMF as a standby facility, not to mention investment made in junk Greek bonds.