Arjuna Mahendran was appointed as the Governor of the Central Bank of Sri Lanka on January 26, 2016.
On March 16, Secretary of the Monetary Board H. A. Karunaratne revealed at the Presidential Commission of Inquiry that during the month of February, the heads of fourteen departments within the Central Bank were transferred.
Then Governor Arjuna Mahendran also transferred nearly five-hundred lower ranking officers during the course of 2015.
This was highlighted to be a very unusual practice.
The day of the controversial bond issuance dawned on February 27, 2015.
Former Additional Superintendent of the Public Debt Department Dr. M. Z. M Aazim, providing evidence before the Presidential Commission noted that Arjuna Mahendran visited the Public Debt Department when the bond issuance was underway, which was an unusual act.
Bids were called for a total of Rs. 1 billion and the deadline for the auction was set at 11 a.m.
M. Z. M. Aazim also revealed that a primary dealer requested to extend the deadline, and deadline extended by five minutes.
During the last few minutes, BOC placed a bid of Rs. 13.5 billion on behalf of Perpetual Treasuries which is linked to Mahendran’s son-in-law Arjun Aloysius
According to the current Governor of the Central Bank, Dr. Indrajit Coomaraswamy, this is the first occasion on which a primary dealer placed bids on behalf of another primary dealer.
At 11.05 a.m., following the conclusion of the auction, Arjuna Mahendran left the Office of the Superintendent of the Public Debt Department.
Dr. Aazim also revealed to the Commission that at around 12.30 p.m., Arjuna Mahendran inquires from the Superintendent of the Public Debt Department about the auction and instructed to accept all bids received which is over 10 billion.
Chairman of the Tender Committee, based on the advice of Arjuna Mahendran instructed to obtain over 10 billion from the bids made.
Appearing before the Commission on March 9, MP Bandula Gunawardane requested the Presidential Commission to look into how Perpetual Treasuries generated a profit of Rs. 12.89 billion within a period of twenty-one months.