Credibility of P. Samarasiri and critique on competence of the Monetary Board

By An Analyst

Two separate articles written by P. Samarasiri have been published in the newspapers recently. The first appeared in the Sunday Observer on 30 December 2018 titled ‘Recent monetary policies: Is the Monetary Board capable?’ and the second in the DailyFT on 1 January titled ‘Who is accountable for country’s economic stability?’ 

Both articles question the competence of the Monetary Board on its handling of the monetary policy and is critical of its past actions. 

While the writer is certainly entitled to form and publish his opinions, one would have expected that he is consistent in his criticism made in the span of a few days. Unfortunately, reading the two articles a reader can be excused for thinking that they are written by different people; but this is not the case.

The thrust of the Sunday Observer article is that the Monetary Board should have eased monetary policy to support growth while the Daily FT article faults the Monetary Board for money printing and thereby keeping interest rates low. Such diametrically opposite views expressed by a former Deputy Governor of the Central Bank and published in different publications in the space of a few days raises serious questions on the competence, motives and intentions of Samarasiri and makes a technical analysis of his arguments redundant.

A Google search on Samarasiri throws up the fact that he was one of the people who gave evidence before the Commission of Inquiry on the issuance of bonds. The Bond Commission report records the evidence he gave, including on the issue of the infamous 30-year bond issued on 27 February 2015 and identifies him as the Chairman of the Tender Board for that issue. Having considered all the evidence placed before the Commission, it is relevant to note the findings of the Commission with regard to Samarasiri (page 617, paragraph 6) which is reproduced below:

“With regard to Mr. Mahendran’s intervention in the decision-making process of the Tender Board by instructing Deputy Governor Samarasiri that, bids to the value of Rs. 10.058 billion should be accepted, we find it disappointing that, Deputy Governor Samarasiri who, as the Chairman of the Tender Board, had a duty to ensure that the Tender Board reached an independent and considered decision acted in gross breach of this duty and supinely obeyed the instructions given by Mr. Mahendran. 

Mr. Samarasiri passively negated the whole purpose for which the Tender Board was constituted. While we are aware that, a Governor of the CBSL holds a position of high authority in the eyes of the staff of the CBSL, we consider that, a Deputy Governor who is entrusted with the vitally important duty of chairing the Tender Board was required to ensure that the Tender Board reached an independent and considered decision and not merely be the conduit and implementer of the instructions given by Mr. Mahendran to accept Bids to the value of Rs. 10.058 billion. 

We are of the view that, the aforesaid conduct on the part of Deputy Governor Samarasiri amounts to gross negligence and a grave breach of his duties and responsibilities as the Chairman of the Tender Board and a Deputy Governor of the CBSL;”

In fact, Samarasiri has a track record of misleading people. Another finding of the Commission is reproduced below (page 647, paragraph 3).

“Upon the aforesaid evidence and in the aforesaid circumstances, we determine that:

(i) Mr. Mahendran and Mr. Samarasiri have deliberately and mala fide misled the Hon. Prime Minister and suppressed material facts and misrepresented the factual position when they reported the facts and events relating to the Treasury Bond Auction held on 27 February 2015, to the Hon. Prime Minister;”

Given this background, one cannot help but wonder whether these articles are anything more than a further manifestation of Samarasiri’s supine behaviour to contribute to an agenda that is being pursued by interested parties.