On 27 February 2015, newly appointed CBSL governor Arjuna Mahendran advertised the sale of
Rs. 1 billion in 30 year
government bonds at a coupon of 12.5% Despite several accounts erroneously cite an indicative rate of 9.5%. The sale was oversubscribed with 36 bids of totaling Rs. 20 billion.The majority of bidders, 26, bidded for Rs. 100 million or less at a rate of 9.5%–10.5%. However, a few bidders, including Perpetual Treasuries Limited, wanted interest rates of 11%–12%. On 27 February 2015, the CBSL accepted Rs. 10 billion in bids at rates of 9.5%–12.5%, which meant that the base value of the auction doubled twenty times. The issuing of ten times the advertised bonds, and at a higher than expected rate, was alleged to cost the Sri Lankan government an additional Rs. 1.6 billion ($ 10.6 million), though this alleged loss was disputed by the Leader of the House of Parliament.A petition was lodged in the Supreme Court of Sri Lanka contesting the methodology used to allege such a loss. Perpetual Treasuries was issued, directly and indirectly, with Rs. 5 billion in bonds at 12.5%.Perpetual Treasuries was one of the
primary dealers in the sale and is owned by Mahendran's son-in-law Arjun Aloysius. The primary dealer had also appointed the sister of the former Central Bank Governor
Ajit Nivard Cabraal onto the Board of its holding company
