Eleven years ago, on this very day, the bond scam began. The central bank’s rigged bond auction on 27 February 2015 triggered immediate losses exceeding a billion rupees – paid for by the taxpayer and the EPF, Employees’ Provident Fund. We still don’t know exactly how much the EPF’s true losses were.
A presidential commission of inquiry called for a “full and complete investigation.” But the forensic audits were incomplete. Auditors weren’t authorised to investigate the most damaging losses.
The bond scam started with a single auction – slated to offer one billion rupees in bonds. Ultimately it cleared ten billion at higher-than-expected interest rates.
Equally surprising was that a single primary dealer, Perpetual Treasuries, secured half the accepted bids. The scam didn’t stop there. The next twelve months saw a series of irregular transactions between Perpetual Treasuries and the EPF.
A forensic audit was eventually conducted on these trades. But the Central Bank’s terms of reference meant auditors could only examine EPF-related transactions from 2002 up to 28 February 2015 – even though irregular dealings between the EPF and Perpetual Treasuries continued beyond that date. In short the audit’s scope was broad, but ended just as the bond scam began.
The presidential commission estimated that Perpetual Treasuries’ gained 6.4 billion rupees from its dealings with the EPF. The EPF losses therefore, must lie somewhere around this number, but until a thorough audit is complete we won’t know.
Other losses, such as those incurred by the Treasury, were covered in other forensic reports, which audited bond sales after February 2015 as well.
We know how workers’ retirement funds were embezzled before the bond scam. It runs into the tens of billions. But exactly how much was stolen in the bond scam itself? Eleven years later, this question is yet to be investigated. Will this government finally commission the long overdue forensic audit for EPF losses in the bond scam?
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