The Permanent Trial-at-Bar yesterday rejected the preliminary objections raised by former Central Bank Governor Ajith Nivard Cabraal, clearing the way for the prosecution to proceed with its case under the AntiCorruption Act over the Central Bank’s investment in Greek sovereign bonds.
The indictment alleges that the investment ultimately resulted in a loss of approximately Rs. 1.84 billion to the State.
An important factual distinction should, however, be borne in mind. At the time the Central Bank purchased the Greek sovereign bonds, they carried an international credit rating of BB+. It was only thereafter, as Greece’s sovereign debt crisis rapidly intensified, that the country’s creditworthiness deteriorated sharply.
As the value of the bonds declined, the Central Bank eventually sold its holdings, crystallising the loss that now forms the basis of the prosecution’s case.
Yesterday’s proceedings were not concerned with deciding whether those investment decisions were prudent or imprudent, nor whether any criminal offence had in fact been committed. The court dealt solely with preliminary legal objections raised by the defence.
Having rejected those objections, the Trial-at-Bar ruled that the prosecution is entitled to proceed with the trial.
The proceedings ahead will therefore examine whether the prosecution can establish, beyond reasonable doubt, that the conduct alleged amounted to an offence under Sri Lanka’s Anti-Corruption Act.
The defence, for its part, will have the opportunity to argue that the investment was made on the basis of information available at the time and that the subsequent collapse in Greek sovereign debt reflected extraordinary international economic events rather than criminal conduct.
The rejection of the preliminary objections does not determine the outcome of the case. It simply means that the court has found the prosecution’s case is legally capable of proceeding to trial, where both sides will present their evidence before the judges reach a final determination.
