Cabinet approved to give Treasury comfort letters to sri lankan - Sumith Abeysinghe
Cabinet of Ministers had approved a decision taken by the Treasury to provide treasury comfort letters as securities to loans SriLankan had taken from state banks instead of Treasury Guarantees, Secretary to the Cabinet of Ministers, Sumith Abeysinghe told the Presidential Commission of Inquiry (PCoI) on irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka yesterday.
A comfort letter is a ‘written statement issued by an outside auditor, stating that there is no inaccurate or misleading information in the prospectus of an entity that is issuing securities.’ Comfort Letters can either be legally binding or non-legally binding. On the other hand in a treasury guarantee, ‘the guarantor undertakes to pay to the third party the amounts which the guaranteed party fails to pay’.
Appearing before the PcoI, Upul Kumara Dias, Manager Offshore Branch of the Bank of Ceylon (BoC) said that the treasury has given comfort letters for three rupee loans it has given to SriLankan to the tune of Rs. 12.9 billion and three dollar loans amounting to USD 100 millions. He added that the bank has been attempting to get guarantees from the Treasury for sometime but to no avail.