Written by Keshala Dias
05 Jul, 2017 | 8:10 pm
Did the Employees Provident Fund suffer the outcome of “pumping and dumping” in the treasury bond market?
Deputy General Manager of Treasuries at Pan Asia Banking Corporation (PABC), Richard Aruna Benedict Dias, provided evidence today, Wednesday, June 5. He testified that Pan Asia Banking Corporation purchased bonds in auction and markets at the request of Perpetual Treasuries Limited.
Providing details on a series of transactions, the witness said Kasun Palisena of Perpetual Treasuries Limited had called PABC informing them that the Employees Provident Fund was ready to sell their securities at a particular rate.
He said PABC was used as an intermediary because both the EPF and PTL could not trade with each other due to trading restrictions on counter-parties. After PTL informs PABC of the requirement, PABC verifies the trade with the EPF, ever time it was with an individual, Saman Kumara, who serves in the EPF Department at the Central Bank.
Thereafter, PABC made the purchase and sold to PTL at a marginal profit of 0.05%.
The witness testified that PABC acted as an intermediary between the EPF and PTL upon the instructions given by former Chairman of Pan Asia Banking Corporation Nimal Perera.
This is incidentally the first time the evidence on Nimal Perera came to light. Dias said, he would not have entered into these deals if there was no such instruction given to the Primary Dealer Unit of PABC.
The witness noted that WealthTrust Securities Limited and Perpetual Treasuries Limited had entered into a series of transactions to raise the rates of the bond being traded and thereafter unloaded them on the EPF which then incurred a loss.
The witness said this can be called ‘Pumping and Dumping”.
He further said the former Chairman of PABC Nimal Perera entered into bond trading on a personal level and through his private firm N. P. Capital Ltd and sold bonds to the EPF.
The witness said it is surprising that the EPF was making purchases at high rates, had gone unnoticed by its Investment Committee for a period of over two years.
If he had done the same at PABC he would have been held accountable, it was observed.
He testified that the former Chairman at Pan Asia Banking Corporation, Nimal Perera, had used PABC trading facilities for his deals in government securities.
Perera had left PABC in March this year.
Richard Aruna Benedict Dias said he was not under duress to give evidence before the Commission.
Justice Prasanna Jayawardena personally thanked the witness for being very frank in his evidence.
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