Presidential Commission: Discrepancies galore as investigations into bond scam go deeper

Presidential Commission: Discrepancies galore as investigations into bond scam go deeper

Written by Staff Writer

28 Aug, 2017 | 10:32 pm

Discrepancies have been discovered in the documents that were provided to the attorneys assisting the Presidential Commission of Inquiry by Perpetual Treasuries Limited.

For the auction dated February 27, 2015, Perpetual Treasuries Limited placed a bid of Rs. 02 billion on its own account, and Rs. 13 billion through the Bank of Ceylon.

Perpetual Treasuries Limited’s total bid was fifteen times the amount on offer and Rs. 05 billion was accepted.

The Primary Dealer Code of Ethics states that trading intentions of a Primary Dealer including the volume, price and the yield, should remain confidential.

However, in this instance Perpetual Treasuries Limited. bid through Bank of Ceylon, which according to the Attorney General’s Department was in violation of the Code of Ethics.

Kasun Palisena, the CEO of Perpetual Treasuries Limited said it entered into a repurchase agreement or short-term borrowing to obtain bonds for the Rs. 02 billion bid that it placed.

He said since Perpetual Treasuries Limited had Rs. 500 million in funds, they used it to purchase a tranche of the bonds and then enter into repurchase agreements.

Palisena said the Rs. 03 billion from Bank of Ceylon was broken into three parts on rupees one billion each.

Thereafter, Perpetual Treasuries Limited had entered in to a swap transaction with Bank of Ceylon for Rs. 2.3 Billion.

According to the AG’s Department, with the Rs. 03 billion due to the Bank of Ceylon and the swap transaction, Perpetual Treasuries Limited had only paid the Bank of Ceylon Rs. 700 million.

Palisena was cautioned by the Chairman of the Commission to answer the question and thereafter provide any explanations if necessary.

The Attorney General’s Department cross examined CEO of Perpetual Treasuries Limited, Kasun Palisena, about his reasoning on the government requiring Rs. 300 billion for repayment purposes in early 2015.

Palisena explained that some mini budget proposals had not gone through and no auction took place between 12/14 and 27/02/15.

The AG’s Department pointed out in the 100 day statement to Parliament in 2015, the deficit between the original and revised budget was Rs. 22 billion. The original budget deficit was Rs. 521.0 billion and the revised was Rs. 499.0 billion.

This contradicts Palisena’s statement that government expenditure increased and required more borrowings.

The AG’s Department pointed out there was no instance where ten times the offer of an auction was accepted between 12/14 and 27/02/15.They pointed out there was no reason for a drastic increase in the amount acceptance, simply because there was a two month gap between auctions.

It came to light that the Central Bank offered small amounts to be raised at auctions as Direct Placements were in existence.

The Attorney General’s Department informed Kasun Palisena that his Rs. 300 billion requirement assessment was false, he did not carry out any market analysis ahead of the auction and he bid large amounts off the market rate becaue he had prior knowledge that a large amount of bids will be accepted.

It must be noted that the main holding company of Perpetual Treasuries Limited is Perpetual Capital Private Limited.

Arjun Aloysius and Geoffrey Aloysius are listed as owners of Perpetual Capital Primate Limited.

Arjun Aloysius is the son-in-law of the former Governor of the Central Bank Arjuna Mahendran.

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