Auditor General Gamini Wijesinghe will give evidence tomorrow before the Commission of Inquiry (COI) probing the issue of treasury bonds from February 1, 2015 to March 31, 2016. The AG is expected to be crossexamined regarding his assessment on the losses to the secondary market by the Central Bank’s controversial Treasury Bond issue under former [...]

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PTL’s CEO was secretly present at bond commission hearing

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Auditor General Gamini Wijesinghe will give evidence tomorrow before the Commission of Inquiry (COI) probing the issue of treasury bonds from February 1, 2015 to March 31, 2016. The AG is expected to be crossexamined regarding his assessment on the losses to the secondary market by the Central Bank’s controversial Treasury Bond issue under former Governor Arjuna Mahendran. The Commission comprises Supreme Court Justices K.T. Chitrasiri, Prasanna Jayawardena and retired Deputy Auditor General V. Kandasamy.

Meanwhile, the Bank of Ceylon (BoC) Treasury Division’s former Chief Dealer J.K. Dharmapala appeared before the Commission on Wednesday. Senior State Counsel Awanthi Perera, who led the evidence played several recorded phone conversations between Mr. Dharmapala and several individuals including Perpetual Treasuries (PTL) Chief Executive Officer (CEO) Kasun Palisena on February 27, 2015.

It was revealed during evidence given by the witness that the BoC had bid on behalf of primary dealer PTL at the 30-year bond auction held on February 27, 2015. According to Mr Dharmapala, since PTL was a small scale primary dealer, it sometimes did not have the money to bid for bond auctions in the morning. However, the BoC had an arrangement where it would buy bonds on behalf of PTL in the morning. This would then be reimbursed by the company in the evening.

The witness was questioned by the Commission members as to whether it was proper for a state institution such as the BoC to provide state funds to a private company such as PTL for transactions. Mr Dharmapala said the bank did it as a form of assistance to CBSL to auction its treasury bonds.

Mr. Dharmapala, however, claimed he was shocked after PTL’s Mr Palisena submitted bids at the rates of 12, Rs.12.50 and 13 percent. This was on the grounds that acceptable bids for CBSL should be below 10 percent and as such, he said he believed that the bids submitted by PTL were dummies. However, it later transpired that the CBSL had accepted the 13 percent bid submitted by PTL.

The BoC official said he was later told by an official at the CBSL’s Public Debt Department over the phone that former Governor Mahendran had instructed that bids amounting to Rs. 10 billion be accepted, though the normal practice was to accept bids amounting to about Rs.1 billion.
Mr. Dharmapala said it was his belief that PTL had acquired inside information that such a large amount of money would be accepted for it to submit those bids.

Meanwhile, PTL’s CEO Palisena was removed from the chamber where the Commission was hearing Mr. Dharmapala’s evidence when it transpired that he was sitting in the audience without the knowledge of the Commission.

Commission Chairman Justice K.T. Chitrasiri rebuked the Counsel appearing on behalf of PTL for not informing the Commission that the company’s CEO was present inside the chamber and observing proceedings while Mr Dharmapala was giving evidence. He was ordered to be removed from the chamber. State Counsel Nihal Fernando, who appeared on behalf of PTL, apologised for any violation of ethics.

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