After weeks of cross-examination, Perpetual Treasuries Ltd. (PTL) CEO Kasun Palisena was re-examined by PTL’s counsel yesterday at the Presidential Commission of Inquiry into the controversial bond issuance.
The legal team, headed by President’s Counsel Nihal Fernando, questioned their client on, among other things, an allegation levelled by the Attorney General’s Department earlier that certain transactions by PTL had been fictitious.
Last week, Deputy Solicitor General Milinda Gunatillake suggested that documents submitted by PTL relating to selected transactions had been “largely fictitious”, considering they had not been reflected on the Central Bank’s Lanka Secure system.
Responding to the queries raised by Fernando’s junior Attorney-at-Law Romali Tudawe yesterday, Palisena said that a transaction does not automatically become a sham just because it is not recorded on the Lanka Secure system.
Referring to a transaction between PTL and another primary dealer, in response to Tudawe’s questions, the PTL CEO said security netting was indeed a market practice as demonstrated by the fact that all parties involved (PTL, the other primary dealer and the broker) had confirmed their participation in the transaction with documentation.
There were three confirmations by three different parties that the transaction had taken place, agreed Palisena. The counsel’s point it appeared was that because of this it was incorrect to claim that transactions had been made up.
In response to this, DSG Gunatillake countered that PTL’s counsel were not referring to transactions he had challenged.
“These transactions are not what we challenged. They’re providing documentation in relation to other transactions,” he said, adding that the PTL counsel was not referring to the seven ISINs the AG’s Department had identified.
However, Tudawe said that she was in fact looking at one of the challenged ISINs (2021). But Gunatillake maintained that it was not a challenged transaction, insisting that ISIN 2021 was not one of the challenged seven.
At this point, Tudawe asked Palisena if the particular transaction was within the mandate period, to which he said ISIN 1921 was.
Gunatillake then reiterated that it was not the documentation the AG Department had challenged.
“There’s no point in burdening the record with this,” he said.
Earlier in yesterday’s proceedings, the PTL CEO said that it had not sold securities to the Employees’ Provident Fund (EPF) at off market rates and that the prices were comparable to those offered to other parties. In one document it was pointed out that out of 120 transactions, the EPF had appeared only once. Gunatillake asked if these documents were relating to profit transfers, which Palisena said they weren’t.
It was also revealed that between 1 February 2015 and 31 March 2016, the Central Bank had accepted over Rs. 1.35 trillion in total in auctions. According to Palisena, about 11% of this auction acceptance had been PTL’s, with other primary dealers comprising the remaining 89%.
“So you made your killing on 11%?” remarked Gunatillake, suggesting that PTL had made 89% of the profits of the market with what it had bought, selling them at “very good prices.”
There are 15 authorised primary dealers in Sri Lanka.