Palisena grilled on reason for bidding 15 times higher | Daily News

Palisena grilled on reason for bidding 15 times higher

 Perpetual Treasuries Limited Chief Executive Officer Kasun Palisena was informed by the Treasury Bond Commission yesterday to solidify his reasoning out for bidding 15 times higher than the offered amount at the 27 February 2015 auction.

The PCoI told Palisena that he can present his justification either in the oral form or written.

Palisena was testifying before the PCoI for the third consecutive day.

When Palisena testified before the PCoI on August 9, 2017, he expressed his confidence in the ability of settling the transaction if all his bids were accepted on the 27 February 2015. Going back to his explanation, Palisena explained to the PCoI as to what factors prompted him to bid higher than what was advertised by the Central Bank.

Palisena told the main factors behind bidding higher than what was accepted, based on the large borrowing requirement of the government, the mini budget, rate adjustments, Tyral Gunatilake’s telephone call promoting the 30-year treasury bond and the low amount of bid offering by the Central Bank.

“On the hypothesis that all my bids were accepted, I was planning to settle the transaction using several methods. For once, I had Rs. 581 million worth bonds maturing that day. Then I had securities which could have been sold out up to Rs. 3 billion. Then I could have raised Rs. 3 billion or so by entering into sell and buy back agreement with the Bank of Ceylon. Then I would have to raise only 7.5 billion more. For that, I could have gone to trade with counter parties for it. The worst case scenario would be for me to go to CBSL OMO window. I can keep doing it until I attract repo traders to raise money by offering higher yields,” Palisena explained. Commissioner Supreme Court Judge Justice Jayawardena then asked Palisena how he can be confident that he would have been able to settle the hypothetical 15 billion when PTL defaulted their Intraday Liquidity Facility on March 29, 2016. Palisena pointed out to the PCoI that it was oversight from his part that they were not able to settle the intraday liquidity facility.

“We made an error when entering data to the system. When the PTL Back Office entered data, they have entered a chunk of Rs. 11 billion without breaking them down into two parts. It put us in a situation which we call a ‘grid lock’. It was not that we did not have money to settle the bids we sold with the promise of buying back. It is that we made a technical mistake,” Palisena explained.

Deputy Solicitor General Milinda Gunatilake pointed out to the PCoI that Palisena was referring to certain notes using his laptop. He told the PCoI that Palisena is narrating a pre arranged testimony and objected Palisena referring to the notes while testifying. DSG Gunatilake also requested a copy of the document that Palisena was referring to.

The PCoI told Palisena to refrain from referring to the pre arranged notes when testifying.

Palisena explained to the PCoI how the PTL Financial Analyst make predictions on auctions based on extensive research done by them on a daily basis. He referred to a series of auctions and bid decisions made by the PTL which were successful. He referred to bond auctions held in October 2015, March and April 2016. Palisena explained how his Financial Analyst made predictions based on both local and international economic conditions.

He once again established the manner in which the “PTL buy rumours and sell news.”

Palisena told that his company promoted Sri Lanka’s Treasury bond market at the Asia Finance, which was held in 2016 at Singapore. He also pointed out their promotion attracted foreign investors into the bond market.

Counsels for Perpetual Treasuries Limited Nihal Fernando PC and Romali Thudawe led evidence.

The PCoI issued a summoning to W.M. Mendis and Company yesterday morning. The PCoI has requested Arjun Aloysius to provide details of W.M. Mendis and Company. It was pointed out the company is a separate legal entity from the Perpetual Capital Holdings.

Free Lanka Group handed over details including its audited accounts to the Treasury Bond Commission yesterday morning. 



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