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PTL’s inter-group transactions concealed ultimate destination of funds: Senior Banker

17 October 2017 05:06 am - 3     - {{hitsCtrl.values.hits}}

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Testifying before the PCoI yesterday, current Monetary Board member and senior banker Nihal Fonseka said the ‘routine’ adopted by Perpetual Treasuries Ltd to transfer funds through its related group companies was to conceal the ultimate destination of the payments.

At the onset of yesterday’s proceedings, Mr. Fonseka testified before the Presidential Commission of Inquiry (PCoI).

Deputy Solicitor General Milinda Gunatilleke led the evidence producing several bank statements and swift messages relating to Perpetual Treasuries Ltd and its related group of companies.

DSG Gunatilleke submitted the documents through the witness to show that PTL had transferred money to its related companies. On the same day (most of the times) the related companies had sent cash cheques to PTL and the officials at PTL had kept the money on PTL CEO Kasun Palisena’s chair after encashing the cheques from the relevant banks.

The following three grids show how these transactions had been carried out.

1

-Perpetual Treasuries Ltd had transferred funds amounting Rs.15.6 million (through a Union Bank account) to Perpetual Capital Holdings (2015-16 period).

-Thereafter Perpetual Capital Holdings had drawn cash cheques corresponding to the payments it received from PTL. (Cheques were signed mainly by Arjun Aloysius, Geoffrey Aloysius and Surendran Muthuraja who was the Chairman of W.M Mendis & Company)

-Cash cheques had been sent to PTL office again.

-PTL officers had encashed the cheques at different times.

-The money had been then given to PTL CEO Kasun Palisena

- PTL officials were unaware what happened to the money thereafter

2

-Perpetual Treasuries Ltd had transferred funds amounting to Rs.44 million (through a Pan Asia Bank account) to Perpetual Capital Pvt (2015-16 period)

-Thereafter Perpetual Capital Pvt had drawn cash cheques corresponding to the payments it received from PTL. (Cheques were signed mainly by Arjun Aloysius, Geoffrey Aloysius and Surendran Muthuraja)

-Cash cheques had been sent to PTL office again.

-PTL officers had encashed the cheques at different times.

-The money then given to PTL CEO Kasun Palisena

- PTL officials unaware what happened to the money thereafter

3

-Perpetual Treasuries Ltd had transferred funds amounting to Rs.79 million (through Bank of Ceylon) to W.M. Mendis & Company (2015-16)

-Thereafter W.M. Mendis & Company had drawn cash cheques corresponding to the payments it received from PTL. (Cheques were signed mainly by Arjun Aloysius, Geoffrey Aloysius and Surendran Muthuraja)

-Cash cheques had been sent to PTL office again.

-PTL officers had encashed the cheques at different times.

-The money had been then given to PTL CEO Kasun Palisena

- PTL officials unaware what happened to the money thereafter

These transactions which took place between PTL and its related companies were regarded as the ‘netted-off’ transactions by Kasun Palisena. It was revealed that the payments made by PTL to its related companies were born out of these netted-off transactions.

During the questioning, DSG Gunatillke also pointed to a transaction amounting to Rs.1 million and said that it was a significant fund transfer which was identical to an amount that transpired in a phone conversation played before the Commission. It speaks of a payment given to one ‘Little Johnny’.

DSG Gunatilleke then asked the witness several questions on the routine adopted by PTL to transfer money as the witness was an expert in the banking industry.

DSG Gunatilleke: Is this how a corporate entity would withdraw its money?

Witness Nihal Fonseka: No

DSG Gunatillke: What could be the purpose of having such a routine to withdraw cash?

Witness: In my opinion the person who was originating the fund transfers would have wanted to conceal the ultimate destination of the money.

At this moment Justice Prasanna Jayawardena adding some amusement to the query said ‘Ultimate destination other than a chair.’

DSG Gunatilleke then questioned the witness on the auctions held in March 2016 and the State banks' meeting which was said to have been called by then Finance Minister Ravi Karunanayake before the auctions.

When questioned by the DSG, the witness said State banks biding at lower rates had material effect on the auctions.

Referring to a particular ISIN (International Securities Identification Number) advertised on March 29, 2016 auction, the witness said there was a loss of Rs.550 million to the government from that particular ISIN mainly due to the EPF not bidding at the auction with its full of potential.

March 29, 2016 auction

- EPF bids Rs.1 billion at the Primary Auction for a particular ISIN at a price of Rs.87 for a Rs.100 bond.

-The settlement date of that auction was April 1, and the EPF carries an excess of Rs.9.9 billion on settlement day.

-However, without bidding at the Primary Auction and having possessed enough funds, the EPF buys Rs.10 billion worth of bonds bearing the same ISIN in the secondary market after a week of the auction (first week of April 2016) at a price of Rs.95 and 97 from PTL.

-EPF had bid a volume of Rs.1 billion at a rate of 13.6% at the auction for that particular ISIN.

-But the CBSL needed to accept up to Rs.10 billion at the auction.

-The rest of the accepted bids were at a rate of 14.8% largely from PTL.

The witness was of the view that if the EPF had bid a larger amount (Rs.10 billion) at the Primary Auction without buying the same bonds in the secondary market, the CBSL could have obtained the borrowings at a lesser rate (13.6%) without accepting the amount at a higher rate (14.8%) at the auction.

According to the witness it was revealed that by buying the same bonds just after the primary auction in the secondary market by the EPF it had incurred losses to itself while at the same time the CBSL had also incurred losses for accepting bids at a higher rate while having the opportunity to obtain them at a lower rate from EPF. (Shehan Chamika Silva)

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  Comments - 3

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  • Raj Tuesday, 17 October 2017 12:14 PM

    Probably, if we look into how both major political parties get money to spend during elections, we might get some answers!

    Dickie bird Tuesday, 17 October 2017 06:06 PM

    Hello Raj, Do not involve major political parties but it is just Yahapalanaya way of paying back the burrowings.

    ceylon Wednesday, 18 October 2017 08:33 AM

    same stories from rajapaksa family billions.final destinations found but sirisena dont go to get it. via DM Android App


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