Due to the losses incurred by the NatWealth Securities Limited, the Mahapola Trust Fund, which finances the said company, had to inject an extra amount of money for its operations, it was revealed yesterday at the Presidential Commission inquiring into the Treasury bond issue.
NatWealth Securities Limited is a primary dealer fully funded by the Mahapola Scholarship Trust Fund.
The losses incurred by NatWealth Securities are due to incorrect reading of the bond market and the erroneous decision making, Counsel Romali Thudawe suggested, leading evidence at the Commission through Assistant Senior Manager N.K.B.Meegolla of the said company.
Meegolla agreed that Mahapola in fact had to inject money into NatWealth Securities but denied the losses incurred were due to wrong decision making.
Meegolla also said that there is no research team attached to NatWealth Securities to study the bond market behaviours.
Counsel Romali Thudawa also suggested that losses incurred by NatWealth Securities in the years 2015 and 2016, are not due to the questioned Treasury bond transaction held on February 27,2015,even though evidence was led to mean so.
She pointed out that NatWealth Securities had in fact gained a profit from selling the Treasury bond they purchased at the questioned auction.
The losses incurred by the NatWealth Securities are due to other trades they have failed in gaining profits, Counsel Romali Thudawa who represents Perpetual Treasuries Limited pointed out.
Eventhough Meegolla stated that the bid they placed at the February 27,2015 auction was a ‘dummy bid’, the said bid would have been accepted even if the Public Debt Department’s initial recommendation to accept Rs. 2.6 billion was implemented on that day, Counsel Romali Thudawa also pointed out.
Meanwhile,Legal Counsel Chanaka de Silva questioning the same witness asked whether his company incurred losses after he took office at the company, to which Meegolla answered in the affirmative.
Meegolla, asked to explain what followed the questioned bond transaction on February 27, 2015, said a meeting was called upon the next working day by the Association of Primary Dealers to discuss regarding the matter. Meegolla said representatives of all primary dealers participated the said meeting.
Commissioner Retired Deputy Auditor General V. Kandasamy asked if a representative from the PTL also participated the said meeting. Meegolla said, if his memory serves correct, the CEO of the Perpetual Treasuries Kasun Palisena attended the meeting.
He observed that the representative of the PTL kept silent at the meeting while other Primary Dealers raised their concerns and demanded to meet the Superintendent of Debt of the Central Bank.
“We were updated on the Central Bank’s decisions on policy rate changes, only after the questioned Treasury bond auction was held. We took it as the Central Bank misleading the Primary Dealers. That is why we wanted to meet the SPD of the Central Bank.” Meegolla explained.
Meegolla further said a meeting was held subsequently at the Central Bank regarding the matter on March 23,2015. He said, he has the minutes of that meeting which was sent to him by the Public Debt Department.
An argument broke out between Acting Attorney General Dappula de Livera and counsel Chanaka de Silva regarding marking the document.
De Silva said, since the witness cannot confirm the content of the minutes, the said evidence cannot be marked through Meegolla. De Livera pointed out to the Commission that the meeting minutes do not reflect the Primary Dealers point of view.
De Silva said, when the private counsels make a submission, the AG’s panel should not try to ridicule the submission and shut them down. “This is not a one sided hearing.” De Silva pointed out.
While Senior State Counsel Dilan Ratnayake was leading evidence, Meegolla said the PTL breached the Primary Dealers Code of Conduct by allowing the Bank of Ceylon to bid on behalf of them at the questioned Treasury bond auction held on 27 February 2015. Meegolla said the breaching was regarding the confidentiality clause in the Code of Conduct regarding the Primary Dealers.
Former Dealer in the Capital Alliance Indika Mendis, also gave evidence before the Commission yesterday.