Treasury bond issue:
The Deputy General Manager of Pan Asia Banking Corporation (PABC) Richard Dias yesterday said he is surprised as to how the Employee’s Provident Fund(EPF) which incurred continuous losses while dealing in the bond market, went ‘unnoticed’ by its investment committee.
The DGM of Pan Asia Bank Richard Dias (Head of Treasury) was testifying before the Presidential Commission investigating into the Treasury bond issue yesterday.
“Had our institution incurred such losses,we would have called for an explanation from the responsible officers,” DGM Dias said.
Asked about the secondary market transactions regarding the questioned February 27,2015
Treasury bonds, DGM Richard Dias said it was former Pan Asia Banking Corporation Chairman Nimal Perera who continued dealings with the Perpetual Treasuries Limited. Dias further said Pan Asia mediated between the EPF and the PTL under the instructions of former PABC Chairman Nimal Perera.
Dias, speaking on the secondary bond market transaction regarding the questioned bond Iissue said PTL decided on the volume and the price of the bonds traded.
He also said if direct placements were available, the EPF could have discussed with the Central Bank to reach a negotiation for lower prices when trading in the bond market.
Meanwhile, former Dealer Indika Mendis of Capital Alliance, also gave evidence before the
Commission yesterday (4). It was observed that mark-to-market losses incurred by Capital Alliance in the year 2015 were due to bad trading policies and wrong decisions taken regarding the bond market. It was suggested that the losses were incurred due to the ‘dummy bids’ of the Capital Alliance being accepted at the February 27, 2015 auction.
Mendis answered in the affirmative when asked losses were incurred by Capital Alliance due to
holding on to their portfolio when the rates have gone high.Counsel Chanaka de Silva, referring to the affidavit Mendis had given to the Commission, suggested that it is simplistic. Both profit making and loss making analysis included in the affidavit is simplistic, Mahendran’s lawyer pointed out. It was also pointed out that Capital Alliance gained a profit of Rs. 6 million, by trading the Treasury bonds they bought at the February 27,2015 auction.
Mahendran’s lawyer pointed out that if Mendis had looked more into the market, he could have sold it to a higher profit.
Mendis explained that Capital Alliance was not taking 30-year Treasury bonds at that time and
they were in a hurry to get rid of a bond that they were not authorised to have.The Commission will sit again on Friday (07).