Telephone recordings reveal; PTL owner privy to inside information

It was unraveled before the Treasury Bond Commission yesterday that Perpetual Treasuries Limited (PTL) owner Arjun Aloysius was privy to insider and price sensitive information on questioned Treasury bond issuance at the 29,31 March 2016 auctions.

This critical information has been derived from the telephone call recordings which were initially destroyed by the Perpetual Treasuries Limited.

Recordings of three telephone conversations between Arjun Aloysius, Kasun Palisena and Nuwan Salgado were played before the Presidential Commission of Inquiry investigating into the Treasury bond issue, yesterday by Additional Solicitor General Yasantha Kodagoda.

Two out of the three telephone conversations make it apparent that Aloysius possessed sensitive information on both aforesaid auctions which could not be derived from the public domain.

Both these one to one telephone conversations were between Arjun Aloysius and Kasun Palisena. Both conversations imply that Aloysius was giving specific instructions for Palisena which he notes down. At the time, Aloysius had stepped down from his position at the PTL, due to the conflict of interest between himself and his father-in-law Central Bank Governor Arjun Mahendran.

The sensitive information includes, specific market rates, Central Bank decisions, bid information (volumes and rates) of Employee’s Provident Fund and the National Savings Bank Fund management.

Both these call conversations have taken place on 29 March 2016 at 9.18 a.m. which coincides with the 29 March 2016 treasury bond auction. The auction was opened and running by 9.18 a.m. The 20 minutes conversation implies that Arjun Aloysius gave extensive information and directions to PTL CEO Kasun Palisena, including the volume and the rates and on what instances. Aloysius at one points says that he is confident that government institutes will bid low and that there is a rate cut. The conversation also includes a part where Palisena says to Aloysius that he want to go for a 40 billion and “whatever be done, should be done today.”

The call records a 20 minutes duration. The call has been originated by PTL CEO Kasun Palisena to Arjun Aloysius, who was in Singapore at that time. Chief Dealer Nuwan Salgado was also with Arjun Aloysius. Palisena has contacted Aloysius through Salgado’s phone.

Additional Solicitor General Yasantha Kodagoda, who led evidence for the day, questioned PTL Chief Dealer Salgado on the content of these call conversations.

ASG Kodagoda: Do you think Aloysius possessed confidential and price sensitive information which were not in the public domain?

Salgado: Yes.

ASG K: Do you agree that this information cannot be derived from the public domain?

S: Yes.

ASG Kodagoda: Do you agree that this sensitive information had a direct bearing on the decision making process of the PTL regarding the 31 March 2016 auction?

S: Yes.

ASG Kodagoda: Do you agree that Arjun Aloysius was running the show and directing how the decisions should be made by the PTL, though he has stepped down from the post and CEO?

S: Yes.

ASG Kodagoda: Do you agree that Arjun Aloysius received sensitive information from multiple insiders?

S: Yes.

ASG K: Do you agree that Kasun Palisena bided at the 31 March 2016 auction using this information given to him by Arjun Aloysius?

S: Yes.

The tribunal questioned Salgado if he was present when the said conversations were taking place between Aloysius and Palisena. Salgado said he walked out from the room where Aloysius was talking with Palisena over the phone.

ASG K: Why did you walked out?

Salgado: Because I thought it was illegal to share such sensitive information.

Referring to the same call conversation, in which Aloysius says “our powerful friend told us to bid” ASG Kodagoda questioned Salgado on the said “particular person” who wants PTL to bid on specific rates given out by Aloysius to Palisena.

ASG K: Who will know the cut-off point of the bids to be accepted? Which authority can decide on the cut-off point of bid acceptance?

Salgado: The Public Debt Department.

ASG K: Yes. But who is the authority who can draw the line? You should know it! You are an experienced dealer in the market. Should it not be the Central Bank Governor?

S: Yes.

ASG K: Who was the Governor at this time?

S: Arjun Mahendran.

The Commissioner Justice P.S. Jayawardena then questioned Salgado on Aloysius giving extensive directions to Kasun Palisena.

Justice Jayawardena: It is very clear to me that Kasun Palisena was writing down instructions given by Arjun Aloysius.

Salgado is silent.

JJ (continues): It seemed it was a very familiar scenario?

Salgado again is silent.

JJ (continues): Prior to 31 March 2016, Arjun Aloysius must have given instructions in the similar manner to Kasun Palisena?

S: Possible.

JJ: I will caution you to give truthful answers.

S: Yes.

JJ: So how did Aloysius received this information?

S: He has his connections, I believe.

JJ: Who was it in EPF who could have given Aloysius information regarding their bidding?

S: Usually it is the dealer of the EPF possesses such information.

JJ: So who was the EPF dealer at that time?

S: Indika Saman Kumara.

JJ: What about in NSB?

S: The dealer was Naveen Anuradha

JJ: Aloysius knew to the last digit regarding the bid acceptance of these auctions. How could he have known this?

S: It should come from the Central Bank.

JJ: From where does the recommendation on bid acceptance come?

S: All officers of the PDD involved in this process can give such information out.

JJ: Who could they be?

S: SPD, Front office officers, tender board members.

JJ: So all these people know exactly at what rate the Central Bank is going to accept?

S: Yes.

JJ: Who called the final decision?

S: The Governor.

ASG Kodagoda wrapping up the session questioned Salgado one last time.

ASG K: So, PTL made phenomenal and unprecedented profits in the backdrop of highest profit maker in the market receiving only 500 million at this auction, and with Arjun Aloysius’s confidential information PTL bid on high volumes and high rates?

S: Yes, that is true.

Legal counsels representing Kasun Palisena, Arjun Aloysius, Saman Kumara and Arjun Mahendran are to cross examine Salgado over the telephone call recordings, tomorrow.

Chairman of the commission Justice K.T. Chitrasiri said “every person will have a fair chance to produce their case.”

The copies of 4 CDs including all the original telephone conversations of the PTL, were given to all the private counsel to study and cross examine on. 

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