Arrest PTL Chief Dealer: AG to tell CID

-- PTL IT executive says he deleted several phone recordings on the instructions of Chief Dealer Nuwan Salgado

-- Chief Dealer Nuwan Salgado had met him at the server room of PTL’s new office on July 5 and had shown him few notes containing 15-16 serial numbers and dates of several phone conversations which have to be deleted

-- Devathantri said he made changes to the data base of the main computer by deleting required phone recordings and replacing them with internal voice recordings

-- Nuwan Salgado was summoned by the CID to come yesterday morning to record a statement but he had not turned up

By Shehan Chamika Silva

Testifying before the Presidential Commission of Inquiry (PCoI), Sachith Devathantri, the IT executive of Perpetual Treasuries Ltd today admitted that he had deleted several phone recordings from its data on the instructions of the Chief Dealer of PTL, Nuwan Salgado on July 5, 2017.

Previously, on two occasions, Mr. Devathantri had recorded statements with CID officials attached to the PCoI and in the second statement he admitted that he had lied in the first statement.

However, in a way of an affidavit, the witness submitted his evidence and also testified before the Commission today.

Additional Solicitor General Yasantha Kodagoda led the evidence.

According to the witness, Metropolitan Communication Ltd had installed a Voice Logger recording system at PTL’s office with eight extensions on May 19, 2015. And the voice recording system was capable of storing the date, the time, the caller detail (incoming or outgoing number) and the voice recording.

When questioned by the Commission, the witness said that at the time of installation, the PTL CEO was also aware of the capability of the recording system. He said they wanted to install such a recording system into the PTL’s dealer room extensions mainly to recognize the CLI numbers of conversations along with the voice recordings.

This system included a main computer given by Metropolitan Ltd, in which all the data was stored as voice recordings (wave files) and caller details (data folder).

It was explained that through the voice logger system’s interface, all the caller details can be seen easily from the main computer.

However, it was explained that after the installation of the recording system, PTL had complained on June 4, 2015 about the system reporting an error. He said it did not record all digits of outgoing numbers.

The witness admitted although there was a problem in storing all outgoing numbers, these were only about some outgoing numbers and the other data was available without faults.

However, it was reveled that by December 2015, Metropolitan Ltd had completely solved the issue getting assistance from its Indian mother Company.

The witness said that after December 2015, no errors occurred in the voice recording system pertaining to caller numbers.

On being questioned by ASG Yasantha Kodagoda, the witness explained the usual process in which he backed up data from the data base of the main computer relating to the recording system.

He said that he attempted to back up data using the formal provision in the recording system’s interface as per the operating manual but failed to do it. And subsequently, he copied only voice recordings (wave files) from the data base of the hard drive of the main computer.

Caller details were however also stored in the computer which he had not copied to a back up.

Mr. Devathantri was of the view that he did not care about copying caller details at that time.

However, Justice Prasanna Jayawardena and Justice K.T. Chitrasiri repeatedly questioned as to why he didn’t think about copying the most essential part of that data.

The Commission asked him since PTL initially wanted to have a phone recording system to identify the CLI numbers what made him not to backup them up.

The witness’ answer was that he did not care about copying caller details. ASG Kodagoda then said that the Commission will consider about the witness’ non-consideration of caller details.

Justice Jayawardena: Manual of the System explains how to backup wave files and caller details, so if you had a problem with the system in doing such backup why did you not complain about it to Metropolitan?

Witness: I did not think that much.

J: The system was installed to mainly identify the CLI numbers, right?

W: Yes

J: So, copying voice recording files only will not serve that purpose, right?

W: Yes

J: Even a half brain man could understand that, so what made you not copy caller details too?

W: I did not think that much at that time

J: Did someone from a higher position of PTL ask you to do so? Because it was a serious failure?

W: No

The witness explained that in the backing up process he had copied all voice recordings from the computer and stored in his portable drive and later included all recordings to 3 DVDs.

He said those DVDs were currently in Chief Dealer, Nuwan Salgado’s custody at PTL’s office. He also said that even though he had backed up the data from the main computer, the original voice or other caller details were not deleted at any point by him.

Earlier it was reveled that PTL had shifted its office to a different address on July 3, 2017 and at the new place, PTL had identified that the computer hard disk relating to the recording system had crashed for some reason on July 6, 2017.

However, making a startling revelation, Mr. Devathantri admitted that he was asked to delete some phone conversations by Chief Dealer Nuwan Salgadu on July 5 2017 from the data base of the main computer of the system.

He explained that Chief Dealer Nuwan Salgado had met him at the server room of PTL’s new office on July 5 and had shown him few notes containing 15-16 serial numbers and dates of several phone conversations which have to be deleted.

Thereafter, the witness had advised the Chief Dealer that if they delete them it could be identified as those voice recordings were stored in a sequence of serial numbers.

Mr. Devathantri admitted that he also proposed to Nuwan Salgado that if they delete such voice recordings, the deleted voice recordings should be replaced with some other phone conversations.

The witness said that thereafter he made changes to the data base of the main computer by deleting required phone recordings and replacing them with internal voice recordings.

Mr. Devathanthri had also produced the notes that Nuwan Salgado had given him on July 5, 2017, to the CID officers and yesterday submitted them to the Commission.

On being questioned by the Commission, the witness identified the hand writing of those notes as of Nuwan Salgado (Chief Dealer), Kaushitha Rathnaweera (Dealer) and Anjana Jayasinghe (Dealer).

The witness said after the alteration was made to the main Computer he had obtained a full back up which contained the edited voice recordings.

According to the witness, after this alteration, he recognized a problem in the main computer on the very next day July 6, 2017 morning.

After a continuous questioning by Justice Prasanna Jayawardena and Justice Chitrasiri, the witness admitted that they had the intention of formatting the hardware and replacing another computer to the system.

However, he said he did not know as to what happened to the computer within 24 hours after the alteration.

Justice Jayawardena: Now, You had deleted certain phone recordings on July 5, right?

Witness: Yes

J: Then on the very next day within 24 hours the computer had crashed?

W: Yes

J: You also knew that even though you had deleted certain data the hard drive of the Computer may have them and if a forensic examination was done it can be retrieved, right?

W: Yes

ASG Yasantha Kodagoda: What happened between July 5 and 6, did a lightning strike the computer?

Witness was silent.

Justice Jayawardena in a serious manner remarked in Sinhala :Aththatama Wena Jathiye Akunak Weduna (Actually a different sort of a lightening struck)

Thereafter he had used another computer in the Company and installed the system to it. He said he also did a configuration to the system on July 21.the witness admitted that the re-installation and the configuration were conducted without informing its service provider Metropolitan Ltd.

Subsequently, he had placed the data which he backed up on July 5 after editing the main computer in to the new system.

The witness explained that it was the altered data that was subsequently provided to the Commission in the latter part of August 2017.

It was explained that PTL had not given all of their phone recordings to the Commission as opposed to what PTL’s CEO Kasun Palisena had ascertained in his affidavit earlier.

ASG Yasantha Kodagoda: Who decided to do such replacement of the computer?

Witness: it was Nuwan Salgado’s (Chief Dealer) decision

Justice Jayawardena: Who is above him in PTL?

Witness: Kasun Palisena the CEO

J: And above him?

W: The boss, Arjun Aloysius

J: That is what I wanted to know, so that means Nuwan Salgado informs Kasun Palisena and Palisena informs Arjun Aloysius, right?

W: I think so 

Additional Solicitor General Yasantha Kodagoda sought the Commission to issue an order to obtain all the original voice recording backups which were in three DVDs (which are relating to the time period before July 6, 2017) at the moment in the custody of Nuwan Salgado immediately. Subsequently, the Commission issued an order to obtain them.

It was said that Nuwan Salgado had been earlier summoned by the CID to come yesterday morning to record a statement but he had not turned up.

ASG Kodagoda also said that the conduct of PTL’s Chief Dealer Nuwan Salgadu was an offence to the cause of justice, because his involvement had transpired during the proceedings and that under the Criminal Procedure Code it was a criminal offence.

The ASG asked the Commission to convey the facts about incident to the Inspector General of Police to take appropriate actions against PTL’s Chief Dealer as well.

Additional Solicitor General Dappula de Livera also made a special application to the Commission that PTL’s Chief Dealer should be arrested over committing a criminal offence under Section 189 of the Penal Code. ASG Livera was of the view that this was a serious offence of PTL against the investigation as they have provided fabricated evidence to the Commission.

He also said that under section 24 of Commission’s Act the Attorney General can take appropriate action accordingly over such instances.

However, the Commission was also of the view that the Commission cannot make orders to arrest persons as per law but the Attorney General could take appropriate steps according to section 24 of the Act.

Justice Prasanna Jayawardena also said that as per the section 24 the Attorney General has the cognizance to take appropriate action since such cogent evidence has come from PTL’s IT executive.

It was revealed that the Attorney General can take appropriate action to arrest Nuwan Salgado the Chief Dealer of PTL by deploying CID officers.

President’s Counsel Kalinga Indatissa who appeared for PTL CEO Kasun Palisena said that they are not condoning the actions of PTL but asked the Attorney General Department to look into the facts before the arrest since the Chief Dealer’s instructions to the IT person were on a date much earlier before the Commission requested PTL to provide phone details.

ASG Kodagoda was also of the view that PTL IT executive has revealed about criminal conduct happened in his work place and therefore such revelation comes under the section 8(6) of the Victim Protection Act. He said therefore, under the Act, the witness is protected from any of harassment from his employer thereafter or any adverse decision to his employment.

When the Commission questioned, the witness also said that he was neither intimidated nor requested to give false evidence by anyone and made the testimony independently before the commission.

It was also revealed that the counsel appearing on behalf of the witness was appointed by PTL. The Chairman of the Commission Justice K.T. Chitrasiri thereafter advised him to make his own decisions whether he should speak with the lawyer who was appointed by his company because he has now given testimony against his employer.

The Commission will resume sittings on Monday (September 4).

Heated argument between ASG De Livera and Indatissa PC

* Justice Prasanna Jayawardena intervenes to restore calm

By Shehan Chamika Silva

During the cross examination, there was a heated argument between ASG Dappula De Livera and PC Kalinga Indatissa.

Counsel Indatissa questioned the witness about the affidavit and the one attester of it, and the witness was unaware about the name of the counsel who had attested the Affidavit.

The witness however, said that he had signed the affidavit in the presence of that counsel but doesn’t know the name.

ASG Livera was unhappy about the line of questioning and objected to the questioning in an aggressive manner.

The ASG asked whether that line of questioning is an implied suspicion towards the officers of AG’s Department.

Kalinga Indatissa PC too responded with a higher tone of voice saying that he did not mention about the AG’s Department.

This led to a heated argument between the two senior President’s Counsel that went on for sometime.

However, Justice Prasanna Jayawardena intervened and directed both parties to stop the argument which was happening in high tone of voice.

PTL IT executive admitted to CID he lied

* Metropolitan Chief Engineer uncertain during cross-examination

* Proper forensic examination has to be carried out to ascertain whether the PTL had deleted or altered data in its phone recording system: Counsel Indatissa

* PTL says it reinstalled the system to a new hard disk because the previous computer crashed

* PTL gives its previous hard disk, new computer and 4 CDs containing back-up 
data from July 6, 2017 to CID officials

* PCoI permits CID to examine them

By Shehan Chamika Silva

Additional Solicitor General Dappaula de Livera yesterday told the Presidential Commission of Inquiry (PCoI) that Perpetual Treasuries Ltd's IT executive Sachith Devathantri had admitted to the CID today that he had lied when making the previous statement to CID officials of the PCoI regarding the PTL’s phone recording system.

ASG Livera said Mr. Devathantri was summoned again to the PCoI to be further questioned by the CID on the matter last morning. The ASG said during today’s questioning the IT person has admitted that he had lied in his previous statement to the CID.

On an earlier occasion, Mr. Devathantri was summoned at the PCoI and a statement recorded by the CID officers.

Meanwhile, President’s Counsel Kalinga Indatissa cross-examined Chief Engineer of Metropolitan Ltd, Chief Examiner Nalin Dharmaratne with regard to the evidence he provided to the PCoI about the voice recording system.

President’s Counsel Anuja Premaratne appearing for Arjun Aloysius also cross-examined the witness.

During the Cross-examination, the witness was seen uncertain with regard to specific technical questions put forward by the President’s Counsel.

According to the witness, Metropolitan Ltd had initially placed a voice recording system (Voice Logger System) on May 18, 2015 with eight ports with the capacity of storing caller details and voice recordings.
This system was included with a main computer given by Metropolitan in which all the data was stored as voice recordings (wave files) and caller details.

However, during the cross examination it was revealed that after the installation PTL had complained on June 4, 2015 about the system that there were errors in the recording system, which lacked the capacity to record all digits of outgoing numbers.

The witness admitted during cross-examination that Metropolitan Ltd was unable to solve the problem for a certain period and only sorted it out in December 2015 with the assistance of Metropolitan’s mother company in India.

The witness said that PTL had not complained thereafter about any major issues regard the system.

Later, in September 2016, Metropolitan Ltd had again installed another 16 ports in the system on the request of PTL.

It was revealed that these 24 ports were linked with PTL’s extensions in the phone recording system.

During the cross-examination, the witness seemed unaware about certain maters raised by Counsel Indatissa PC with reference to the contract agreement and service agreement of PTL and Metropolitan.

When leading evidence of the witness, it was explained that when the Metropolitan's chief engineer examined the system on August 26, 2017 at PTL they could not find previous data relating to phone recordings.

Thereafter, they had obtained the assistance of its Indian Company through a remote logging method, accessing the system online. Subsequently, the Indian Mother Company had sent a report on the system.

The witness admitted that Metropolitan Ltd had no specialist technical officer to examine matters which were required by the Commission and that they had asked assistance from its mother company.

The report said the system had been re-installed on July 6, 2017. Later, on July 20 the previous voice recording data (wave files) had been re-placed in the data base and a basic configuration done on July 21 to operate the system.

It was also revealed that the July 21 configuration was only a basic one and still the system did not have the capability to record Caller Line Identification (CLI) in the system without doing an advanced configuration.

It was also revealed that this basic configuration and re-installation had been done by PTL without the assistance of Metropolitan Limited.

However, it was explained that PTL had shifted its office to a different address on July 3, 2017. It was revealed that at the new place, PTL had identified that the computer hard disk relating to the recording system had crashed for some reason.

Thereafter they had replaced a new hard disk in the computer and re-installed the system on July 6, 2017 -- the day that PTL was suspended from being a Primary Dealer in Government Securities.

President’s Counsel Indatissa who appeared for PTL CEO Kasun Palisena was of the view that Metropoltan Chief Engineer’s testimony was not independent evidence because the witness was solely relying on their Indian mother company’s report.

PC Indatissa said the Indian mother company had only examined the system remotely by accessing online and provided details. He was of the view that such inspection was only a preliminary stage of a forensic examination; therefore a proper forensic examination has to be done to ascertain whether PTL had deleted or altered data in its phone records.

When he asked whether it was the best way to ascertain such details, the witness’ answer was in the affirmative.

Mr. Indatissa was also of the view that PTL CEO Kasuna Palisena had only looked at the system on August 18 and had prepared his affidavit, saying that PTL did not have a recording system which stored caller details.

Adding some amusement to the questioning, Mr. Indatissa said Metropolitan owner Ambani did not know about the Metropolitan systems and in a similar fashion his client, PTL CEO was also unaware about the matter not being a technical expert.

In the earlier affidavit which was submitted by the PTL CEO it was said that PTL had a recording system which only records the voice recordings with serial numbers.

Justice Prasanna Jayawardena later questioned the witness about the Indian mother company’s report.

Justice Jayawardena: Did your Indian company examine the system after you made a request?

Witness: Yes

J: And their report says they cannot recover any data pertaining to the time period between February 2015- May 2016, right?, and that there had been a re-installation and re-configuration in July, right?

W: Yes

J: Can a remote method of examination find that sort of information?

W: Yes

Meanwhile, it was revealed that PTL had now given its previous hard disk drive, the new computer, and the four CDs containing back-up data pertaining to the time period after July 6, 2017 to the CID officials who are attached to the PCoI.

Acceding to Additional Solicitor General Yasantha Kodagoda’s request, the Commission yesterday also allowed the CID to examine all the devices handed over by PTL with assistance of Metropolitan officers.

ASG Yasantha Kodagoda was of the view that since the previous computer was said to have crashed, they had to examine the reasons as to why it had crashed. At this moment Justice Prasanna Jayawardena in a lighter vein quipped in pithy Sinhala: ‘Hena Wedunada Balanna’ (See whether it was struck by lightning) amid ripples of laughter in the courtroom.

PTL and its CEO fabricated evidence: ASG

 

• ASG Dappula De Livera asks Commission to take action under Contempt of Commission

 

• Evidence of Metropolitan Chief Engineer contradicts stance taken by PTL CEO about its phone recording system

 

• Phone Recording System re-installed on July 06, 2017 -- the day PTL was suspended by CBSL as a primary dealer

 

• Re-installation and re positioning had been identified by the Indian mother company of the system by accessing the system online

·        PTL had tampered with the data during re-installation process deleting caller details and subsequently submitted fabricated material to the Commission

·        According to the service agreement with Metropolitan, PTL was prohibited  from modifying or altering the system without informing the service provider

 

 

By Shehan Chamika Silva

 

Additional Solicitor General Dappula de Livera requested the Commission to take appropriate legal action against Perpetual Treasuries Limited (PTL) and its CEO Kasun Palisena under Contempt of Commission for fabricating material submitted as evidence.

 

This request was made after Metropolitan Ltd confirmed that the original recording system installed by Metropolitan Limited at PTL stored all details relating to caller IDs and call times, in contrary to the evidence submitted by the PTL CEO and its IT officer. 

Additional Solicitor General (ASG) Dappula de Livera informed the Commission that Metropolitan Limited had inspected the recording system of PTL and submitted a report on August 28, 2017, as directed by the Commission.

Metropolitan Limited had said that the recording system had been re- installed on July 6, 2017 without informing the service provider (Metropolitan) and also the backup had been re-installed on the same day.

The report also says that the original system had the options of identifying the caller ID and the time duration as opposed to what PTL CEO and its IT officer had testified earlier.

The ASG also said that PTL IT officer, Sachith Devathanthri, in his statement to the Commission on August 28, 2017 said that he was unaware about such re-installation.

ASG Livera also was of the view that the re-installation had taken place on the very same day that PTL was suspended by the CBSL from business activities as a Primary Dealer in Government securities.

ASG Livera was of the view that PTL had tampered with the data during the re-installation process and subsequently submitted fabricated material to the Commission.

Earlier, PTL CEO Kasun Palisena had submitted an affidavit with the assistance of the IT officer Devathanthri and informed the Commission that its recording system does not show any details of the caller number or time duration other than a serial number of every call.

Therefore, the ASG asked the Commission to take appropriate legal action under Contempt of Commission against the witness and PTL.

It was also revealed that the CID officers had taken over the current computer in which the system’s software was running. However, the ASG said that they had found that the current computer was not the one PTL had used before July 2017, and therefore requested the Commission to issue an appropriate order to obtain the old computer which was used in the phone recording system’s software and data base.

The ASG was of the view that they can prove the allegations by way of an affidavit of Metropolitan Chief Engineer and subsequently Nalin Dharmaratne, the Chief Engineer of Metropolitan Ltd testified before the Commission explaining the matter.Additional Solicitor General Yasantha Kodagoda led the evidence.

It was explained that Metropolitan Limited had installed a phone recording system at PTL on June 2015 which had the capacity of receiving calls from both digital lines and analog lines to the extensions at PTL’s office.

Initially, PTL had only 8 ports for the extension and subsequently, in September 2016 another 16 ports had been placed by the Metropolitan to the system.

The calls were received and sent out through these 24 extensions using both Digital and Analog lines. Thereafter those call details go through another two devices attached to the extensions and finally saved in a main computer which has the voice logger system.

All of these devices were also provided by the Metropolitan as PTL’s service provider.

The witness explained that the all voice recordings of calls go to one folder file as ‘wave format’ in the main computer while all call details relating to those calls are also saved in a different format as data base.

He confirmed that every call detail, such as caller number (incoming or out going), time duration and date will be in the data base of the recording system and Metropolitan Limited had initially placed a system with all those facilities.

He also explained the formal way as how to extract the previous data of calls by using the software options (backup data) of the recording system.

He also said that after a complaint lodged by PTL in June 2015 they had examined the system and prepared it by December 2015. The complaint was about some missing digits of outgoing numbers which were recorded in the system.

However, the PTL had earlier only provided its voice recordings with sequential serial numbers to the Commission. During Last Friday’s (25) cross examination, DSG Milinda Gunathilake pointed out that some phone conversations are missing from the recordings that PTL had provided.

On being questioned by ASG Kodagoda today, the witness Metropolitan Chief Engineer Nalin Dharmaratane said that they had identified a re-installation of the software on July 6 ,2017

When they were examining the back up data, the witness said that they had identified that the previous voice recordings (wave files) had been replaced to the data base.

He said it could have been done by copying voice recordings from the ‘wave’ folder before the re-installation. He said all other call data other than the voice recordings had subsequently been deleted in the re-installation process.

The witness said that such re-installation and re positioning had been identified by the Indian mother company of the system by accessing the system online.

When Justice Prasanna Jayawardena questioned, the witness said that PTL could have easily asked Metropolitan assistance if they wanted a re-installation. Justice Jayawardena also highlighted that according to the service agreement with Metropolitan, PTL was also prohibited in making any modification or alteration to the system without informing the service provider.

Justice Jayawardena: Have you seen such an incident before?

Witness: No I have not come across such an incident in Sri Lanka before pertaining to our customers.

When ASG Kodagoda showed details provided about by PTL CEO and its IT expert in an affidavit to the commission, and questioned whether they were true or false, the witness said they were not technically true according to the phone recording system he installed at PTL.

President’s Counsel Kalinga Indatissa who was appearing for PTL CEO Kasuna Palisena subsequently requested time to cross-examine the witness as he has to get instructions from technical experts about the matter.

 

 

 

 

Copies of Document provided by PTL to AG contain discrepancies

- PTL apologizes for the fault and asks whether they can correct it

- Commission rejects to give more time

By Shehan Chamika Silva

Deputy Solicitor General Milinda Gunathilake today said that there were discrepancies in the two copies provided to the Attorney General’s team by PTL relating to a main document which PTL had used to challenge the calculation of CBSL Additional Director Wasantha Alwis over the capital gains acquired by PTL in the Secondary Market transactions with EPF.

The DSG was of the view that there was one set of box files relating to the main document submitted by the PTL and they had also provided two copies of it to the AG’s Department.

DSG Gunathilake said that his team was observing the document by using those copies and only figured the discrepancy today morning.

The commission said that they had not gone through their copies yet but such copies of documents should be identical to the main document.

The counsel appearing for PTL apologized to the Commission over the fault said they could correct them if needed. However, Additional Solicitor General Dappula de Livera objected to the request.

Chairman of the Commission Justice K.T. Chitrasiri said that PTL had been given enough time to present their case and also directed the DSG to correct the discrepancies by putting them to the witness during the cross examination.

Justice Prasanna Jayawardena then questioned the witness about the matter.

Justice Jayawardena: This document of PTL was contained in box files that were referred to present your argument on Mr. Alwis’s calculations on PTL-EPF secondary market transactions.

Witness: Yes

J: You could have only one set of original documents and then photo copied it, right?
Witness: Yes, but there may be several people operating them.

J: it doesn’t matter

W: Yes

J: So, there is no possibility of any differences in such copies?

W: Yes, they have to be correct. I have to check on that because there were several people involved in the process.

Justice Chitrasiri also questioned: There is a team assisting the Commission, so, if there are such discrepancies then what would happen if we are to rely on such differences?

The witness had no answer.

Govt. didn`t have a Rs. 300 bn requirement as PTL predicted: State Counsel

«« SSC Shaheeda Barrie contests factors put forward by PTL CEO Palisena to go for a 15 times higher bid than the amount advertised by CBSL

«« It was revealed that there was an unexpected five basis point interest rate cut in April 2015 by the Govt. and that had benefited PTL because the yield rates were low afterwards

«« SSC Barrie questions Palisena repeatedly about what he would have done if the offered Rs.15 billion bids had been accepted at the auction because PTL had no liquid cash to that amount in hand at that time

SSC Barrie - Did you bid such a higher value because you had inside information that other Primary Dealers never had?

Witness Palisena – I only used public information to predict such government requirement

By Shehan Chamika Silva

Cross examining PTL CEO, Kasun Palisena on his prediction of the Government’s fund requirement of Rs. 300 billion before the controversial bond auction on February 27, 2015, Senior State Counsel Shaheeda Barrie today argued that there was no such fund requirement by the Government at that time.

SSC Barrie contested several factors put forward by witness Palisena on an earlier occasion as to how he predicted the government’s 'desperate fund requirement’ although CBSL initially advertised only for bonds worth Rs.1 billion at the auction to take place on February 27, 2015.

At this auction, the CBSL ultimately issued bonds 10 times more (Rs. 10 billion) than the value that was initially offered (Rs. 1 billion), and PTL had bid Rs.15 billion worth of bonds directly and through Bank of Ceylon.

Subsequently, out of those bids, Rs. 5 billion worth of bonds were accepted -- Rs. 2 billion from direct bids and another Rs. 3 billion from what was bid through BoC on behalf of them.

Arguing the reasons earlier given by the witness, SSC Barrie questioned him on the Sovereign bond repayment requirement of the government and clarified that there was no such need because the repayments relating to January had been already made in the latter part of 2014, therefore there was no pressing need in settling sovereign bonds in February 2015.

She also questioned the witness over the IMF liability and drew the Commission’s attention that such IMF liability cannot be taken into consideration as there was no precedent that the Public Debt Department of CBSL had dealt in such a settlement.

SSC Barrie also brought the Parliament Hansard relating to certain details of the supplementary budget that came during the 100 days programme presented by the then Minister of Finance. She said that there was no drastic increase in government expenditure as much as the witness contemplated.

The witness had earlier said that due to the Rs. 10,000 salary hike proposed for the Government servants, the Government expenditure had increased by the early part of 2015.

However, Ms. Barrie was of the view that there was no such considerable increase in expenditure, in fact, as depicted in the documents, despite the salary hike proposal the government had reduced other expenditure considerably and therefore the expenditure of that mini budget decreased by Rs. 22 billion.

She also put forward a government document which explains the estimated and actual government domestic borrowing payments relating to January-May, 2014 and January-May, 2015.

Ms. Barrie and Justice Prasanna Jayawardena both questioned the witness about the details depicted in the document and were of the view that compared to the year 2014, the government’s domestic borrowing repayments were Rs. 90 billion less during January-May, 2015.

SSC Barrie also showed cash flow statements of the Treasury Department to the witness and argued that there was no fund requirement for the Government as the witness suggested earlier.

The witness had earlier said that they also considered the time gap from the last auction that had taken place when making a higher bid at the auction on February 27, 2015 by predicting that Government was in need of desperate funds.

SSC Shaheeda Barrie: You earlier said that the CBSL had only conducted an auction in the beginning of December, 2014 prior to the controversial auction in February and that was an unusual factor for you to bid a higher volume?

Witness: Yes

SSC: You were wrong. The last auction happened on December 30, 2014 and the gap between that date to the February auction is not an unusual aspect because there have been instances where such time gaps between bond auctions have been depicted in PDD history.

The witness was of the view that due to the two months time gap, they predicted that the CBSL would accept more than the offered value of Rs. 1 billion at the bond auction on February 27.

Questioning the witness, Chairman of the Commission Justice Chitrasiri observed that it was the system that CBSL had been practicing over the past, and said that the direct placement method was also in use at that time to acquire government fund requirements.

During the cross examination, it was also explained that PTL had to settle the accepted Rs. 5 billion at the auction on March 2, 2015.

The accepted Rs. 2 billion worth of bonds which was bid directly by PTL and Rs. 3 billion bid by BoC on behalf of PTL were completely settled through getting into REPO transactions and sell and buy back transactions with counter parties including BoC and EPF.

The Commission and SSC Barrie also questioned the witness repeatedly about what he would have done if the offered 15 billion bids had been accepted at the auction because the PTL had no liquid cash to that amount in hand at that time.

The witness was of the view that he would have gone for the CBSL window which provides a lending facility.

Justice Jayawardena also questioned the witness about what means he would have taken if the bid value of Rs. 15 billion were accepted. The witness said he would have dealt in REPOs largely to meet the settling requirement.

Then Justice Jayawardena was of the view whether PTL could have sold those accepted bonds keeping a considerable margin, as it were accepted at higher rates. The witness’ answer was affirmative.

The Justice questioned the witness whether PTL intended to hold on to those securities in order to get more benefits in the future.

It was also revealed that there was an unexpected five basis point interest rate cut in April 2015 by the Government and that had affected PTL positively because the yield rates were low afterwards.

SSC Shaheeda Barrie moved that there was no such overwhelming government requirement during that period to bid a higher volume at the February 27 auction without knowing the possible termination of direct placement method later.

“Did you bid such a higher value because you had inside information that other Primary Dealers never had”, she asked.

The witness said he only used the public information to predict such government requirement.

Several conversations ‘missing’ in PTL’s phone recordings

DSG Gunathillake says concluding conversation of the Rs. 2bn secondary market sale of bonds to EPF, missing

• PTL CEO Palisena says he has to check about the missing conversations

• Commission orders PTL to provide backup data of the phone recording system

• Justice Prasanna Jaywardena questions the purpose of having a recording system that does not record the caller ID

By Shehan Chamika Silva

Deputy Solicitor General Milinda Gunathilake today said that several phone recordings were missing in the provided call details of PTL, which were possibly relating to the concluding part of dealers’ conversations between PTL and EPF regarding the first secondary market transaction after the controversial bond issue.

Deputy Solicitor General Milinda Gunathilake today commencing the Cross- examination of PTL CEO Kasun Palisena, -- after a one week preparation-- questioned about the first deal struck between PTL and EPF in secondary market on June 5, 2015 through a broker. In this deal, PTL had sold Rs.2 billion worth of thirty year bonds to EPF in the secondary market.

During the questioning, DSG Gunathilake was of the view that even though the deal had taken place through a broker; PTL had negotiated the deal with EPF directly.

The witness admitted that he would have negotiated with EPF at that time.

The DSG then questioned him as to why they went through broker. The witness said the broker came into the deal to get the immediate confirmation of the deal between the two parties.

When Justice Jayawardena questioned, the witness admitted that a deal would be concluded once the two parties (dealers) agreed upon it via phone conversations.

Justice Jayawardena : when PTL and EPF agreed on a deal then the matter is over?

Witness: Yes

J: Broker comes in to speed up the process?

W: Yes

J: Merely by way of documentation?

W: Yes

When Justice Jayawardena questioned, the witness said that the Conclusion of the deal happened between two dealers of PTL and EPF, and the broker was a mere formality for documentation and to get the immediate confirmation.

DSG Gunathilake then played three voice recordings. The conversations dealing with the secondary market transactions were between PTL dealer at that time Nuwan Salgadu and EPF dealer Udayaseelan and had taken place on June 5, 2015. The witness also identified the voices and affirmed that none of them were relating to the conclusion of the deal.

DSG Gunathilake said that they were not able to identify phone conversations relating to the conclusion of the deal from among the phone recordings provided by PTL, which were recorded in their internal voice recording system.

It was explained earlier by the witness that the PTL’s recording system only records the index number and date of the phone call which has a sequence of serial numbers.

DSG Gunathilake revealed to the Commission that there are five serial numbers relating to the possible conclusion of the deal that were missing. (SN- 6816-19, 6825)

DSG Gunathilake: Were those details tampered with by deleting?

Witness: No, no need for that

DSG: Then why are those conversations relating to the conclusion of the deal could not be found in the given phone recordings? And why are five serial numbers missing?

Witness: That I have to check.

Justice Jayawardena: Are all calls are recorded with a serial number (sequence of numbers)?

Witness: Yes

J: There cannot be missing numbers?

W: Yes

J: You earlier said that you have given all call recordings to the commission, but this contradicts that?

W: I need to check about it

J: Can you think as to why those are missing?

W: No, I can’t

Earlier, filing an affidavit, with the assistance of PTL IT expert, the witness informed the Commission that the phone recording system setup in PTL has no options to identify the incoming or out going numbers.

Contesting that stance of the PTL CEO Palisena, DSG Gunathilake yesterday played a voice recording related to a conversation between the PTL IT person and the CEO which had taken place on December 2, 2015.

Voice recording in Sinhala - Palisena: “Sachith !.. (IT person) some outgoing numbers are not recorded”….

The DSG was of the view that the testimony of the witness is questionable since he had referred as “Some” outgoing numbers to be checked by the IT person in December, 2015 and that would possibly reflect that PTL had caller numbers recorded in their system as outgoing and incoming.

The witness said that he had a dispute with a counter party at that time and thereby he asked to check about some serial numbers which were not recorded at that point of time.

It was revealed that subsequently, the IT person, Sachith Devathanthri had lodged a complaint with its service provider, Metropolitan in December 2015 on the instructions of CEO, Palisena.

DSG Gunathilake was of the view that the witness was not telling the truth about the recording system of PTL and his affidavit submitted earlier was also false. The witness however, denied that.

It was earlier said that the witness had only examined about the system on August 16, 2017 and thereafter informed the Commission that PTL has a phone recording system which has no options to record the caller number or the time durations of calls.

DSG Gunathilake: You checked about the system only on August 16, 2017?

W: Yes, when I checked there was no such option.

DSG: But you were already concerned about the outgoing calls much before that time in 2015 December? Would it be possible that your system had reflected the caller ID before you examined it in August 2017?

W: That I need to check

DSG: You earlier had given an affidavit confirming that your system does not record the caller ID and now you are saying that you have to check? So, are you saying that the system was not tampered with at any point of time?

W: Yes

Subsequently, DSG Gunathilake was of the view that the investigation wants to get the backup data of the phone recording system of PTL and thereby, requested the Commission to issue an order on PTL to recover those data.

The DSG also sought an order to permit the Metropolitan engineer to extract the backup data from the system, if PTL was unable to recover the backup data.

Consequently, the Commission asked the relevant individuals to comply with the DSG’s request.

Justice Jayawardena subsequently questioned the witness again on the issue and asked about the importance of having a recording system which records no phone numbers.

Justice Jaywardena observed that such a recording system is used with regard to the possible disputes that could arise in the dealing process, and therefore a system which does not record the caller ID serves little purpose of having such a recording system.

 

  

  

Geoffrey and Arjun Aloysius’ Perpetual Capital Holdings received Rs. 348 million dividends in November, 2016: PTLCEO

-Part of dividends also used to buy voting shares of NDB, Central Finance and Ashok Leyland  

By Shehan Chamika Silva

PTL CEO Kasun Palisena today said that Perpetual Asset Management paid Rs. 348 million dividends to Perpetual Capital Holding owned by Geoffrey Aloysius (father) and Arjun Aloysius (son) in November 2016. When Justice Prasanna Jayawardena questioned the witness about it, he said that he was unaware as to what happened to that money afterwards.

On being questioned by the Commission as to what happened to Rs. 712 million dividends paid by PTL to its 100% shareholding company, Perpetual Asset Management Pvt Ltd (PAM), the witness yesterday explained how the dividends have been distributed during the time period after he was appointed as a non executive director of PAM in February 2016.

President’s Counsel Kalinga Indatissa appearing on behalf of Palisena yesterday led the evidence in relation to the questions raised earlier by the Commission.

The Witness said he first joined PTL in November 2013 as the chief dealer and later in January, 2015 was appointed as the CEO of PTL. Then, he was appointed as a non executive director to the Board of directors at Perpetual Asset Management (PAM), which is the 100% shareholding company of PTL in February 2016.

The witness said that he has no relationship with Perpetual Capital Holdings, which owns Perpetual Asset Management.

When Justice Prasanna Jayawardena questioned, the witness said he was aware about two dividends payments from PTL to its 100% share holder, Perpetual Asset Management after he became a non executive director of PAM in February 2016.

According to the witness, Rs.90.09 million dividends on August 8, 2016 and another Rs. 348. 255 million dividends on September 19, 2016 had been paid from PTL to PAM during his tenure as a director of PAM (total of Rs. 458.548 million).

The witness said only about the dividends paid during the time after he was appointed as a director of PAM. There were dividends declarations submitted earlier by PTL before the Commission with regard to previous years as well.

However, when the Commission questioned as to how PAM spent the given dividend in 2016, the witness said as a non executive director of PAM he was aware that Rs. 642.69 million dividends was invested to buy voting shares of NDB, Central Finance and Lanka Ashok Leyland through PAM’s subsidiary company called Perpetual Equity Pvt Ltd.

He also said another Rs. 348 million dividend of Perpetual Asset Management (PAM) was given to Perpetual Capital Holdings, which was the owning company of PAM, headed by Geoffrey Aloysius (father) and Arjun Aloysius (Son).

Justice Prasanna Jayawardena: you were a director of Perpetual Asset Management in August 2016?

Witness: yes

J: PAM received a net dividend of 90 million from PTL on August 8, 2016

W: correct

J: Then PAM receives a net dividend of Rs. 348 million also from PTL?

W: yes

J: So, during your tenure as a director of Perpetual Asset Management, PAM received 458.548 by way of dividends from PTL?

W: that is correct.

J: What happened to that Rs. 458 million?

W: Rs. 642 million was used to invest in buying voting shares of NDB, Central Finance and Ashok Leyland. And the Rs. 458 million received as dividends was also included in that Rs. 642 million.

The witness was of the view that PAM through its subsidiary company called Perpetual Equity had invested in buying NDB shares using Rs. 642 million.

J: You are a financial person please be careful in giving evidence. Did Perpetual Equity function as a stock broker?

W: Not a stock broker but it only invested in shares.

J: So, Perpetual Equity bought those shares of Central Finance, Lanka Asok Leyland and NDB under Perpetual Asset Management?

W: Yes

J: So, these shares are owned by Perpetual Equity from the part of funds received as dividends by PAM from PTL?

W: Yes

When Justice Jayawardena asked in which manner PAM had invested through its subsidiary Perpetual Equity to buy those shares, the witness said it was a way of lending given by PAM to its subsidiary.

W: there was another dividend of Rs. 348 million in Perpetual Asset Management which was paid to Perpetual Capital Holding in November 2016.

J: And what happened to that money?

W: I am not involved in Perpetual Capital Holdings (PCH)

J: Perpetual Capital Holding is owned by Geoffrey Aloysius and Arjun Aloysius, father and son, is that correct?

W: yes

J: So, that money was paid to the Father and Son, who owned PCH

W: That is correct

J: Do you know what happened to that money?

W: I don’t know about that

It was also revealed that in addition to the shares that Perpetual Equity owns of Central Finance, Lanka Asok Leyland and NDB, The PTL also has Rs. 1.1 billion worth of shares of NDB. This gives Perpetual Group a total acquisition of Rs. 2 billion worth of NDB shares.

 Meanwhile, after being questioned by Chairman of the Commission, Justice K.T. Chitrasiri over the lack of information in the submitted financial details, the Counsel who appeared for W.M. Mendis & Company yesterday told the PCoI that they will furnish all the financial details asked by the Commission within a week.

Justice Chitrasiri yesterday told President’s Counsel Anuja Premaratne that the Commission had received only a Balance sheet without the entirety of how all the expenditure and income happened.

When PC Premaratne agreed to provide them soon Justice Prasanna Jayawardena said those details might be with the audit company of the W.M. Mendis & Company.

The Commission also questioned on the required bank statements of W.M. Mendis & Company. PC Premaratne said that they have written to the banks and will be able to provide the original bank statements within a week’s time.

It was also revealed that W.M. Mendis & Company has provided its financial details relating to 12 bank accounts to the Commission.

In the Meantime, Perpetual Treasuries Ltd CEO Kasun Palisena yesterday undertook to provide details regarding its phone recording system in an affidavit as required by the Attorney General’s Department with the assistance of PTL IT expert.

The witness was of the view that he did not negotiate with the Metropolitan Company when installing the phone recording system in PTL. He said it was the IT expert who negotiated with them and he would be the best person to explain about the system.

The witness also said that the system is customized up to a certain point. When questioned by Justice Jayawardena on the manner in which the system was customized, Palisena said he will provide the details in an affidavit with assistance of the IT expert.

PCoI commends dedication of AG’s Department towards Inquiry

-        PCoI proceedings adjourned till August 25
 -        ASG Dappula de Livera asks time to prepare before the cross-examination of PTL CEO

By Shehan Chamika Silva

Justice Prasanna Jayawardena today appreciated the assistance provided by the Attorney General’s Department officers to the Commission and said their dedication towards the inquiry was Commendable.

Justice Jayawardena made this statement following the application moved by Additional Solicitor General Dappula de Livera who sought the Commission’s indulgence for an adjournment of the proceedings before the Attorney General’s Department cross-examines PTL CEO, Kasun Palisena.

Testimony of PTL CEO was yesterday concluded and ASG Livera asked the Commission to provide a substantial time period them to prepare before the cross-examination since there was a bulk of material to peruse cautiously.

Acceding to the request, Chairman of the Commission, K.T. Chitrasiri adjourned the proceedings till 25 August (next Friday).  

Geoffrey and Arjun Aloysius’ Perpetual Capital Holdings received Rs. 348 million dividends in November, 2016: PTLCEO

-Part of dividends also used to buy voting shares of NDB, Central Finance and Ashok Leyland  

By Shehan Chamika Silva

PTL CEO Kasun Palisena today said that Perpetual Asset Management paid Rs. 348 million dividends to Perpetual Capital Holding owned by Geoffrey Aloysius (father) and Arjun Aloysius (son) in November 2016. When Justice Prasanna Jayawardena questioned the witness about it, he said that he was unaware as to what happened to that money afterwards.

On being questioned by the Commission as to what happened to Rs. 712 million dividends paid by PTL to its 100% shareholding company, Perpetual Asset Management Pvt Ltd (PAM), the witness yesterday explained how the dividends have been distributed during the time period after he was appointed as a non executive director of PAM in February 2016.

President’s Counsel Kalinga Indatissa appearing on behalf of Palisena yesterday led the evidence in relation to the questions raised earlier by the Commission.

The Witness said he first joined PTL in November 2013 as the chief dealer and later in January, 2015 was appointed as the CEO of PTL. Then, he was appointed as a non executive director to the Board of directors at Perpetual Asset Management (PAM), which is the 100% shareholding company of PTL in February 2016.

The witness said that he has no relationship with Perpetual Capital Holdings, which owns Perpetual Asset Management.

When Justice Prasanna Jayawardena questioned, the witness said he was aware about two dividends payments from PTL to its 100% share holder, Perpetual Asset Management after he became a non executive director of PAM in February 2016.

According to the witness, Rs.90.09 million dividends on August 8, 2016 and another Rs. 348. 255 million dividends on September 19, 2016 had been paid from PTL to PAM during his tenure as a director of PAM (total of Rs. 458.548 million).

The witness said only about the dividends paid during the time after he was appointed as a director of PAM. There were dividends declarations submitted earlier by PTL before the Commission with regard to previous years as well.

However, when the Commission questioned as to how PAM spent the given dividend in 2016, the witness said as a non executive director of PAM he was aware that Rs. 642.69 million dividends was invested to buy voting shares of NDB, Central Finance and Lanka Ashok Leyland through PAM’s subsidiary company called Perpetual Equity Pvt Ltd.

He also said another Rs. 348 million dividend of Perpetual Asset Management (PAM) was given to Perpetual Capital Holdings, which was the owning company of PAM, headed by Geoffrey Aloysius (father) and Arjun Aloysius (Son).

Justice Prasanna Jayawardena: you were a director of Perpetual Asset Management in August 2016?

Witness: yes

J: PAM received a net dividend of 90 million from PTL on August 8, 2016

W: correct

J: Then PAM receives a net dividend of Rs. 348 million also from PTL?

W: yes

J: So, during your tenure as a director of Perpetual Asset Management, PAM received 458.548 by way of dividends from PTL?

W: that is correct.

J: What happened to that Rs. 458 million?

W: Rs. 642 million was used to invest in buying voting shares of NDB, Central Finance and Ashok Leyland. And the Rs. 458 million received as dividends was also included in that Rs. 642 million.

The witness was of the view that PAM through its subsidiary company called Perpetual Equity had invested in buying NDB shares using Rs. 642 million.

J: You are a financial person please be careful in giving evidence. Did Perpetual Equity function as a stock broker?

W: Not a stock broker but it only invested in shares.

J: So, Perpetual Equity bought those shares of Central Finance, Lanka Asok Leyland and NDB under Perpetual Asset Management?

W: Yes

J: So, these shares are owned by Perpetual Equity from the part of funds received as dividends by PAM from PTL?

W: Yes

When Justice Jayawardena asked in which manner PAM had invested through its subsidiary Perpetual Equity to buy those shares, the witness said it was a way of lending given by PAM to its subsidiary.

W: there was another dividend of Rs. 348 million in Perpetual Asset Management which was paid to Perpetual Capital Holding in November 2016.

J: And what happened to that money?

W: I am not involved in Perpetual Capital Holdings (PCH)

J: Perpetual Capital Holding is owned by Geoffrey Aloysius and Arjun Aloysius, father and son, is that correct?

W: yes

J: So, that money was paid to the Father and Son, who owned PCH

W: That is correct

J: Do you know what happened to that money?

W: I don’t know about that

It was also revealed that in addition to the shares that Perpetual Equity owns of Central Finance, Lanka Asok Leyland and NDB, The PTL also has Rs. 1.1 billion worth of shares of NDB. This gives Perpetual Group a total acquisition of Rs. 2 billion worth of NDB shares.

 Meanwhile, after being questioned by Chairman of the Commission, Justice K.T. Chitrasiri over the lack of information in the submitted financial details, the Counsel who appeared for W.M. Mendis & Company yesterday told the PCoI that they will furnish all the financial details asked by the Commission within a week.

Justice Chitrasiri yesterday told President’s Counsel Anuja Premaratne that the Commission had received only a Balance sheet without the entirety of how all the expenditure and income happened.

When PC Premaratne agreed to provide them soon Justice Prasanna Jayawardena said those details might be with the audit company of the W.M. Mendis & Company.

The Commission also questioned on the required bank statements of W.M. Mendis & Company. PC Premaratne said that they have written to the banks and will be able to provide the original bank statements within a week’s time.

It was also revealed that W.M. Mendis & Company has provided its financial details relating to 12 bank accounts to the Commission.

In the Meantime, Perpetual Treasuries Ltd CEO Kasun Palisena yesterday undertook to provide details regarding its phone recording system in an affidavit as required by the Attorney General’s Department with the assistance of PTL IT expert.

The witness was of the view that he did not negotiate with the Metropolitan Company when installing the phone recording system in PTL. He said it was the IT expert who negotiated with them and he would be the best person to explain about the system.

The witness also said that the system is customized up to a certain point. When questioned by Justice Jayawardena on the manner in which the system was customized, Palisena said he will provide the details in an affidavit with assistance of the IT expert.