Bond issue Rs.11.5 Bn default by Perpetual Treasuries

CB official says

While leading the evidence of Central Bank’s IT Department Director Wasantha Kumara Alwis, DSG Milinda Gunathilaka made the Bond Commission aware that Perpetual Treasuries (PT) had defaulted on Rs.11.05 billion when settling the payments due to the CB on April 1 last year.

This was in relation to the bids accepted at the bond auctions held on March 29, 30 and 31.

The DSG told the Commission that Perpetual Treasuries was required to settle the payments through the Lanka Security System (LSS).

According to Mr. Alwis, who was in charge of LSS operations, Perpetual Treasuries had made several borrowings on the payment settling day using the CB’S Intraday Liquidity Facility (ILF) which is set up to bridge the gap between transaction outflows and inflows.

ILF enables financial institutions to make payments with the funds, which can be accessed on a particular business day keeping the securities provided by the institution to the CBSL as security with the borrowings to be settled on the same day of the payment process.

The DSG said the amount previously outstanding was recorded as Rs.353 million, but the default amount was 34 times more.

However, Nihal Fernando PC who appeared for Perpetual Treasuries said the so-called outstanding was later paid to the CBSL on April 4 and he needed to cross examinine the witness after obtaining further instructions from his clients on the details presented to the Commission with regard to the payment process on April 1. The Commission of Inquiry comprising Supreme Court Judges K. T. Chitrasiri and Prasanna Sujeewa Jayawardena and former Deputy Auditor General Kandasamy Velupillai put off the inquiry to April 6.