Sri Lanka names ex-bank chief as suspect in scam

COLOMBO: The former head of Sri Lanka’s central bank was named in court as a key suspect in a multi-million dollar bond scam.

Arjuna Mahendran, a Singapore national of Sri Lankan origin, was ordered to present himself to police before Feb 15 to respond to charges under the state property act. He and his bond-dealer son-in-law Arjun Aloysius are accused of manipulating of bond auctions in 2015 and 2016, causing losses of over US$11 million to the state.

Mahendran was not present for the hearing and is believed to be in Singapore.

A damning presidential report into the high-profile bond scandal accused him of insider trading and recommended the state recover its losses from Mahendran and his son-in-law.

The bond scandal has deepened acrimony between President Maithripala Sirisena and his coalition partner Prime Minister Ranil Wickremesinghe, who handpicked Mahendran to head the central bank in 2015.

Sirisena has publicly accused Wickremesinghe’s United National Party (UNP) of being more corrupt than the previous regime they toppled together in 2015 after cobbling together an alliance. The allies ended the 10-year rule of strongman president Mahinda Rajapakse, whose regime had been accused of graft and nepotism.

The bond scandal has shaken the union and called into question their pledge to clean up governance. Sections of the 1,154page report released last month recommended prosecuting Ravi Karunanayake, finance minister at the time of the scandal, for graft and perjury over his links with Aloysius.

He resigned as foreign minister in August last year after his association with the controversial bond dealer went public.

The investigation also recommended a forensic audit of the central bank during the Rajapakse era, saying insider trading had occurred under his rule.