Sri Lanka’s foreign minister quits as bonds row brews
Politician is caught up in confict of interest controversy involving ex-bank chief’s in-law
Sri Lanka’s foreign minister resigned yesterday following alleged irregularities in government bond sales.
Ravi Karunanayake, a former finance minister, however, maintained that he is not guilty of wrongdoing.
The resignation of Mr Karunanayake came in the wake of calls for his removal by the government and the opposition, after the panel looking into the sales found that the rent on his flat was being paid by an official who is under investigation.
“I have never done anything wrong, and I resign with pride to create a new political culture in Sri Lanka and ensure good governance,” Mr Karunanayake told parliament. “I have never earned any money from politics.”
He said he would continue in the party as a backbench member of parliament.
The allegations came after Mr Karunanayake’s appearance before the panel last week. He has not been charged by any court.
President Maithripala Sirisena’s government has pledged to end the rampant corruption that affected the country’s previous government.
Mr Sirisena appointed a presidential commission to investigate, after demands from opposition politicians who said the controversial bond auction lost the state more than US$1billion (Dh3.7bn), because of rising borrowing costs in the past two years.
The central bank has dismissed the opposition’s claims.
The auction, originally intended to sell 1 billion rupees (Dh24 million) of 30-year bonds, eventually grew to more than 10 times that amount, to meet government borrowing needs.
More than half of the bond issue was sold to Perpetual Treasuries, a subsidiary of a company owned by the son-inlaw of the former central bank governor, Arjuna Mahendran, in what has been criticised by opponents as a conflict of interest.
Perpetual Treasuries, Mr Mahendran, and his son-in-law denied wrongdoing.
Mr Karunanayake last week told the panel he had no knowledge that the rental was paid by Mr Mahendran’s son-in-law.
Yesterday, he told parliament that one of his daughters leased the flat through the son-in-law of the former central bank governor, and that the money had already been repaid.
Mr Sirisena appointed Mr Karunanayake, a key strategist in helping to topple the former government, as foreign minister on May 22. Before then, he had been finance minister since January 2015.