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‘Good governance’ camp demands sacking of Sri Lanka Central Bank chief

ECONOMYNEXT – Sri Lanka’s influential academics and professionals have demanded that President Maithripala Sirisena sack controversial Central Bank Governor Arjuna Mahendran who is accused of involvement in a bond scam.

The Anti-Corruption Front (ACF), which comprises dozens of professional bodies that campaigned for Sirisena’s election victory last year, urged him to terminate Mahendran when his term comes to an end on June 30.

The ACF also accused the "Joint Opposition," or the SLFP faction loyal to former president Mahinda Rajapaksa, of taking a softer line on Mahendran despite initially calling for his ouster last year.

"During the no-confidence debate against the finance minister, we did not see any spirited calls for the removal of the governor," ACF convenor Keerthi Tennakoon told reporters at his Welikada office.

"Don’t allow Arjuna Mahendran to bleed the country. Through the bond scam, he has caused billions of rupees in losses to the state."

Tennakoon also alleged that the governor had been lavishly spending state money on both local and foreign travel.

"His spending is more than what 30 ministers collectively spent during the same period he has been governor," Tennakoon said.

There was no immediate comment from the governor who has, however, maintained his innocence.

Another ACF campaigner, Nirmal Dewasiri, said they will agitate till Mahendran is removed and warned the administration that they will not sit idly by.

"We want not only his removal, but also an investigation into the activities of Arjuna Mahendran," he added.





The ACF said they would take to the streets if the President extended Mahendran’s term, which is due to expire at the end of this month. Mahendran is a Singapore national and the second foreigner to hold office.

The ACF is seen as influential. Its members have been credited with leading a campaign to topple former strongman Mahinda Rajapaksa who had been accused of nepotism and corruption.

Last year, Mahendran was accused of leaking inside information to his son-in-law’s company, which is believed to have made huge profits from a 30-year bond auction.

An ad-hoc ruling party committee cleared him of direct involvement, but called for a more thorough investigation, which is yet to be held.

Even before a new probe could be ordered, Mahendran was again accused of favouring his son-in-law’s firm in another bond auction recently.

In the first bond sale in February last year, the bank sold Rs10 billion of 30-year treasury bonds at a coupon rate of 12.5 percent, after earlier indicating to the market that only Rs1 billion would be sold at 9.5 percent.

About half of the bonds were purchased by his son-in-law’s firm at high rates, but the company at the time denied that it had inside information.

The ruling party’s own probe noted that the bidding pattern of Mahendran’s relative’s company was "unusual" and "warranted a further investigation."

Sri Lanka’s economy is under stress, but earlier this month began receiving the first tranche of a $1.5 billion bailout by the International Monetary Fund.
(COLOMBO, June 15, 2016)

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