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Pressure heightens on Sri Lanka PM over bond scam

ECONOMYNEXT – Sri Lanka’s Prime Minister Ranil Wickremesinghe came under renewed pressure in parliament Tuesday as even coalition ministers demanded tough action against those responsible for the simmering bond scandal.

A visibly angry Wickremesinghe attempted to hit back as legislators mounted a scathing attacks against Arjuna Mahendran, the prime minister’s choice for central bank governor who had to leave under a cloud.

Megapolis and Western Development minister Champika Ranawaka went further suggesting that Mahendran should commit suicide to protect the dignity and the integrity of Wickremesinghe and his government.

Ranawaka narrated the story of Teh Cheang Wan, a Singapore minister in the government of then-Prime Minister Lee Kuan Yew who had zero tolerance for corruption. Under investigation for corruption, Teh committed suicide in 1986.

That suicide is considered a testimony to Lee’s refusal to protect his friends, however close they may have been.

Ranawaka also wanted the government to widen the investigation into the controversial bond sales last year as well as this year in which then governor Mahendran’s son-in-law is alleged to have benefited from inside information.

The minister said it was a bigger scandal how Perpetual Treasuries of Mahendran’s son-in-law, Arjuna Aloysius,  secured funding from the state to buy bonds and flip them to another state entity and pocket billions of rupees in profits.

Related: Killer profits for Sri Lanka’s Perpetual Treasuries from bonds bought with central bank cash

Ruling United National Party (UNP) sources said Wickremesinghe’s position was becoming untenable as evidence mounts in the bond investigation ahead of a parliamentary report into the same issue.

The Committee on Public Enterprises (COPE) is due to unveil its report this week, its chairman Sunil Handunetti said.

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COPE has no powers to prosecute, but can name and shame alleged wrong doers and it is up to the government to take further action. In this case, COPE is recommending criminal prosecutions against members of Perpetual Treasuries. Prosecution of Perpetual will also bring up the involvement of the previous government with the same companies in bond transactions.

Rajapaksa-appointed governor Ajith Nivard Cabraal’s sister had been a director of Perpetual when it was buying bond sold by the central bank without a transparent auction system. Cabraal is already under investigation for financial irregularities and his passport has been impounded. (COLOMBO, October 25, 2016)

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