Sri Lanka AG orders ex-Finance Minister, CB Governor, arrested over Rs51bn securities fraud

ECONOMYNEXT – Sri Lanka’s Attorney General has asked police to arrest ex-Finance Minister Ravi Karunanayake, ex-Central Bank Governor Arjuna Mahendran and officials of a state-managed retirement fund and bond dealership arrested as suspects in 51 billion rupee securities fraud.

Sri Lanka’s attorney General has also order the arrest of Indika Saman Kumara, a dealers at the central bank managed Employees Provident Fund and Sangarapillai Padumanathan another central bank official.

Directors of Perpetual Treasuries, a primary dealer in government securities linked to Arjun Aloysius, son-in-law of Mahendran, Aloysius and the firm’s chief executive Kasun Palisena has also been ordered arrested over alleged offences linked to two bond auction in March 2016.

Sri Lanka’s Attorney General has asked Acting Police Chief to obtain warrants arrest the suspects and get their statements.

The AG said based on investigations done by police criminal investigators there was reasonable suspicion that insider dealing and market manipulation had taken place in relation to two bond auction of 51 billion rupees (about 350 million dollars at the time) violating Sri Lanka’s securities ordinances and codes of conduct governing licensed bond dealers.

The AG advised that evidence had been uncovered that the suspects conspired to misappropriate 36.98 billion rupees at a bond auction on March 29, 2016 with the involvement of Perpetual Treasuries, a primary dealer in gilts.

Ex-Finance Minister Karunanayake had conspired to misappropriate public property of 36.98 billion rupees, violating the Public Property Act.

He is also alleged to have aided in the Perpetual Treasuries to mis-appropriate the property and defrauded representatives of Bank of Ceylon, People’s Bank and National Savings bank over the auction.

Ex-Central Bank Governor Arjuna Mahendran had also violated the Public Property Act and aided Perpetual Treasuries to misappropriate public property.

Arjuna Aloysius and Palisena are alleged to have violated the Public Property Act and aided Perpetual Treasuries to commit insider dealing and market manipulation.

Employees Provident Fund dealer Indika Saman Kumara and another official Sangarapillai Pathumanapan had also violated the Public Property Act and helped Perpetual Treasuries commit insider dealing and market manipulation.

Similar offences were also alleged to have been committed in another 15 billion rupee bond auction held on March 31, 2016. (Colombo/Mar03/2020)