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Tuesday May 17th, 2022

Sri Lanka bond scam: Former finance minister, others cleared of 11 out of 22 charges

FILE PHOTO – Former Finance Minister Ravi Karunanayake

ECONOMYNEXT – The Colombo High Court Trial at Bar on Monday (06)  cleared former Sri Lanka Finance Minister Ravi Karunanayake, former Central Bank Governor Arjuna Mahendran and eight others of 11 out of 22 charges filed against them in the 2016 treasury bond scam case.

Karunanayake confirmed to EconomyNext Monday afternoon that he was charged on counts 1, 2 and 12 of the 22 charges.

“Today, the court released all from charges 1-11. The charges 12-22 are aiding and abetting in nature,” he said.

Karunanayake and six other were remanded on March 17 this year over alleged links to the misappropriation of Rs 15 billion through the March 31 2016 bond auction.

On April 01, the Colombo High Court trial-at-bar ordered the release of the accused on Rs 1 million cash bail each and two surety bails of Rs 10 million each, while also imposing a travel ban.

Incumbent Finance Minister Basil Rajapaksa during his budget speech on November 14 transferred 8.5 billion rupees earned by Perpetual Treasuries Pvt Ltd, which is alleged to be involved in the bond scam for breaching the code of conduct.

Rajapaksa said as per a Presidential Commission of Inquiry report, Perpetual Treasuries had made profit mainly through “price-sensitive inside information” and “market manipulation”.

Related: Sri Lanka finmin transfers Perpetual Treasuries’ Rs. 8.5 bln to govt for breach of code

Perpetual Treasuries, a central bank licensed primary dealer in government bonds’ activities were suspended on several occasions after a bond scam that ran between 2006 to 2016 came to light.

The dealership was owned by Arjun Aloysius, the son-in-law of ex-Central Bank Governor Arjuna Mahendran (2015-2016).

The presidential commission of inquiry found that Mahendran had interfered in a bond auction and has leaked inside information to help his Perpetual Treasuries make billions of rupees in profits.

Mahendran raised a policy rate floor outside the regular monetary policy meeting and pressured a tender board to sell bonds at high prices, the inquiry found.

The inquiry also found that Perpetual Treasuries had paid central bank dealers, who were managing the country’s largest pension fund to buy bonds at high prices and other state funds. (Colombo/Dec06/2021)


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