Sri Lanka President, PM non-committal on Mahendran at powwow

ECONOMYNEXT – Sri Lanka’s President and Prime Minister side stepped calls Friday by "good governance" activists who urged the termination of controversial Central Bank Governor Arjuna Mahendran.

A participant at Friday’s closed-door talks at the Presidential Secretariat said both leaders did not indicate what they planned to do when Mahendran’s term ends this month.

"We talked about bribery, corruption and the Central Bank Governor," the source told Economynext. "But, we were not able to get any direct response regarding the Governor."

Wickremesinghe left the meeting half way through to make a statement at his official residence Temple Trees on Sri Lanka being the European Union lifting a fish export ban slapped on Colombo.

"The main thrust of the civil society groups was the termination of Mahendran who is accused of corruption, conflict of interest and a cavalier attitude  towards Central Bank resources.

"But, we did not get a clear answer from the Prime Minister or the President," the source said.

The Anti-Corruption Front (ACF), which comprises dozens of professional bodies that campaigned for Sirisena’s election victory last year, urged him earlier this week not to reappoint Mahendran when his term comes to an end on June 30.

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

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 Rs 10 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 17, 2016)

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