Lanka Central Bank chief cleared over Bond scam

Sri Lanka's Central Bank chief has been cleared of any wrongdoing by a panel which probed allegations that his family member benefited unduly from a 10 billion rupee bond auction, the government said today.
The government-appointed three member panel of lawyers cleared Governor Arjuna Mahendran but found several flaws in the conduct of bond sale by the bank's Public Debt Department (PDD).
A press release issued by the Prime Minister Ranil Wickremesinghe's office said that while contending that Mahendran bore no direct responsibility for the decision, his son-in-law's firm's role in the bond trading warrants further investigation.
It was alleged that Mahendran's son-in-law's firm had benefited from inside information on Central Bank's decision to sell 10 billion rupees (USD 76 million) worth of bonds at a higher rate of interest in place of the original decision to sell just 1 billion worth of bonds at a lower interest rate.

"The committee found that Governor Mahendran had no direct role in deciding to accept bids over and above the one billion rupees stipulated in the 30-year bond tender and accept upto 10 billion rupees," the panel was quoted as saying in the government's release.
The panel said the decision had been arrived at by the bank's PDD. Its tender committee comprises eight members but Mahendran was not among them.

However, the panel also observed that Mahendran's son-in- law's company's "unusual role" needs to be investigated further.
Mahendran was appointed by the newly-elected government of President Maithripala Sirisena and has been on leave since the panel's investigation started last month.

The bond issue had rocked the country's parliament as the opposition had demanded a probe.
Mahendran was subsequently quizzed by the anti-graft commission and he was slapped with a travel ban until the investigation could be completed.