• May 22, 2018
    Last updated 4 minutes ago

sri lanka

Sri Lanka’s foreign minister quits amid financial probe

During inquiry into fired central bank governor’s case, Karunanayake admitted his family had dealings with a controversial bond dealer

14:31 August 10, 2017
R. Karunanayake | Foreign minister

Colombo: Sri Lanka’s foreign minister resigned on Thursday after being linked to a controversial financial trader under investigation for allegedly causing millions of dollars of losses to the island’s coffers.

Ravi Karunanayake, 54, stepped down from cabinet amid questioning over his connection to an insider trading scandal at Sri Lanka’s central bank after the new government was elected in January 2015.

“I am not guilty of any of the allegations, but I am resigning my portfolio to ensure that opponents are not able to destabilise our unity government,” Karunanayake said.

Karunanayake has testified before an investigation ordered by President Maithripala Sirisena into then-central bank governor Arjuna Mahendran, who was sacked last April.

Mahendran was accused of misconduct surrounding alleged favours for his son-in-law, a bond dealer.

At the inquiry proceedings last week, Karunanayake admitted his family had dealings with the controversial bond dealer.

Karunanayake, who was finance minister when the scandal broke, was given the foreign ministry in a cabinet reshuffle in May.

Last week, Karunanayake appeared before a presidential commission of inquiry in connection with the bond sale scandal in 2015.

Perpetual Treasuries Ltd, a subsidiary of a company owned by the son-in-law of Sri Lanka’s then-central bank chief Arjuna Mahendran, bought more than half of the controversial bond issue on February 27, 2015, prompting charges of a conflict of interest.

Mahendran and his son-in-law, Arjun Aloysius, have denied any wrongdoing.

Karunanayake is accused of taking on lease a luxury apartment in Colombo paid for by Aloysius of Perpetual Treasuries.

Karunanayake said his daughter had struck a deal with the apartment owner who was linked to the company under probe over bond sale.

Aloysius’ company had allegedly benefited by insider information on the two Central Bank bond issues in 2015 and 2016.

President Maithripala Sirisena, who came into power promising to end corruption, has been under pressure to act against Karunanayake.

Prime Minister Ranil Wickremesinghe said Karunanayake’s resignation had created a new political culture. He said politicians in the past had never resigned when accused of corruption.