Sri Lanka bond commission asks Rs.688 mn be clawed back from Mahendran

A Presidential commission of inquiry has recommended that 688 million rupees be clawed back from ex-Central Bank Governor Arjuna Mahendran after he interfered in an auction in February 2015, which benefited his son-in-law’s company.

The commission said Mahendran direct that bids to the value of 10 billion be accepted for the “improper, wrongful and mala fide” so that Perpetual Treasuries, the primary dealer connected to his son-in-law Arjuna Aloysius was able to get bonds at high yields (low prices).

The commission said Mahendran “acted in collusion” with Perpetual Treasuries Ltd, connected to his son-in-law Arjun Aloysius.

The commission asked the bribery commission to consider whether his actions amounted to corruption.

Perpetual Treasuries had acted on inside information and action should be taken to fine the firm for twice the value and recover the funds, the commission said.

The commission recommended the Attorney General to take action against Aloysius and Perpetual Treasuries CEO Kasun Palisena under Registered Stock and Securities Ordinance.

Perpetual Treasuries had also benefited from inside information in a bond auction on March 2016 and a forensic audit should be carried out to find the loss.