PM forced to back down

central bank 2Sri Lanka¡¦s central bank governor Arjuna Mahendran, who holds a Singapore passport, will not be re-appointed this month at the end of his first year pending the outcome of a corruption investigation.

Sri Lanka¡¦s Prime Minister Ranil Wickremesinghe, under whose tenure the island has gone on a foreign borrowing binge, has been accused of backing the former HSBC and Credit Suisse banker despite allegations against him and a relative over a bond deal last year. Wickremesinghe told civil society groups he will decide on the re-appointment of his ally once an investigation is complete.

In May, Wickremesinghe himself has been accused of importing two super luxury vehicles for his personal use with public funds to the tune of 600 million rupees, while he campaigned against the ousted Rajapaksa regime citing their corruption, waste, and cronyism.

Mahendran, a Tamil, has been accused of giving inside information to his son-in-law’s bond dealing firm in Colombo, which is alleged to have profited from a central bank bond auction.

Academics and professionals including economists have rejected Mahendran, who was brought in by Wickremesinghe.

The Anti-Corruption Front threatened to begin street protests if Mahendran were to be re-appointed this month.

In April, 2015, after an inquiry, Mahendran was cleared of having any direct role in the bond deal on February 27, when the government raised more than 10 billion rupees (US$75.2 million) from the sale of a 30-year treasury bond at a yield of 11.73 percent, after initially offering just 1 billion rupees with an indicative price of 9.5 percent. (Business Standard)

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