Daily Times

COLOMBO: President Maithripala Sirisena ordered an investigation Monday into alleged insider trading at Sri Lanka’s central bank that has heightened tensions between him and his prime minister.

Sirisena announced he was setting up a special panel to probe the February 2015 bond sales to a relative of the then governor, a hand-picked appointee of Prime Minister Ranil Wickremesinghe. “I will appoint a Special Presidential Commission of Inquiry this week to investigate the central bank bond issue and recommend actions,” the president said in a brief statement on his website.

The announcement came a day before parliament was due to debate a report by lawmakers who in October recommended the criminal prosecution of former central bank chief Arjuna Mahendran. While parliament has no powers to instigate prosecutions, the presidential commission could set the stage for criminal charges.

When Mahendran’s tenure ended in June last year, Sirisena denied him an extension and overlooked Wickremesinghe’s alternative candidate, causing more friction within their troubled ruling alliance. A Singapore national of Sri Lankan origin, Mahendran was accused of leaking inside information to his son-in-law’s firm, allegedly allowing it to make millions of dollars in profits from central bank bond auctions.

Mahendran has consistently maintained his innocence. He has begun working as a senior advisor to Wickremesinghe since being removed from his top post at the central bank by the president. Sirisena came to power in January 2015 after he defected from the Sri Lanka Freedom Party (SLFP) and secured the support of Wickremesinghe’s United National Party (UNP).

The UNP formed a coalition with a section of Sirisena loyalists within the SLFP as August 2015 parliamentary elections did not give an absolute majority to any single party. The two top men have had several clashes over economic policy, with Sirisena publicly accusing the government in October of using the police and anti-graft institutions to further the UNP’s political agenda. There was no immediate reaction from the government to Sirisena’s announcement.