Sri Lanka’s Biggest Financial Scandal Back in Spotlight

COLOMBO (News 1st); Prime Minister Dr. Harini Amarasuriya briefed Parliament on the ongoing legal proceedings related to the Central Bank bond scam of 2015 and 2016, one of Sri Lanka’s most controversial financial scandals.

Acting on the recommendations of the Presidential Commission of Inquiry and subsequent investigations by the Criminal Investigation Department, the Attorney General has filed indictments against Perpetual Treasuries Limited and several prominent individuals, including:-

Sandesh Ravindra Karunanayake – Former Minister of Finance
- Lakshman Arjuna Mahendran – Former Governor, Central Bank of Sri Lanka
-Paththinige Samarasiri – Former Deputy Governor, Central Bank of Sri Lanka
-Arjun Joseph Aloysius
-Palisena Appuhamilage Don Kasun Oshadi Palisena
-Jeffrey Joseph Aloysius
-Chittharanjan Hulugalla
-Muthu Raja Surendran
-Ajahn Gardiye Punchihewa
-Badugoda Heva Indika Saman Kumara – Chief Dealer, Employees’ Provident Fund
-Sangarapillai Padmanapan – Senior Manager, Public Debt Department

While the Central Bank has yet to determine the full economic impact of the scam, legal action seeks to recover Rs. 78.16 million from Central Bank funds and Rs. 6.98 billion from the Employees’ Provident Fund. These recovery cases are currently before the Colombo District Court.

Indictments have also been filed before the Three-Judge High Court for bond scams dated February 27, 2015, March 29, 2016, and March 31, 2016.

However, proceedings have faced delays due to appeals and writ applications. The Court of Appeal previously dismissed attempts to overturn High Court orders releasing accused under the Public Property Act, but the Supreme Court has now granted leave to proceed in cases SCSPL/LA/135/22 and SCAPP/161/23, paving the way for trials to resume.

Further, writ applications filed by Sandesh Ravindra Karunanayake challenging his inclusion as an accused were initially upheld by the Court of Appeal. The Supreme Court has since set aside those orders, allowing the High Court to continue hearings.

In addition to criminal proceedings, several institutions have filed civil recovery suits against Perpetual Treasuries Limited, including:

Sri Lanka Insurance Corporation
University Grants Commission
Mahapola Higher Education Scholarship Trust Fund
National Savings Bank
Employees’ Trust Fund Board

The Central Bank bond scam refers to one of the most significant financial scandals in Sri Lanka’s history, involving irregularities in the issuance of government bonds (treasury bonds) by the Central Bank in 2015 and 2016.

What Happened?

The scandal centered around Perpetual Treasuries Limited (PTL), a primary dealer in government securities.

Allegations arose that PTL received inside information and undue advantage during bond auctions conducted by the Central Bank.

These auctions were linked to unusually large bond issuances, which raised suspicions of conflict of interest and corruption.

Key Figures Involved:

Arjuna Mahendran – Former Governor of the Central Bank (appointed in 2015).

Arjun Aloysius – Owner of Perpetual Treasuries Limited.

Kasun Palisena – CEO of PTL.

Several senior officials of the Central Bank and public institutions.

Sandesh Ravindra Karunanayake – Former Minister of Finance, named in later investigations.

The scam allegedly caused massive financial losses to the government and public funds.