Sri Lanka's C. bank governor cleared over insider trading charges

Sri Lanka's central bank governor was on Sunday cleared over allegations of insider trading.

Mahendran, a Sri Lankan-born Singapore national, was appointed to the post after the new Sri Lankan government took office in January.

The allegations against Mahendran saw the opposition demanding his resignation and that of Prime Minister Ranil Wickremesinghe.

However, the Prime Minister's Office said in a statement on Sunday that a committee appointed by Wickremesinghe to inquire into alleged insider dealings in a 30-year treasury bond issuance found that Mahendran had no direct role in deciding to accept bids over and above the 1 billion Sri Lankan rupees (7.52 million U.S. dollars) stipulated in the bond tender and accept up to 10 billion Sri Lankan rupees.

"Even though the minutes of the Monetary Board number 4/2015 specifies to issue a 30-year treasury bond, the amount of the bond has not been decided by the Monetary Board (of which the governor is the chairman)," the committee said.

However, the committee noted serious lapses on the part of the Bank of Ceylon through which Perpetual Treasuries, a local company, had routed an unusually large amount of bids for the 30-year bond.

The committee observed that the bidding pattern of Perpetual Treasuries was unusual and warranted a further investigation.

The committee also made far reaching recommendations to ensure transparency and better governance at the central bank.