Sri Lanka Prez Sirisena orders inquiry into central bank bond scam

President Maithripala Sirisena on Monday appointed a special commission to probe into the alleged insider trading scam at the country's central bank, a move which could heighten tension between him and the prime minister.

"I will appoint a Special Presidential Commission of Inquiry this week to investigate the Central Bank bond issue and recommend actions," President Sirisena tweeted.

The gazette notice is to be issued this week with the panel being given three months to conclude the report and specify legal action if any.

The three-member Presidential commission of Inquiry will have a judge from the Supreme Court, High Court and an auditor, the statement said.

The said bond was declared on February 27, 2015 by Central Bank of Sri Lanka. Soon accusations of insider trading surfaced related to the bids of Perpetual Treasuries, a firm connected to Arjun Aloysius, the son-in-law of Governor Arjuna Mahendran, the then Governor of the bank.

When Mahendran's tenure ended in June last year, Sirisena denied him an extension and overlooked Prime Minister Ranil Wickremesinghe alternative candidate.

The firm was accused of benefitting from insider information in the two bond issues in February 2015 and March 2016.

It was alleged that auctions were rigged where larger than announced volumes were sold, at low prices. The state has suffered large losses from the 30 year Bonds.

Later on opposition demand, parliament's Committee of Public Enterprises (COPE) issued a report which highlighted wrong doing in the issues.

Parliament is scheduled to debate the report by the COPE on the alleged bond scam this week.