July 5, 2018 / 12:55 PM / 3 months ago

Sri Lankan Perpetual Treasuries' suspension extended amid probe

COLOMBO, July 5 (Reuters) - Sri Lanka’s central bank on Thursday extended the suspension of business operations of Perpetual Treasuries Ltd, a company at the centre of an investigation into possible irregularities at a government bond sale in 2015.

The primary dealer, a subsidiary of a company owned by the son-in-law of Sri Lanka’s former central bank chief Arjuna Mahendran, bought more than half of the controversial bond issue on Feb. 27, 2015, prompting charges of a conflict of interest.

Two executives from Perpetual are under arrest over the alleged scam and police have said Interpol has issued a red notice against Mahendran who is wanted in connection with the investigation.

Mahendran and his son-in-law, Arjun Aloysius, have denied wrongdoing, as have officials at Perpetual Treasuries.

The auction of 30-year bonds at the centre of the controversy was originally planned at a modest 1 billion rupees ($7 million) but was then scaled up 10 times to meet government borrowing needs. (Reporting by Shihar Aneez; Editing by Nick Macfie)

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