Lanka FM quits over bond scam probe

Sri Lanka's foreign minister resigned yesterday after being linked to a controversial financial trader under investigation for allegedly causing millions of dollars of losses to the island's coffers.

Ravi Karunanayake, 54, stepped down from the cabinet amid questioning over his connection to an insider trading scandal at Sri Lanka's central bank after the new government was elected in January 2015.

"I am not guilty of any of the allegations, but I am resigning my portfolio to ensure that opponents are not able to destabilise our unity government," Karunanayake said.

Karunanayake has testified before an investigation ordered by President Maithripala Sirisena into then-central bank governor Arjuna Mahendran, who was sacked last April.

Mahendran was accused of misconduct surrounding alleged favours for his son-in-law, Arjun Aloysius, a bond dealer.

At the inquiry proceedings last week, Karunanayake, who is also the deputy leader of the ruling United National Partner (UNP), admitted his family had dealings with the controversial bond dealer, but insisted he was not involved in bond dealings.

Karunanayake, who was finance minister when the scandal broke, was given the foreign ministry in a cabinet reshuffle in May.