Arjuna Mahendran
Lakshman Arjuna Mahendran | |
|---|---|
| Born | Sri Lanka |
| Occupation(s) | Economist, banker |
| Known for | Governor of the Central Bank of Sri Lanka (2015–2016) |
Lakshman Arjuna Mahendran is an economist and banker originally from Sri Lanka who later acquired Singaporean citizenship. He held the position of Governor at the Central Bank of Sri Lanka (CBSL) between January 2015 and June 2016, following his appointment by President Maithripala Sirisena. Before this role, Mahendran was Managing Director at HSBC Private Bank, served as Chief Investment Officer at Emirates NBD, and acted as chairman and Director-General of Sri Lanka’s Board of Investment. He currently lives in Singapore, which has declined extradition requests made by Sri Lanka through Interpol.
Education
Mahendran completed his schooling at Royal College, Colombo in Sri Lanka and pursued higher education at Balliol College, Oxford, where he obtained a Master of Arts (MA) degree in Philosophy, Politics and Economics.
Banking career
Starting his professional journey as a senior economist at the Central Bank of Sri Lanka, Mahendran later moved into investment banking based in Singapore. At HSBC Private Bank, he was Managing Director and Chief Investment Strategist for Asia, overseeing research and market insights across the Asia Pacific region. Subsequently, he took on the role of Chief Investment Officer for Wealth Management at Emirates NBD. Between 2001 and 2004, he led the Board of Investment of Sri Lanka (BOI) as chairman, significantly contributing to its foundation and strategic direction. His leadership earned him recognition as runner-up for Euromoney Strategic Direct Investor’s "CEO Lifetime Achievement Award" in 2003. From 2006 onward, he worked with Credit Suisse Group AG as Chief Economist & Strategist – Asia Pacific and Head of Research for the region.
Central Bank Governor
Upon his appointment as Governor of the Central Bank of Sri Lanka in 2015, Mahendran openly criticized the nation's tax framework for its complexity and low revenue generation—only about 10% of GDP. He pushed for simplification of tax laws alongside the introduction of digital payment systems to enhance tax collection efficiency. Additionally, he condemned inefficient state-owned enterprises that imposed financial strain on state banks while allowing private banks to benefit from lending spreads. He proposed reforms aimed at improving public enterprise performance to foster economic growth. During his term, the International Monetary Fund approved a US$1.5 billion loan program in March 2016 to assist Sri Lanka’s economic restructuring efforts.
Singapore questions Sri Lanka’s accusations against Mahendran
In March 2019, President Sirisena alleged that Singapore had ignored his request to prosecute Mahendran. Singapore authorities replied that no criminal charges could be filed since evidence provided by Sri Lanka did not indicate any offense under Singaporean law. In February 2015, the CBSL announced a government bond auction worth Rs. 1 billion with a 12.5% coupon over 30 years; some reports mistakenly mentioned a 9.5% rate. Mahendran expressed concerns about the low auction size despite government borrowing requirements exceeding Rs. 13 billion on that day and Rs. 172 billion in March 2015. The auction was oversubscribed with bids totaling Rs. 20 billion, primarily between 9.5% and 10.5%, though some bidders—including Perpetual Treasuries Limited—requested rates ranging from 11% to 12%. On 27 February 2015, a tender board accepted Rs. 10 billion in bids at rates between 9.5% and 12.5%. Issuing bonds ten times above the advertised amount at elevated interest rates allegedly led to an extra cost of Rs. 1.6 billion (approximately $10.6 million) to the government; however, parliamentary leaders disputed this figure and it became subject to legal challenges.
Perpetual Treasuries, owned by Arjun Aloysius—Mahendran’s son-in-law—was a major participant in this bond issue, securing Rs. 5 billion worth of bonds at the highest coupon rate of 12.5%. The company also included on its holding company’s board the sister of former CBSL Governor Ajith Nivard Cabraal.
This bond issuance sparked significant political controversy amid President Sirisena’s administration’s emphasis on good governance reforms. A legal committee comprising three members found no direct evidence implicating Mahendran personally, and the Supreme Court declined to initiate a separate investigation due to absence of legal violations. Mahendran denied any misconduct, welcoming investigations to establish his innocence while asserting he had been targeted because of his transparency.
The CBSL Governor who succeeded Mahendran refused to release a forensic audit conducted by KPMG/BDO that cleared Mahendran of wrongdoing; nevertheless, Parliament’s Speaker mandated public discussion of the report. Around this period, CBSL’s board underwent reconstitution with new appointments.
Former Governor Cabraal accused higher authorities of involvement in covering up aspects of the scandal; he himself faced scrutiny over alleged misconduct during his tenure.
On 28 October 2016, the Committee on Public Enterprises (COPE) held Mahendran accountable for the bond controversy and recommended initiating legal proceedings against him. In response, President Sirisena established a Special Presidential Commission of Inquiry led by Justice K.T. Chitrasiri; Mahendran defended his actions by stating they did not harm government interests.
The commission submitted its findings on 30 December 2017 and made them publicly available through the Presidential Secretariat. It concluded that Mahendran was directly responsible for causing losses amounting to LKR 11,145 million to public institutions. Prime Minister Ranil Wickremesinghe clarified that no actual financial loss would occur since Rs. 9.2 billion would be recovered from Perpetual Treasuries Ltd., whose assets had been frozen by CBSL.
A report by an independent UN High Commissioner for Human Rights observed that such commissions often impede effective institutional responses within Sri Lanka.
The extended duration of this inquiry mirrored escalating tensions between President Sirisena and Prime Minister Wickremesinghe amid coalition disputes. A parliamentary no-confidence motion against the Prime Minister failed; issues included alleged interference with CBSL operations. Subsequently, Parliament was prorogued by presidential decree.
During this period, President Sirisena faced allegations from Australian authorities concerning bribery solicitations involving contractors; additionally, his chief of staff was publicly caught accepting cash bribes—further complicating the political landscape at that time.
Quashing of Arrest Warrant
On 15 March 2018, an arrest warrant was issued by the Colombo Fort Magistrate's Court against Arjuna Mahendra, accusing him of criminal breach of trust for allegedly disclosing confidential data from the Central Bank of Sri Lanka to Perpetual Treasuries Limited. This firm is a primary dealer owned by his son-in-law, Arjun Aloysius, who had been detained earlier on 4 February 2018 along with CEO Kasun Palisena. Mahendra did not present himself before the court, and a similar request had previously been dismissed by the Supreme Court. It has been reported that Mahendran contested the warrant through Interpol channels. On 5 June 2018, Prime Minister Wickremesinghe informed Parliament that Singapore declined to detain Mahendran. Defense counsel contended that the Commission of Inquiry (COI) report should be excluded as evidence since it does not comply with established legal standards for admissibility.
Subsequently, on 28 June 2019, the Attorney General initiated proceedings at the Permanent High Court Trial at Bar against Mahendran for his purported involvement in the Central Bank Treasury Bond Scam, which resulted in significant financial losses to public resources.
On 16 June 2020, the Attorney General claimed that Interpol had reported Mahendran had adopted the name Harjan Alexander; however, later reports questioned this assertion. Mahendran refuted any name change allegations and accused the Attorney General of exaggerating the matter under directives from the presidency. The same Attorney General also ordered the arrest of a Swiss embassy official stationed in Sri Lanka, an action that was met with strong protests from Switzerland.
Throughout three verdicts delivered between 2021 and 2022, Sri Lanka’s Special High Court acquitted Mahendran of all charges connected to the bond scandal.