Sri Lanka’s central bank’s former governor Arjuna Mahendran was today named as one of the key suspects in a treasury bond scam that caused a loss of USD 11 million to public institutions and triggered a rift within the ruling coalition.

Perpetual Treasuries Director and Mahendran’s son-in-law Arjun Aloysius and Perpetual Treasuries CEO Kasun Palisena were also named as suspects of the Criminal Investigation Division (CID) inquiry into the issuance of bonds.

The Colombo Fort Magistrate has ordered Mahendran, who is currently in Singapore, to respond to charges under the Public Properties Act.

He and his bond-dealer son-in-law Aloysius are accused of manipulating of bond auctions in 2015 and 2016, causing losses of over USD 11 million to the state.

Mahendran, handpicked by Prime Minister Ranil Wickremesinghe, was sacked by President Maithripala Sirisena after the alleged scam.

The clash is the latest in a series of disputes within the ruling coalition, formed after Sirisena split his own Sri Lanka Freedom Party (SLFP) and secured support from the rival United National Party.

The allies have since clashed over economic policy and on stalled investigations into corruption under the regime of former president Mahinda Rajapaksa, who is also from the SLFP.

A presidential probe ordered by Sirisena found Mahendran to be the provider of information to his son-in-law’s firm.

The scandal rocked the current unity government between Wickremesinghe’s United National Party and Sirisena’s Sri Lanka Freedom Party.

Sirisena used the findings to attack the UNP in the run upto the February 10 local council election. (PTI)