The former head of Sri Lanka's stock market watchdog was today arrested for huge securities fraud he allegedly committed by illegally transferring five million rupees to a youth organisation headed by one of the three sons of ex-president Mahinda Rajapaksa.
Nalaka Godahewa, the chairman of Securities and Exchange Commission (SEC) during the Rajapaksa regime, was arrested for criminal breach of trust and misappropriation of state funds, said police spokesman Ruwan Gunasekera.
Godahewa has been remanded in custody for a week pending investigations, Gunasekera added.
Sri Lankan police's financial crimes investigation division had summoned Godahewa in connection with the alleged fraud. He was arrested after he arrived at the SEC office here to record his statement.
It has been alleged that Godahewa was involved in illegal transfer of five million rupees from the SEC to Tharunyata Hetak, a youth organisation headed by Rajapaksa's son Namal, about two years ago.
The police on Saturday arrested former deputy director of the SEC, Dhammika Perera, and Ronnie Ibrahim, director of the Carlton Sports Club, also connected to the Rajapaksa family, which conducted international rugby tournaments.
Local media have reported that the money, said to be allocated for an awareness programme on investing in stock market, was transferred to a third party bank account in the US as payment for a Hip Hop dance group that performed at the Carlton Super Sevens Rugby Tournament last year.
The FCID is also investigating several other transactions under the Rajapaksa regime, police sources said.
There have been numerous allegations of corruption against Rajapaksa. Soon after his successor, Maithripala Sirisena, took over presidency in January, a complaint was filed against Rajapaksa and his family members over graft claims.
Sirisena has pledged to investigate allegations against Rajapaksa and family and has also launched a several probes.
Earlier this year, the Criminal Investigation Department of Sri Lanka police had summoned several officials attached to the SEC to record their statements.
Two SEC heads have quit in succession during Rajapaksa's rule, alleging political pressure to supress investigations into insider trading and market manipulation.
