Chairman of the Lankaputhra Development Bank Lasantha Goonewardena was expelled by the bank’s Board and Director Ranil Fernando has been appointed as the Acting Chairman.
According to the Daily FT, Goonewardena had attended the Board meeting held on Monday and had later walked out of it. The Board decided to expel Goonewardena complying with an order issued to the bank’s Board by the Monetary Board.
In June, quoting the Anti-Corruption Front, the Colombo Telegraph reported how former Governor of the Central Bank Arjuna Mahendran had abused his power at the bank by protecting Goonewardena, despite an order by the Central Bank’s Department of Bank Supervision calling for Goonewardena’s ouster.
The Department of Bank Supervision on the 24th of March 2016 in a letter to the Chairman of the LDB ordered that he should no longer continue to serve in the said post. “The reason for this was twofold. The first was that Gunawardena did not possess the professional qualifications required as per Section 3 (5) (IX) of the Banking Act, Direction No. 12, of 2007. The second was that previously despite warnings of danger being given, the Chairman had unheeded them and failed to protect the Bank’s confidentiality and thereby failed to fulfill the duties and responsibilities of the post of the Chairman,” ACF said.
However, Mahendran had recalled the letter sent on 24th of March. “The CBSL Governor has no power to recall a letter sent by the Department of Bank Supervision. Recalling recommendations made following a technical assessment constitutes a dictatorial/ an authoritarian/ an arbitrary act. An inquiry into this matter has revealed that the Department of Bank Supervision has never recalled an original, initial letter sent by them. Therefore, this letter still remains valid. If so, how is the Chairman of the LDB still continuing on in the post?,” ACF questioned in June.
Financial institutions and special banks registered in the country are bound to conduct themselves in accordance with directives and warnings provided by the CBSL’s Department of Bank Supervision. This is for the betterment of the banking process and to protect the standards in place. Section 76 (h) (42) (2) of the Banking Act, No. 30 of 1988, provides the CBSL with the required powers for this.