Hedging: Central Bank tells SCB to show cause

The Central Bank (CB) has sent a ‘show cause’ letter to the Standard Chartered Bank’s Chief Executive Officer in Sri Lanka on the oil hedging issue and allegations relating to corruption, banking sources said.

The letter to CEO Clive Haswell was sent by CB Governor Ajith Nivard Cabraal a week ago. No details of the letter were available but it was believed to be related to allegations that the SCB had funded Ceylon Petroleum Corporation (CPC) and other bank officials on foreign trips and other matters in connection with the hedging deals.

When asked about the letter, an SCB spokesperson said they had no comment to make on this matter (letter). The CB has the power to remove CEOs and directors of banks if they have violated provisions of the Banking Act.

Mr Cabraal is in Washington and thus was unavailable for comment. The hedging issue in which the CPC owes close to $800 million in payments to five banks is now before a ministerial committee which is trying to find a compromise to settle the matter. However, sources close to the committee said any ruling by the committee would take into consideration all legal aspects.

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