COLOMBO, Sri Lanka — Shiranthi Rajapaksa, the wife of former President Mahinda Rajapaksa, was ordered held in remand custody until Oct. 13 on Wednesday after anti-corruption investigators accused her of involvement in the alleged misuse of 10 million rupees in state-bank funds intended to buy a CT scanner for Sri Lanka’s main children’s hospital.
The case marks an extraordinary turn for a family that dominated Sri Lankan politics for nearly two decades: Mrs. Rajapaksa is the first former first lady in the country’s history to be taken into custody in a corruption investigation.
Officers of the Commission to Investigate Allegations of Bribery or Corruption arrested Mrs. Rajapaksa at about 9:56 a.m. at a residence on Poorwarama Road in Kirulapone, where the former president is currently staying, after recording a statement from her there for nearly two hours, the commission said. She was taken to the commission's offices by about 10:30 a.m.
Pradeep Kariyawasam, a former chairman of the National Savings Bank and the husband of former Chief Justice Shirani Bandaranayake, was arrested in the same investigation at about 9:50 a.m. at his home on Lake Drive in Colombo 8.
Both were produced in the afternoon before Colombo Chief Magistrate Asanga S. Bodaragama, according to a Jaffna Monitor reporter who attended the proceedings.
The magistrate ordered Mrs. Rajapaksa remanded until Oct. 13 but directed prison officials to admit her to a private hospital in Colombo for medical treatment. She appeared in court with a dressing over one eye.
Mr. Kariyawasam, whom investigators identified as the first suspect in the case, was released on two surety bonds of 10 million rupees each and barred from leaving the country.
The case centers on money transferred in 2010 to Siriliya Saviya, a charitable organization associated with Mrs. Rajapaksa. Investigators told the court that the National Savings Bank provided 10 million rupees after Mrs. Rajapaksa made a written request for help buying a CT scanner for the Lady Ridgeway Hospital for Children in Colombo. The commission says the scanner was never provided to the hospital.
Investigators alleged that the transfer was made outside the bank's normal procedures and that the money was later misappropriated.
Assistant Legal Director Yashmatha Lokunarangoda, appearing for the commission, told the court that the investigation began after the Front Against Corruption filed a complaint in 2015.
According to the commission, former members of the bank's board have told investigators that the transfer to the Siriliya Saviya account did not follow ordinary procedures. The commission alleged that Mr. Kariyawasam committed an offense of corruption in approving or facilitating the transaction and that Mrs. Rajapaksa aided and abetted him.
The commission made a further allegation against Mrs. Rajapaksa: that the money was used for her personal purposes, which would bring the case within the Public Property Act.
Investigators also told the court that their inquiry had expanded beyond the original 10 million rupees. They said the Siriliya Saviya account had received an additional 880,000 rupees from the Ministry of Foreign Affairs and 22 million rupees from a private telecommunications company, and that those transactions were being examined under legislation dealing with the proceeds of crime.
The commission further alleged that money obtained from the state bank had been used to buy a house in the Torrington area of Colombo. It did not set out in court the full chain of transactions linking the bank funds to the property.
Citing a certificate filed under Section 8(1) of the Public Property Act, the commission asked the magistrate to keep Mrs. Rajapaksa in custody while the investigation continued.
Nalinda Indatissa, President's Counsel for Mr. Kariyawasam, told the court that the payment was a legitimate contribution from money the bank had set aside for corporate social responsibility programs.
Siriliya Saviya, he said, had operated as a recognized charity since 2006 and had been raising money for the scanner. The organization needed about 160 million rupees for the machine but had collected only about 42 million rupees by 2014, he said. The project stalled, he told the court, after the account was frozen following the change of government.
"There was no corruption," Mr. Indatissa said. He argued that the money remained in the account and could still be recovered by the bank. He also suggested the case had taken on a political dimension. "Unfortunately, this situation has arisen simply because the matter is connected to a member of the Rajapaksa family," he said.
Mr. Indatissa sought bail for his client on medical grounds, telling the court that Mr. Kariyawasam was 73, had recently undergone eye surgery and had heart, neurological and spinal conditions.
Mrs. Rajapaksa has denied wrongdoing and has said the money was not misappropriated.
Her arrest follows months of contact with investigators. A separate inquiry into the Siriliya Saviya account by the police Financial Crimes Investigation Division summoned her in January. She asked for a two-week extension and gave a statement of more than four hours on Feb. 3 after being summoned again.
The division reopened the inquiry in September and issued a notice for her to appear on Sept. 24. Officers served the notice at Bandaranaike International Airport as she left for Singapore on Sept. 16, where she was admitted to Mount Elizabeth Hospital. Her lawyer wrote to the division before the Sept. 24 date to say she was receiving treatment abroad and would appear on her return.
She came back to Sri Lanka on the night of Oct. 5. The same day, her lawyers filed an anticipatory bail application in the Maligakanda Magistrate's Court seeking to prevent her arrest in the police inquiry. That application is due to be heard on Oct. 12. The division had also directed her to appear before it on Oct. 13.
Former Chief Justice Bandaranayake was in the courtroom during Wednesday's proceedings, the Jaffna Monitor reporter said.
The case is the latest in a series of corruption investigations involving members of the Rajapaksa family since President Anura Kumara Dissanayake's government took office. The couple's eldest son, Namal Rajapaksa, a member of Parliament and national organizer of the Sri Lanka Podujana Peramuna, has been in custody since the commission arrested him on Sept. 4 over alleged bribes linked to SriLankan Airlines' purchase of Airbus aircraft. On Sept. 29 a magistrate ordered him held until Oct. 13 in that case, and he has also been named a suspect in a separate case over the Krrish property deal. Their second son, Yoshitha Rajapaksa, was arrested by the commission in June. The family and the party have described the cases as politically motivated.
None of the allegations against Mrs. Rajapaksa or Mr. Kariyawasam has been proven in court, and neither has been charged. The case will be called again on Oct. 13.
