Raj Rajaratnam, the billionaire hedge fund manager arrested Friday and charged with insider trading, is apparently connected to a case in his native Sri Lanka that involves money transfers that should have been reported to the local government.
Rajaratnam, with the help of a Sri Lankan Parliament member, transferred $1 million from Galleon (his hedge fund) into an account of Nexia Corporate Consultants in late 2006, according to a Sept. 26, 2009, article in the Daily Mirror of Sri Lanka. Rajaratnam then followed with his own $2 million transfer in early 2007, according to the article. The money was to be used to buy shares of Union Bank of Colombo, the article said.
The member of Parliament, Ravi Karunanayake, was indicted and charged with violating the Sri Lankan foreign exchange control law through his helping Rajaratnam, the article said. Rajaratnam was not charged. A trial was set for early next year after being postponed in September.
(According to published reports, Rajaratnam is a big investor in Sri Lankan companies, owning about $500 million in shares of a number of companies. He is said to be a large investor in John Keels Holdings and Hatton National Bank).
Separately, The Wall Street Journal reported today that Rajaratnam surfaced in an earlier case involving fund raising efforts for the opposition group Tamil Tigers in Sri Lanka. Click here to see the WSJ article.