February 3, 2020 / 12:27 PM / in 19 days

UPDATE 1-Sri Lanka to probe graft allegations over Airbus deal

(Adds arrest warrant details)

COLOMBO, Feb 3 (Reuters) - Sri Lanka has ordered a probe into allegations of bribery by European planemaker Airbus over the sale of aircraft to state-run carrier SriLankan Airlines, after Airbus agreed to settle a corruption probe with regulators.

The Indian Ocean nation was among the countries whose officials were mentioned as having allegedly received bribes in Airbus's $4-billion settlement with European and U.S. authorities.

Sri Lanka will conduct "a comprehensive investigation into reports of allegations over financial irregularities", the office of President Gotabaya Rajapaksa said in a statement on Sunday.

Detailed findings from Britain's Serious Fraud Office (SFO) said Airbus had hired the wife of a SriLankan Airlines executive as its intermediary and misled UK export credit agency UKEF over her name and gender, while paying $2 million to her company.

On Monday, a senior official at SriLankan Airlines said a Colombo court had issued orders to arrest the former CEO of the airline, Kapila Chandrasena, and his wife Priyanka Niyomali Wijenayake as suspects of money laundering.

Reuters was unable to reach Chandrasena and his wife as their mobile phones were switched off. A court source confirmed the issue of the arrest warrants.

In a statement on Sunday, SriLankan Airlines said its chairman and board had directed the management to cooperate fully with any government agency regarding any investigation or prosecution.

The board has also told management to "preserve and study all available internal documentation with a view to take all possible corrective future action," it added.

The alleged corruption in dealings between Airbus and SriLankan Airlines took place between July 2011 and June 2015, the SFO added.

Saturday's announcement of the Airbus settlement followed a nearly four-year investigation spanning sales to more than a dozen overseas markets.

Ghana said late Sunday it was also opening an investigation into alleged bribery over an Airbus plane deal.

Reporting by Waruna Karunatilake; Writing by Euan Rocha; Editing by Clarence Fernandez and Mark Potter

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