On Thursday, a law suit was filed against Sri Lanka-born U.S. business tycoon Raja Rajaratnam, arrested last week on charges of vast insider trading by victims of LTTE violence on the charge that he and his father knowingly helped the terrorist group.

On Friday, the Sri Lankan Defence Ministry said LTTE’s arms procurer and Prabakaran’s successor Kumar Pathmanadan a.k.a. KP had revealed during interrogation that Mr. Rajaratnam had been a leading contributor of money to the LTTE.

Mr. Rajaratnam (52) was among six persons arrested on October 17 on charges of securities fraud and conspiracy to commit securities fraud. Sri Lankan Foreign Minister Rohitha Bogollagama told Parliament on Thursday that the arrest was a “significant development in the area of the LTTE’s financing network”.

Reports from the U.S. said Mr. Rajaratnam was being sued for unspecified amounts in damages for the acts of violence of the LTTE. Jim Walden, his lawyer, was quoted as saying that the charges brought by the Sri Lankan victims of LTTE violence were baseless.

Sri Lankan Defence Ministry quoted KP as telling his interrogators that contributions of Mr. Rajaratnam to LTTE were “intricately connected with the opposition politicians outside the LTTE but implementing a parallel political agenda with the terrorist group”. KP, who was arrested in a Kula Lumpur Hotel, is now in government custody.

Meanwhile, the Central Bank of Sri Lanka (CBSL) Governor told Daily Mirror that Mr. Rajaratnam’s local investment portfolio would remain unchanged and the CBSL would not seize his assets in Sri Lanka until he was proven guilty of financing terrorism. CBSL Governor Ajith N. Cabraal told the daily: “Currently we are engaged in our own investigations on the investment portfolio of Mr. Rajaratnam and we are also inquiring into his involvement with the Tamil Rehabilitation Organisation (TRO).” He noted that Mr. Rajaratnam’s total asset portfolio in Sri Lanka was valued at approximately Rs.12 billion.

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