The alleged LTTE links of Raj Rajaratnam, the tycoon arrested in New York for insider trading, were being investigated, the Sri Lankan government announced on Monday.

“Investigations are yet continuing in relation to the funding allegedly provided by Rajaratnam to the Tamil Rehabilitation Organisaton (TRO),” Sri Lanka’s Central Bank said in a carefully worded statement. The TRO is allegedly an LTTE front.

“Accordingly, any reports that suggest that such investigations are concluded or that Rajaratnam has been cleared of possible involvement are incorrect and misleading,”it added. ’

Rajaratnam is arguably the richest Sri Lankan in the world and at one time its largest single investor. ``He still owns 7 per cent to 10 per cent in at least 10 top Lankan companies,’’ a broker said.

Not surprisingly his arrest sparked off near panic in the Colombo Stock Exchange as the day began with panic selling.

A Tamil, educated at Wharton Business School in the US, Rajaratnam has a house in the most fashionable part of Colombo. He studied in schools in Sri Lanka, India and the UK, before moving to the US. He is married to a Sikh from the Philippines and has three kids.