CPC bought derivatives in a failed bid to keep down import costs of oil and in a mis-guided attempt to 'save' foreign exchange.

The utility did not have a price formula to hedge its import costs, and politically directed pricing exposed it to frequent losses.

CPC chairman Ashantha De Mel was forced to resign over the deals following a court case which was subsequently terminated.

The Sunday Times said the former chairman may also be questioned over the deal.

The exotic option-based derivative position gave limited upside protection, but had greater downside risk, especially if prices fell steeply.

The deals which are due to run out by the middle of this year have been estimated to cost CPC between 600 to 800 million US dollars.

Standard Chartered Bank, Citi, Deutsche Bank, state-run People's Bank and private listed Commercial Bank sold derivatives. CPC has halted payments on the deals and at least two banks have gone for arbitration.

The Sunday Times said a fresh case had been filed in Sri Lanka's Supreme Court by Nihal Sri Ameresekere, a public interest activist, alleging that Standard Chartered Bank took public officials on foreign trips to strike the deals.

The case filed under fundamental rights provisions of Sri Lanka's constitutions asked court to cancel the transactions and asked for an order asking Sri Lanka's central bank, the bribery commission and attorney general to probe the deal, the newspaper said.