Raj Rajaratnam, a Sri Lankan-born hedge fund billionaire accused of funding the Tamil Tiger rebels has been given a clean cit by the Central Bank of Sri Lanka.

The investigations did not find any evidence of wrongdoing by Rajaratnam, who said he had given the money to a charity, the AFP news agency quoted D K Wijesuriya, the central bank's investigations unit chief, as saying on Monday.

The US authorities had last week charged Rajaratnam with fraud after saying they had uncovered the biggest ever case of insider-trading by a hedge fund.

Rajaratnam was among several wealthy Sri Lankans living abroad whose donations to the Tamils Rehabilitation Organisation (TRO), a US-based charity, are suspected of making their way to the Tamil Tigers.

'In good faith'

"At the time Mr Rajaratnam made the donations, the TRO was not banned by the Sri Lankan government, nor the US. It was a donation made in good faith," Wijesuriya said.

The TRO was outlawed in Sri Lanka in November 2007 and its assets were frozen a year later.

The central bank is the leading investigating authority in Sri Lanka for all financial transactions that are suspected of breaching money-laundering laws.

The Liberation Tigers of Tamil Eelam (LTTE) is considered a "terrorist" organisation by Sri Lanka, the United States and the European Union.

After decades of civil war, the government declared victory over the LTTE in May.

According to Forbes magazine, Rajaratnam is the world's 559th richest person with a net worth of $1.3bn.

Sri Lanka's justice ministry thanked him last month for donating millions of dollars to rehabilitate child soldiers conscripted by the Tamil Tigers.