Three men were arrested for allegedly mining for gems while working for the Maga Neguma programme of road construction in the Laggala area, police said.
A tipper and a backhoe used by them have also been seized.
Laggala police said the men were involved in gem mining in the Hatthotamuna area while pretending to excavate earth for road development work under the Maga Neguma programme. The men were said to be engaged by a contractor to the Road Development Authority (RDA).
Police said they found mounds of earth stacked in two places.
People of the area said that road work done by this contractor was shabby as some culverts have already shown signs of collapse.
A farmer association member said this trio was engaged night and day cutting earth by using the excavator while working for the RDA.
Rohan Liyanage, the contractor claimed that he was responsible for all Maga Neguma work in the area and that he has completed 21 projects in Laggala. He said it was for such work that he was excavating gravel and earth.
Laggala police led by Matale SSP Wijenayake Banda, HQI Nishantha Kumara and others are continuing investigations.