Of scams and frauds …
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It was apparently a clever and deceptive email address that resulted in some of the money in the US$2.5 million Treasury heist being siphoned off to an unknown entity, police investigations have revealed.It was disclosed in court that while the official email address was ‘exportfinance.gov.au’, it had been replaced with ‘exportfinanceav.com’ catching an unsuspecting Finance Ministry official (or was it deliberate?) napping in making the transfer.
A similar case was reported in February 2016 and the money ($20 million) would have gone to the wrong hands if not for an alert official at the local Pan Asia Bank, who, suspicious of the email address, informed his management who in turn tipped off the Central Bank.
The $20 million was part of $1 billion belonging to the Bangladesh Bank and the New York Fed which had been hacked. The hackers then transferred part of the funds to the Philippines in four transfers and it was the fifth transfer to an NGO in Sri Lanka that was stalled by the alert Pan Asia Bank official. This resulted in the recovery of the entire $1 billion, earning praise for the local bank.
Currently, all of a sudden, the under-pressure government has been pummelled by three scams with many questions on governance and transparency emerging in a period of just four weeks. It started off with the NDB Bank confession of an Rs.13.2 billion internal fraud (substantially rising from an earlier estimate of Rs.380 million) in early April. Even though there was no government involvement, the fraud – which has taken place over a period of several months – exposed weaknesses in governance issues, particularly since the Central Bank has regular audits of banks and it was unbelievable how these fraudulent transactions had escaped the attention of the bank and Central Bank auditors.
Then came the mid-April disclosure of a ‘loss’ of $2.5 million from Treasury funds due to a ‘wrong’ transfer intended for an Australian agency. The transfers to a bogus third party had taken place between December 2025 and January 2026.
If that was not enough pressure on the government, Cabinet spokesman Dr. Nalinda Jayatissa this week disclosed (almost casually, as if it didn’t matter) that a sum of $625,000 sent by Sri Lanka Post to US Post had fallen into the wrong hands. Three transactions and many questions emerging with more than Rs.14 billion vanishing into thin air.
In the NDB case, pressure is mounting on the Board of Directors and its CEO to resign, one did – non-Executive Director Shanil Fernando – on April 27. At the same time Deloitte India has been appointed to undertake a forensic audit under the watchful eyes of the Central Bank. While the NDB Bank has assured customers that their money is safe, it begs the question of some part of the profits being lost. Isn’t that generated from deposits and the money of depositors?
Phew! I wouldn’t like to be in the shoes of any key policymaker or influential ruling party politician with so many unanswered questions on the two government-related transactions. Walking to the kitchen to fetch a cup of tea (notice the difference from my usual mug of tea as I had switched gears this week to enjoy tea in a cup!), I was enthralled by the conversation by the trio under the margosa tree.
“Aanduwa mae davas wala godak gatalu walata muna denava, mokada virudda pakshaya hadisiyema avadiwela pahara denawa haema paththenma (The government is facing many problems as the opposition has suddenly woken up and is attacking on all fronts),” said Kussi Amma Sera. “Godak gatalu thiyenawa. Lokuma prashney wela thiyenney niladharin weda nokarana nisa saha mae wagey wancha nirmanaya wela thiyena eka (There are many issues but the problem is partly because officials are not working and creating issues like the two scams),” noted Mabel Rasthiyadu. “Hithanawada aanduwa karanna JVP-ekata ath-dakeem madi kiyala. Eka nisada mae prashna (Could it be the inexperience of the JVP in running a government)?” asked Serapina.
As I walked back to the computer, the home phone rang. It was Ruwanputha, my young economist friend. “I say…..I was surprised by the attitude of Cabinet spokesman Dr. Nalinda Jayatissa who was seemingly casual when highlighting the loss of $625,000 by Sri Lanka Post. He said an internal probe is underway but doesn’t it call for a wider investigation? Sometimes you wonder whether they lack experience in governing,” he said. “You may be right. Even the Treasury loss of funds (could it be recovered, is the question) was announced rather late in the day and only because of a whistleblower,” I said. “In the NDB case too it was a whistleblower sounding the alarm that triggered alarm bells in the bank,” he said.
To put it into some perspective – the three scams amounting to more than Rs. 14 billion (the NDB case is on the lack of Central Bank oversight) is far greater than the Central Bank Bond scam of over Rs. 10 billion in February 2015. Under enormous pressure then, heads rolled – a key minister, Ravi Karunanayake, resigned while Central Bank Governor Arjuna Mahendran decamped to Singapore and remains there – far from the reach of Sri Lankan law authorities – as he is a citizen of Singapore.
This week, Treasury Secretary Dr. Harshana Suriyapperuma was asked by Committee on Public Finance Chairperson Dr. Harsha de Silva to appear before the committee along with his officials and explain what happened to the missing $2.5 million of Treasury funds. It is reported that the Treasury Secretary had initially said he was unable to attend the session slated for Thursday (April 30), but later appeared before the committee.
There are two issues facing the government. On one hand, government officials seem to be blocking their efforts to run a smooth administration and on the other hand, inexperience in governance is clearly evident. Amidst this brouhaha, a disjointed opposition is joining ranks to take on the government at all levels.
At the end of the day, Sri Lanka will be mired in squabbles with a government defending its position, undoing whatever good work it has done in the past 18 months. Having said that, the two frauds – the Treasury $2.5 million heist and the Sri Lanka Post loss of $600,000 – need an independent evaluation and investigation. Only then can the government live by its own words and deeds to take action even if top governing politicians or officials are involved.
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