By: Staff Writer
November 24, Colombo (LNW): Sri Lanka Customs tasked with ensuring efficient import and export operations while securing government revenue has been found to be mired in administrative lapses, opaque financial practices, and weak internal controls, according to 2024 National Audit Office report released in 2025.
The report focuses on Customs’ complex network of internal funds, including the Reward Fund, Management & Compensation Fund, and the Overtime & Cargo Examination Fund, along with several sub-funds. While these were intended to support operational efficiency, auditors discovered minimal oversight and policy guidance, creating incentives for personal gain over national interest.
One alarming finding relates to penalty sharing: only 30% of net penalties reach the Consolidated Fund, often less than the customs duty owed. Between 2012 and 2023, Rs. 14.53 billion reached the Treasury, while Rs. 24.22 billion was paid to officers and informants.
Reward practices also fail legal requirements: for 35 years, payouts were made without Finance Minister approval, and routine operational detections were categorized as “offence detections” to justify bonuses. Attendance tracking remains outdated, relying on handwritten registers despite 2017 biometric mandates, while 90% of overtime payments go to officers, leaving only 10% for the state.
Major penalties between 2017 and 2023 were arbitrarily reduced, causing revenue losses of Rs. 181.5 million. The report highlights systemic weaknesses that undermine the integrity of one of the country’s most important revenue-generating institutions. The NAO stresses the need for immediate reforms to prevent further financial leakage
