By: Staff Writer
May 11, Colombo (LNW): The unfolding Rs. 13.2 billion fraud inside NDB Bank has become one of the most serious financial scandals to hit Sri Lanka’s banking sector in recent years, exposing deep weaknesses in governance, internal controls, and regulatory oversight.
The fraud, according to ongoing investigations, was allegedly orchestrated within the bank’s Department of Payments and Settlements, where insiders are suspected of bypassing monitoring systems and diverting funds through nearly 64 fraudulent accounts before converting portions into cryptocurrency through global platforms including Binance. Authorities believe the transactions were deliberately carried out during weekends to avoid immediate detection by automated monitoring systems.
Sri Lanka’s Criminal Investigation Department has already arrested and remanded several suspects, including Lahiru Harshana Kodikara, identified in court filings as an assistant manager attached to the bank’s head office payments division. His brother, Pathum Kothalawala, along with bank employee Kosala Tharanga and Mohammed Inhamul Hashan, are also among the principal suspects facing formal charges. Investigators have recorded statements from at least 16 individuals, while officials warn the number of implicated persons could eventually exceed 60.
The scandal has now escalated into an international investigation after Sri Lankan authorities sought assistance from Interpol experts to trace approximately Rs. 380 million allegedly converted into cryptocurrency and transferred through offshore channels. Court proceedings before the Colombo Chief Magistrate’s Court remain active, with additional hearings expected throughout May.
Amid mounting public pressure, the Central Bank of Sri Lanka appointed Deloitte Touche Tohmatsu India LLP to conduct an independent forensic audit into the fraud and investigate failures in governance and oversight. However, critics argue the move does not go far enough.
Opposition parliamentarian Ravi Karunanayake has questioned why the existing NDB board remains in office while the very audit examining the fraud is being conducted under their watch. He has called for the appointment of an independent competent authority under the Ministry of Finance and urged Sri Lanka to seek assistance from international financial regulators such as the Bank of England and the Monetary Authority of Singapore.
Economic analysts say the Central Bank is deliberately avoiding drastic intervention to prevent panic within the banking system. Officials maintain that NDB still satisfies all regulatory capital and liquidity requirements despite the massive financial loss. Suspending the board, they argue, could trigger depositor panic and potentially destabilize the wider banking sector.
Instead, the regulator has adopted a middle-ground strategy by suspending cash dividends, freezing branch expansions, and restricting discretionary spending while allowing the current board to remain operational under close supervision.
Meanwhile, critics continue to accuse the Central Bank of failing to act on early warning signs. Reports presented before the Committee on Public Finance claim suspicious transactions linked to the fraud had been flagged by other commercial banks nearly 16 months before the scandal surfaced publicly, raising difficult questions over regulatory accountability and systemic oversight failures within Sri Lanka’s financial sector.
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Sri Lanka plans to become Japan’s Next Strategic Investment Gateway
Sri Lanka is attempting to reposition itself as a strategic economic partner for Japan, but analysts warn that attracting major Japanese corporations will require far more than trade concessions and diplomatic goodwill.
At a recent business forum hosted by the Sri Lanka Japan Business Council, policymakers and industry leaders outlined both the promise and the obstacles facing Sri Lanka’s efforts to secure larger Japanese investments and expand exports into one of Asia’s most demanding markets.
At the centre of discussions was the proposed Sri Lanka-Japan-India economic corridor, a regional integration initiative that officials believe could transform Sri Lanka into a manufacturing and logistics hub connecting South Asia with East Asian supply chains.
Japanese Ambassador Akio Isomata argued that rising geopolitical uncertainty and long-term energy security concerns are forcing Asian economies to rethink trade routes, industrial partnerships, and production networks. He warned that global instability may continue for decades, making regional cooperation increasingly important for economic resilience.
Sri Lanka hopes to use this shifting environment to its advantage by presenting itself as a gateway linking Japanese investment with India’s massive consumer market. Officials believe the island’s strategic location in the Indian Ocean could allow Japanese firms to establish regional production and export operations while benefiting from Sri Lanka’s trade access and proximity to India.
However, business leaders admitted that Sri Lanka is still far from becoming a preferred destination for Japanese corporate giants.
Export Development Board Chairman Mangala Wijesinghe acknowledged that the country’s export profile remains limited largely to industrial goods and agricultural products with low value addition. He said Sri Lanka lacks sufficient numbers of export-ready small and medium-sized enterprises capable of complying with Japan’s strict technical and operational standards.
Industry experts noted that Japanese companies prioritise reliability, long-term consistency, and disciplined production systems when selecting investment destinations. Sri Lanka’s recurring economic instability, logistical inefficiencies, and uneven industrial standards continue to raise concerns among foreign investors.
Consultant Sunil Wijesinha stressed that Japanese buyers evaluate every aspect of operations, from factory cleanliness to workflow management. According to him, many Sri Lankan exporters underestimate how strongly Japanese corporations value operational precision and organisational culture.
Meanwhile, Rohan Pallewatte said Sri Lankan businesses frequently fail because they approach Japan expecting rapid transactions instead of long-term relationship building. He noted that securing contracts in Japan can take years of sustained engagement, patience, and repeated visits.
Despite these barriers, officials remain optimistic about sectors with strong growth potential. Value-added Ceylon cinnamon products, processed foods, fintech services, ICT exports, and mineral-based industries were identified as areas where Sri Lanka could establish a stronger foothold.