By Adolf

According to sources, the Criminal Investigation Department (CID) has initiated investigations into the banking transactions of certain senior officials of the National Development Bank PLC (NDB) and their family members in connection with a large-scale fraud that reportedly took place at the bank.

It is understood that the CID is preparing to present the relevant facts before the court to obtain judicial orders to examine the financial transactions linked to the individuals concerned.

Sources indicate that the move follows suspicions that several individuals — both current and former employees of the bank — who may be connected to the alleged financial fraud could have deposited or transferred misappropriated funds through various banks and financial institutions.

Meanwhile, permission was granted yesterday (20) by Asanga S. Bodaragama for investigators to visit prison facilities to record statements from four suspects, including a remanded businessman who allegedly aided and abetted the fraudulent theft by secretly accessing the bank’s general ledger account via the internet. The order was issued after the court considered a request made by the Computer Crimes Investigation Division of the CID. The court granted permission to record statements from the remanded suspects: Lahiru Harshana, Pathum Kothalawala, Kosala Tharanga, and Mohammed Inhamul Hashan, in connection with the incident. Presenting facts before the court, the CID stated that the suspects had allegedly attempted to steal Rs. 600 million belonging to the bank. Investigators noted that further questioning was required and therefore requested permission to visit the prison to obtain additional statements.

64 Fake Bank Accounts

Investigators also informed the court that further statements are required regarding the alleged deposit of Rs. 380 million of stolen funds into accounts on Binance after the money was routed through 64 fraudulent bank accounts.

According to investigators, funds credited to the bank’s general ledger account were first transferred through 64 bank accounts, then redirected to 100 additional accounts, before eventually being consolidated into five accounts — including accounts allegedly used by the suspects across several banks.

Data from the bank’s automated account monitoring system reportedly revealed deposits and withdrawals being made to the same account from multiple locations across the country at different times. After detecting these suspicious activities, the bank suspended the relevant accounts and lodged a complaint with authorities. However, investigators stated that funds credited to certain suspect accounts had already been misappropriated.

Questions needs answers 

This episode raises serious questions about the breakdown of fiduciary responsibility across multiple layers of oversight — from NDB itself to the wider banking system that processed these transactions.

This includes the role of external auditors Ernst & Young, supervisors at the Central Bank of Sri Lanka (CBSL), the bank’s internal audit mechanisms, the CFO, the CEO, the Board Audit Committee, and ultimately the Board of Directors.

Did these safeguards fail due to negligence, systemic weakness, or something more serious? The public deserves clear answers.

Several key questions remain unanswered ?

A) Why were proper dual control mechanisms not enforced within NDB?

B) How did NDB’s internal systems — along with Ernst & Young, CBSL supervision, and top management — fail to detect such a significant fraud earlier?

C) Did other banks such as Sampath Bank PLC, Seylan Bank PLC, and Hatton National Bank PLC report the suspicious accounts and transactions to the Central Bank?

D) Were the boards of NDB, CBSL supervisors, and Ernst & Young aware of the issue as early as December 2025, and if so, was the matter suppressed until the Rs. 16 billion sustainability bond was issued?

These questions are likely to become central to the unfolding investigation and the broader debate on governance, risk management, and accountability in Sri Lanka’s banking sector.

Media hyped Directors 

Another important lesson for the banking industry is the need to appoint competent and vigilant boards capable of identifying emerging risks before they escalate into crises that ultimately harm the public and the financial system.

The NDB board, for instance, included several high-profile, media-hyped individuals such as Kasturi Chellaraja, who often speaks of her management expertise and accomplishments; Sujewa Mudalige, the former managing partner of PwC, the hyped financial wizard and investment banker; Sanjaya Mohottala, a Boston Consulting Group restructuring specialist who left the Board of Investment of Sri Lanka in 2018 after union protests; and Sriyan Cooray, known primarily for his sporting background.

Before the Central Bank of Sri Lanka is confronted with another such crisis, it may be prudent for regulators to carefully assess the governance strength and oversight capabilities of other banks in the system — including institutions such as Hatton National Bank PLC and Sampath Bank PLC that we have found wanting — and ensure that boards are strengthened across the sector.

Sri Lanka’s banking system cannot afford another episode similar to what is now unfolding at NDB.

The post CID to Investigate NDB , CBSL and E&Y Officials and Their Family Members for the 13.2 B Fraud ? appeared first on LNW Lanka News Web.