Sri Lanka’s taxpayers may ultimately have to bear the cost of a USD 2.5 million fraud involving funds transferred from the Treasury to recipients overseas, Dr Harsha de Silva, chairman of Parliament’s Committee on Public Finance (CoPF), said on 21 October, criticising the government’s lack of progress in recovering the money.
De Silva, a Colombo District MP representing the Samagi Jana Balawegaya (SJB) and a former state minister, said the government and law enforcement agencies had failed to make meaningful progress despite assurances given in and outside Parliament following the disclosure of the loss. He said the committee had received no update on recovery efforts and called on the government to explain what action had been taken.
“There has been no update submitted to our Committee or Parliament,” he said, emphasising the need for the authorities to provide a clear account of the matter.
The CoPF investigated the loss of USD 2.5 million from the Treasury’s External Resources Department (ERD) and released its final report in July 2026. According to the committee, funds intended for Export Finance Australia were diverted between December 2025 and January 2026 after fraudsters used a lookalike email domain and altered payment instructions.
De Silva said the loss would probably have to be absorbed through existing budget allocations for foreign debt payments, rather than through a new allocation. He explained that the Treasury would make fresh payments to the actual creditor if those payments had not already been made, using funds allocated in the previous year’s Budget.
“In terms of the procedure, what will happen is the Treasury will make fresh payments, if not already made, amounting to USD 2.5m to the actual creditor from the amounts already allocated in the Budget last year,” he said.
He added that allocations for foreign debt payments generally exceeded the precise dollar amounts required to accommodate contingencies, particularly exchange-rate and interest-rate fluctuations. He therefore believed that the replacement payment could be made within the approved allocation.
The MP said this would leave the public bearing the financial burden of the fraud, in addition to existing taxes. He was responding to questions about how the government intended to recover the money lost during the early period of the National People’s Power (NPP) administration.
The committee chairman also criticised Speaker Dr Jagath Wickramaratne for declining to act on the CoPF’s recommendation that the Auditor General conduct a forensic audit of the transactions associated with the fraud.
“The Committee is disappointed that the Speaker refused to act on our recommendation to direct the Auditor General to undertake a forensic audit of the series of transactions that led to this fraud,” de Silva said.
Instead, the Speaker advised the committee to follow parliamentary standing orders and forward its report to the Ministry of Finance, which it had already done, according to de Silva. He said the committee had not been informed of any action taken by the ministry in response to its recommendations.
De Silva argued that disregarding key recommendations had prevented the special investigation from achieving its intended purpose. He maintained that the authorities needed to account for their response to the committee’s findings and clarify the status of efforts to recover the funds.
The case also drew attention following the death of Ranga Nishantha Rajapaksha, an assistant director at the ERD in the Ministry of Finance who had been interdicted over the incident. He was found dead at his home in Kuliyapitiya on 30 April 2026. A four-member panel of judicial medical officers determined that his death was a suicide caused by self-inflicted injuries.
Minister of Labour and Deputy Minister of Finance and Planning and Treasury Secretary Harshana Suriyapperuma were unavailable for comment.
