{"id":155681,"date":"2026-04-12T16:32:29","date_gmt":"2026-04-12T23:32:29","guid":{"rendered":"https:\/\/www.lankaweb.com\/news\/items\/?p=155681"},"modified":"2026-04-12T16:32:29","modified_gmt":"2026-04-12T23:32:29","slug":"ndb-bank-fraud-remove-and-replace-independent-directors-vice-president-finance-and-external-auditors","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2026\/04\/12\/ndb-bank-fraud-remove-and-replace-independent-directors-vice-president-finance-and-external-auditors\/","title":{"rendered":"NDB Bank Fraud: Remove and Replace Independent Directors, Vice President-Finance and External Auditors"},"content":{"rendered":"

Dilrook Kannangara<\/em><\/span><\/h2>\n\n\n

NDB bank is again in the news for the second time in 6 months for another, second, fraud. This time it is over Rs.13 billion which makes it the biggest bank heist in the island, second only to the 2015 Central Bank bond fraud. The fraud amount is colossal and there is no way it could have escaped scrutiny of the internal finance function, external auditors (EY) and Independent Directors \u2013 each of them are (at least supposed to be) looking at financial health of the entity independently and with sufficient skepticism as required by Sri Lanka Auditing Standards and Sri Lanka accounting standards. In addition, the company law and CSE also impose strict guidelines for fiduciary duty. All these have been breached for 18 months which is the tenure of the fraud. It shows very poor integrity, accountability and professional capabilities on the part of the said three groups.<\/p>\n\n\n\n

Although the Central Bank has an oversight function, it has no responsibility over internal management as long as NDB Bank maintains its solvency and reserve ratios well and follows Central Bank regulations \u2013 which it has.<\/p>\n\n\n\n

The statement issued by NDB Bank states that it has no impact on depositors which is highly misleading. The loss of Rs.13 billion (over $35 million) has already turned 2026 Q1 profit into a loss! The fraud has a tremendous impact on their depositors, shareholders, borrowers, the industry and the government. Their hard-earned money is mismanaged through negligence and fraud leading to the reduction of profitability and caused a serious dent to the reputation of the bank. These two effects are sufficient for an astute depositor to pull out their deposits from the bank. They have plenty of alternatives.<\/p>\n\n\n\n

Then how about its shareholders \u2013 the dividend already declared to them has been withheld! Who will compensate them for the loss?<\/p>\n\n\n\n

In this context, NDB Bank should immediately remove and replace its independent directors, Vice President-Finance and EY as its external auditor.<\/p>\n\n\n\n

This is the only way NDB Bank can reassure its stakeholders that it is serious about fraud prevention and take ownership of the massive loss it incurred. It also helps law enforcement agencies properly investigate the matter. If sufficient evidence exists, all of them should be prosecuted for criminal negligence, etc. This step is essential to sustain investor confidence, maintain the integrity of the banking and finance sector and drive home the message that professional negligence is as damaging as subversion or mischief.<\/p>\n\n\n\n

The mastermind of the fraud who is a third party from Potuvil and not an employee of the bank, should be further investigated for his involvement in similar frauds involving other banks, etc. He may have accomplices who do the same elsewhere. He is related to the 2003 VAT fraud criminals which was the then largest identified fraud in the island. The likelihood of using the fraud money in local and foreign extremist activity should also be investigated. Cryptocurrency is the desired currency of extremist and terrorist groups due to the lack of oversight by law enforcement authorities. An astute investor who is looking for a good investment return would not have invested in cryptocurrency during that period as they were not performing as before. Most suffered loss during this period. This points to the strong possibility of using cryptocurrency for other purposes.<\/p>\n\n\n\n

A glance at NDB Bank\u2019s Group financial statements gives away that there is something very wrong with them. Despite an increase in loans and other receivables by close to 20% year on year from 2024 to 2025, cash interest income received has actually gone down from Rs.50 billion to Rs.40 billion! Further, the share of each category of lending shows an almost doubling of the share of loans to financial investments from 6% in 2024 to 11% in 2025 of the total other loans portfolio. Let alone these 2 sure giveaways in the financial statements, a skilled person\u2019s review of the monthly bank reconciliation would have cast sufficient doubt to investigate the matter further in the first month the fraud occurred in early 2024.  Absence of any of these for 18 months shows gross incompetence if not collusion. Excuses and shooting the messenger achieve no worthy outcome; it only covers up its systemic and endemic failures.<\/p>\n\n\n\n

Rs.13 billion figure was provided a day after the initial assessment of the fraud which was put at Rs.290 million. This too shows the inability to assess systemic weaknesses properly. Another obvious question that arises which is yet to be addressed is the expected credit loss. No additional provision has been made to the loan portfolio following the fraud. 2026Q1 interim results do not have this. This violates accounting standards which require an expected loss provision percentage based on historical receivable write-offs.<\/p>\n\n\n\n

The third concern apart from this fraud is the 2025 fraud that involved weak system access controls. Over 16 suspects and bigwigs were investigated just this February. Since the latest fraud also involved misusing system access of users, both publicly known matters seem to be the tip of the iceberg.<\/p>\n\n\n\n

All those who are responsible for this crime through commission and omission should be punished according to the law. Glossing over the matter is totally unacceptable.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Dilrook Kannangara NDB bank is again in the news for the second time in 6 months for another, second, fraud. This time it is over Rs.13 billion which makes it the biggest bank heist in the island, second only to the 2015 Central Bank bond fraud. The fraud amount is colossal and there is no […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44],"tags":[],"class_list":["post-155681","post","type-post","status-publish","format-standard","hentry","category-dilrook-kannangara"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155681","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=155681"}],"version-history":[{"count":1,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155681\/revisions"}],"predecessor-version":[{"id":155682,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/155681\/revisions\/155682"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=155681"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=155681"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=155681"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}