Four bank managers have been remanded as Sri Lanka’s $1bn import fraud probe widens

Four bank managers from leading private banks were remanded on Monday (August 17) as part of an investigation into an alleged USD 1 billion foreign-exchange fraud.

They were arrested on the morning of August 17 by Sri Lanka Police’s Financial Crimes Investigation Division (FCID) and produced before the Colombo Magistrate’s Court, where the Additional Magistrate ordered their remand until August 20.

The four arrested bank managers are alleged to have assisted the main suspect in the wider USD 1 billion scheme, by processing transactions while allegedly bypassing foreign-exchange controls and anti–money-laundering procedures.

Context

In June this year, Public Security Minister Ananda Wijepala and President Anura Kumara Dissanayake separately disclosed in Parliament that large sums had been siphoned out of the country using Telegraphic Transfers (TTs) marked as advance payments for imports.

He cited one investigation that traced Rs. 12.89 billion sent through 953 transactions to 256 companies in 26 countries (about US$42.7 million), and a separate narcotics-linked probe that identified another firm that transferred around Rs. 13 billion overseas with no corresponding imports.

President Dissanayake later said that the TT payments appeared linked to organised crime, drug networks and corruption.

Revelations

Investigators told court that one of the individuals central to the fraud, Jeffrey Mohamed, had established around 36 companies that claimed to be engaged in importing goods into Sri Lanka.

He had approached four private banks to open accounts for these companies.

Investigators also allege that the four arrested bank officials had met Mohamed regularly and assisted him with banking transactions.

In exchange, Mohamed is alleged to have made weekly payments ranging from Rs. 30,000 to Rs. 100,000 to the four bank managers, with one official allegedly receiving about Rs. 1 million on a single occasion.

The bank managers are alleged to have failed to conduct required checks when opening the bank accounts and processing the transactions.

Lawyers representing the four bank managers claimed that some of those responsibilities fell outside the scope of work for certain accused officials.