Ravi K slams CB response on NDB fraud, questions regulator’s oversight

Colombo, July 10 (Daily Mirror) - Opposition MP Ravi Karunanayake today criticised the Central Bank's response to the Rs. 13.2 billion fraud at National Development Bank (NDB), accusing the regulator of failing in its supervisory role and providing Parliament with inaccurate information.

Raising concerns in Parliament after Deputy Finance and Planning Minister Anil Jayantha responded to a series of questions on the fraud, Karunanayake said the Central Bank's explanations were inadequate and inconsistent with information already available.

"The quality of answers coming from the Central Bank is deteriorating by the day. The Ministry has become nothing more than a post box," Karunanayake said, adding that Parliament must receive accurate information on matters affecting the country's financial system.

The Deputy Minister, reading the Central Bank's response, said the Banking Supervision Department (BSD) operates under a risk-based supervisory framework focused on prudential regulation rather than financial or forensic audits. He said the Financial Intelligence Unit (FIU) had acted on all Suspicious Transaction Reports (STRs) received in accordance with the Financial Transactions Reporting Act and had referred relevant information to the Criminal Investigation Department (CID).

Anil Jayantha said the BSD's investigations had so far determined that the total value involved in the NDB fraud was Rs. 13.2 billion and that no losses had been detected in any other financial institution. He also said the bank's proposed Rs. 2.7 billion dividend payment had been suspended by the Central Bank, while an independent forensic audit by Deloitte Tohmatsu India LLP was underway under terms agreed with the Central Bank.

However, Karunanayake questioned the discrepancy between the Central Bank's figure and what he said was Deloitte's internal assessment.

"Today Deloitte has given an internal report saying the loss is Rs. 13.5 billion, while the Central Bank is reporting Rs. 13.2 billion through the Minister. If Parliament cannot get the truth, where can we get it?" he asked.

He also argued that the reported fraud would have significant tax implications, claiming the Government could lose billions of rupees in tax revenue.

"The regulator is not performing its duty and is pointing fingers everywhere else. I am speaking on behalf of the public who invest in the financial system," he said.

Karunanayake further questioned the effectiveness of the Financial Intelligence Unit and the Banking Supervision Department, asking how thousands of transactions could have taken place without regulators detecting a suspicious pattern.

"If 3,000 transactions can take place and the Banking Supervision Department cannot identify a trend, then we are in serious jeopardy," he warned.

The MP urged the Government to verify the information provided by the Central Bank and submit a proper explanation to Parliament, warning that public confidence in the country's financial regulatory system could be undermined if the matter was not handled transparently.