<ul><li>Calls for mandatory cybersecurity standards to be enforced</li><li>Reports highlight finger-pointing between Treasury, CBSL&nbsp;</li><li>Lack of competency of PDMO/ERD staff, poor transition management cited</li><li>Report finds cybersecurity lapses at Treasury</li><li>Recommends NAO conduct audit of foreign debt payment process</li></ul> &nbsp;The Committee on Public Finance (COPF) has concluded that the Central Bank of Sri Lanka (CBSL) cannot completely absolve itself of responsibility for the $ 2.5 million cyber fraud that disrupted the Government’s foreign debt repayment process, despite legal arguments that primary responsibility rested with the Ministry of Finance and the Public Debt Management Office (PDMO).In its investigative report tabled in Parliament on Friday (10), the committee found that the fraud was the result of governance, procedural, and operational failures across multiple institutions rather than an isolated cyberattack.&nbsp;While acknowledging the Attorney General’s legal interpretation that responsibility shifted to the PDMO after debt management functions were transferred, the COPF concluded that serious shortcomings within both the Ministry of Finance and the CBSL enabled the fraud to succeed.&nbsp;The report examined the theft of $ 2.5 million in public funds that occurred between November 2025 and January 2026, when Sri Lanka was completing the final stages of its external debt restructuring programme.A significant portion of the report focuses on the disagreement between the Ministry of Finance and the CBSL over who should bear responsibility for the incident.&nbsp;Ministry officials argued that the CBSL, as the Government’s banker, should have exercised greater vigilance over Anti-Money Laundering (AML) concerns and questioned suspicious payment instructions before processing them. They also maintained that the staff of the newly-established PDMO lacked sufficient experience and relied heavily on the Central Bank during the institutional transition.The CBSL rejected those claims, stating that the fraud originated from payment instructions generated through a compromised Ministry of Finance email system. According to the CBSL, its responsibility was limited to executing authorised payment instructions submitted by the ministry, while verifying payment details remained the responsibility of ministry officials.Although the Attorney General’s interpretation largely supported the Central Bank’s legal position, the COPF concluded that the dispute itself exposed significant weaknesses in governance and institutional accountability.&nbsp;The committee noted that while legal responsibility may currently rest with the PDMO following the transfer of debt management functions, policy reforms were required to clearly define the CBSL’s future responsibilities when acting as banker to the Government.&nbsp;Accordingly, the COPF has recommended amendments to the Financial Transactions Reporting Act (FTRA), stating that the current legal framework leaves ambiguity regarding the CBSL’s obligations in relation to suspicious transactions involving Government payments.The report also questioned earlier assurances jointly given by the Secretary to the Treasury and the CBSL Governor that coordination mechanisms between the institutions were adequate. The COPF found that there was considerable room for improvement, particularly during the transition of debt management responsibilities.According to the committee, the fraud occurred during a complex institutional transition following the enactment of the Public Debt Management Act No.33 of 2024.&nbsp;The legislation transferred debt management functions from the CBSL’s Public Debt Department and the ministry’s External Resources Department (ERD) to the newly-established PDMO.&nbsp;However, the COPF found that the 18-month transition lacked basic governance safeguards. There were no formal terms of reference governing the transfer, no measurable Key Performance Indicators (KPIs) to assess whether officers had received adequate training, and no Memorandum of Understanding defining the responsibilities of the CBSL and the PDMO until 9 March 2026 – months after the fraud had already taken place.&nbsp;The committee concluded that a properly negotiated agreement before the transition would likely have clarified institutional responsibilities and prevented the subsequent dispute over accountability.&nbsp;The report also identifies serious cybersecurity weaknesses within the Ministry of Finance. Unlike most departments, which operated on a centralised IT platform, the ERD maintained its own separate email infrastructure using Microsoft Exchange Server 2016.Among the committee’s findings was that major foreign debt repayments were historically authorised by a single director without independent review by more senior officials. Officials also failed to perform basic verification by checking lender invoices against signed loan agreements before approving payments.&nbsp;The committee further found that during the transition period, ERD officers failed to copy their PDMO counterparts on official correspondence, creating information gaps that were exploited by the fraudsters.In addition, the CBSL’s Finance Department had flagged one payment to a United Arab Emirates account in November 2025 as a potential AML concern. The COPF found that the warning had not been adequately escalated or acted upon by senior ministry officials.&nbsp;The committee concluded that while cybercriminals had executed the fraud, institutional failures across multiple agencies made the theft possible.It has been recommended that the National Audit Office (NAO) conduct a special audit of the entire foreign debt repayment process to establish an independent account of procedural failures across both the Ministry of Finance and the CBSL.The COPF has also called for an immediate revision of the Government’s Financial Regulations, which have remained largely unchanged since 1992, mandatory implementation of Sri Lanka Computer Emergency Readiness Team cybersecurity standards across the public sector, the creation of a secure database containing verified lender information to eliminate reliance on email instructions, and the introduction of a comprehensive whistleblower protection policy for the public service.&nbsp;

$ 2.5 m cyber fraud: CBSL cannot escape responsibility: COPF 

<ul><li>CID deploys 6 investigation teams</li><li>No arrests as of Friday evening</li></ul> The Criminal Investigation Department (CID) has deployed six specialised investigation teams as part of a parallel probe into the Negombo Prison riot that left 28 people dead, as authorities seek to establish how one of the country’s worst prison disturbances in decades spiralled out of control, The Sunday Morning reliably learns.&nbsp;The tragedy, one of many which have plagued the island’s corrections system, exposes systemic issues of overpopulation, under-resourced administrative structures, and other issues which have seen recurring incidents of prison violence, riots, and custodial deaths over decades.&nbsp;It is learnt that the Department of Prisons has simultaneously launched its own internal inquiry into the violence, with both investigations expected to establish individual accountability as well as identify institutional failures that may have allowed the unrest to spiral out of control.&nbsp;A senior CID official, speaking on condition of anonymity, told The Sunday Morning that the six investigation teams had already commenced work and were expected to complete their inquiries as expeditiously as possible, although no timeline had been fixed yet for submitting the final report.&nbsp;The official also confirmed that no one had been taken into custody in connection with the riot so far.&nbsp;The six teams have already commenced investigations into every aspect of the incident, including the sequence of events leading to the violence, the circumstances surrounding the deaths, possible intelligence failures, and whether shortcomings in prison administration contributed to the tragedy, it is learnt.&nbsp;The official, who spoke on condition of anonymity as investigations remain ongoing, said that the inquiry was progressing rapidly and was expected to be completed as soon as possible.“No one has been taken into custody in connection with the incident so far. At this stage, our priority is to establish exactly what happened, identify those responsible, and determine whether there were institutional failures that allowed the situation to escalate,” the official said.&nbsp;Investigators are also examining whether Prisons officers acted within the limits permitted under the law while attempting to suppress the violence after hundreds of inmates allegedly turned against correctional officers.&nbsp;“The law permits the use of reasonable force under certain circumstances. We have to determine whether the force used remained proportionate to the threat faced by officers during the operation,” the official explained.&nbsp;According to preliminary findings, the violence appears to have originated from a dispute linked to narcotics inside the prison. However, investigators cautioned that the motive remained subject to verification through witness statements, forensic examinations, intelligence gathered from within the prison system, and other evidence.&nbsp;The inquiry is also expected to examine whether prior intelligence regarding tensions inside the prison had been adequately assessed and acted upon before the violence erupted.Meanwhile, the Department of Prisons has initiated a separate investigation focusing on operational and administrative issues, including prison management, security procedures, and the events leading up to the riot.&nbsp;Prisons Commissioner – Operations, Intelligence, and Security and Media Spokesperson – Covering Up Duties A.C. Gajanayake said that the immediate violence had been contained, although the Negombo Prison had not returned to normal operations yet.&nbsp;“The situation is under control, but normal prison operations have not resumed yet. Security personnel continue to be deployed where necessary to maintain order,” he said.&nbsp;As part of emergency security measures, Prisons authorities have transferred approximately 1,000 inmates from the Negombo Prison to correctional facilities across the country, while all female inmates have been relocated to the Wariyapola Prison to reduce tensions within the institution.Gajanayake said that the transfers were intended to restore stability while investigations continued.&nbsp;The incident has once again drawn attention to Sri Lanka’s severely overcrowded prison system. “Our prison system was originally designed to accommodate around 11,000 inmates. Today, nearly 40,000 prisoners are being housed within these facilities,” Gajanayake said.

Deadly Negombo Prison riot: Govt. scrambles to probe incident  

<ul><li>Loan terms still under negotiation, talks continue</li><li>56% of construction completed&nbsp;</li></ul>Negotiations on revised financing terms for the Kadawatha–Mirigama section of the Central Expressway Project (CEP) are still underway, with the Government hoping to finalise the agreement with China by the end of next month, according to the External Resources Department (ERD).&nbsp;Speaking to The Sunday Morning, Finance Ministry ERD Director General Samantha Bandara stated that the revised loan arrangement had not been finalised yet and that negotiations with the Chinese were ongoing.&nbsp;“We have not finalised or signed the agreement yet. We are in the process of having discussions with them and we expect to conclude the agreement before the end of the next month,” he said.&nbsp;When asked about the Government’s local financing obligation for the project, he said discussions were still ongoing with the National Budget Department.&nbsp;Meanwhile, Coordinating Secretary to the Minister of Transport, Highways, and Urban Development Lahiru Madusanka stated that the Chinese side had already agreed to provide the financing and that a delegation was scheduled to visit Sri Lanka to sign the deal.&nbsp;However, he noted that the timing would be established by the Ministry of Finance.&nbsp;“On our end, we are carrying on with the work as the Treasury has given us the commitment with the released funds. About 56% of the work is done and proceeding at a steady pace,” he said.&nbsp;He added that no changes would be made to the project’s scope or contractor obligations under the revised agreement. “We have evaluated their claims. We are not paying for the ones we aren’t liable for. They have a few other claims left,” he said.&nbsp;According to Madusanka, the project is still scheduled to be completed by September 2028, although it could be completed sooner. “It might be possible to finish before that,” he said.&nbsp;The 37-km Kadawatha–Mirigama section of the Central Expressway has remained one of Sri Lanka’s longest-delayed infrastructure projects. Construction, which began in 2020 under Metallurgical Corporation of China Ltd. (MCC), was halted after China Exim Bank froze loan disbursements following Sri Lanka’s sovereign debt default in 2022.&nbsp;While the initial finance arrangement signed in 2019 provided for a loan of $ 989 million to pay 85% of the project cost, only about $ 51 million was delivered before funding was blocked. The remaining 15%, equivalent to $ 174 million, was paid by the Sri Lankan Government as a mobilisation fee.&nbsp;In 2025, China Exim Bank presented many options for restarting financing, including changing the loan currency from US Dollars to renminbi, switching to a different financing instrument, or obtaining co-financing from international and local lenders. The Government has since negotiated better financial terms in order to resume full-scale development.

CEP deal expected by end-August

The Opposition on Friday (10) commenced collecting signatures for a No-Confidence Motion (NCM) against Justice and National Integration Minister Harshana Nanayakkara, accusing him of failing to discharge his ministerial responsibility to safeguard the lives of Prisons officers and inmates killed during the Negombo Prison riot.&nbsp;Opposition and Samagi Jana Balawegaya (SJB) Leader Sajith Premadasa inaugurated the signing of the motion in Parliament, with several Opposition MPs signing it immediately afterwards. Among them were Sarvajana Balaya Leader Dilith Jayaweera and New Democratic Front (NDF) MP Chamara Sampath Dasanayake.&nbsp;Speaking to The Sunday Morning, SJB MP Ajith P. Perera said that the Opposition would continue collecting signatures over the weekend and expected to hand over the motion to Speaker Jagath Wickramaratne on Monday (13).&nbsp;Perera said that the Opposition expected all parties represented in the Opposition to support and sign the motion.&nbsp;Nanayakkara is the second Minister in the National People’s Power (NPP) Government to face an NCM from the Opposition. Earlier, an NCM against former Energy Minister Kumara Jayakody was defeated in Parliament by a majority of 104 votes.&nbsp;The move follows the deadly clash at the Negombo Prison, which claimed the lives of 28 people, including Prisons officers and inmates. Opposition MPs, led by the SJB, subsequently called for Nanayakkara’s immediate resignation, arguing that the tragedy had resulted from gross negligence and systemic failures within the prison system, which fell under his ministry.&nbsp;The Opposition further contended that the ministry’s failure to ensure adequate prison security and address long-standing overcrowding had made the Minister’s position untenable.&nbsp;Responding to the criticism earlier, Nanayakkara said that he accepted responsibility for the incident as the prison system came under his purview. However, he rejected calls to resign from his post.&nbsp;Multiple attempts by The Sunday Morning to contact Nanayakkara for further comment were unsuccessful.&nbsp;

NCM against Justice Minister: Opposition begins signature drive 

<ul><li>180,000 MT imported despite initial 75,000 MT target for 2025&nbsp;</li></ul>Sri Lanka imported 180,000 MT of rice in 2025, more than double the quantity initially planned, after the Government determined that the original import target would be insufficient to stabilise domestic supplies, as learnt by The Sunday Morning.&nbsp;&nbsp;Speaking to The Sunday Morning, Deputy Minister of Trade, Commerce, and Food Security R.M. Jayawardana said: “We intended to import only about 70,000–75,000 MT, but after monitoring the daily situation, we found that amount would not be sufficient, so we imported approximately 180,000 MT.”&nbsp;He added that around 156,000 MT of keeri ponni samba as a substitute for keeri samba and another samba substitute had been imported this year after the Government established a 14-day import window without a tender process.&nbsp;“Those are the two types we have brought in, totalling about 156,000 MT. We haven’t brought in any kekulu,” Jayawardana noted.&nbsp;He rejected allegations that rice imports were to be blamed for the decline in paddy purchasing prices. Instead, he attributed the issue to an unanticipated surplus in domestic paddy production.&nbsp;However, farmers have strongly rejected the claim, arguing that despite sufficient domestic stocks, uncontrolled imports had caused market instability.Commenting on pricing, Jayawardana said: “We recommended and fixed the price of keeri samba at Rs. 260, but traders were selling it for Rs. 380–400. To stabilise prices and the market, we imported keeri ponni samba and another samba substitute.”&nbsp;According to him, rice imports were permitted only during three limited periods: around December 2024 for approximately a month, last year (2025) for about a month, and again this year for a 14-day period.“Last time around December 2024 was when we specifically experienced a rice shortage. Based on that, the opportunity to import rice was granted for a short period. Last year, the rice importing took place within about a month. It was only during that period. After that, we didn’t bring in any more. Last month, we gave a window of about 14 days, during which 156,000 MT were brought in. We granted the opportunity to bring rice in without going through a tender procedure,” he noted.The Deputy Minister said that the surplus in paddy production had made it difficult for traders to purchase paddy at the Government’s guaranteed price of Rs. 120 per kg.“The problem now is that there is a surplus in paddy production. With this surplus, even though we fixed the paddy purchasing price at Rs. 120 per kg, rice is being sold in the market for between Rs. 155 and Rs. 190. Some places sell red kekulu for Rs. 155 at minimum. They are selling kekulu and nadu at around Rs. 155, Rs. 170, and Rs. 180.&nbsp;“If traders buy paddy at Rs. 120, they will have to sell rice at around Rs. 210–220. Because of that, businessmen are not buying paddy at Rs. 120 or anywhere near it. As the Government, we are buying paddy again this season,” he said.However, National Agrarian Unity President Anuradha Tennakoon rejected the Deputy Minister’s explanation, arguing that Sri Lanka had previously produced more than enough paddy to meet yearly rice demand.&nbsp;Tennakoon alleged that the Government had allowed unrestricted imports despite adequate domestic stocks and that the volume imported far exceeded what was required.“You only need to import rice when there isn’t enough paddy to meet the country’s rice requirement. Farmers in this country have always cultivated a paddy surplus. Every year, Sri Lanka produces 4.6–5 million MT of paddy from the Yala and Maha seasons, while only about 3.7–3.8 million MT are needed to meet annual rice requirements of about 2.45 million MT.&nbsp;“We already have a surplus of around 1 million MT. This has been the case every time, for many years now. The Government does not have precise data to calculate the actual rice requirement. We should only import rice relative to the annual rice consumption, if the domestic paddy supply is insufficient,” he said.&nbsp;

Rice imports soar above target

The Government has commissioned the Engineering Council Sri Lanka (ECSL) to conduct a feasibility study on the future of the controversial Nilwala salinity barrier in Matara.A final decision on whether the structure should be removed will be taken after the report is submitted later this year, according to Matara District Coordinating Committee member and National People’s Power (NPP) MP Ajantha Gammeddage.&nbsp;Speaking to The Sunday Morning, Gammeddage said that a team of experts from the ECSL had been tasked with assessing the barrier and recommending the most appropriate course of action.He made these remarks when asked to comment on the recent finding by the Human Rights Commission of Sri Lanka (HRCSL) that the prolonged flooding experienced in the Matara District in 2023 was a manmade disaster, attributed to infrastructure failures and administrative negligence, including issues associated with the Nilwala salinity barrier.“We have entrusted a separate team from the ECSL to conduct a feasibility study and provide us with a report. They are considering the removal of the Nilwala salinity barrier,” the MP said.Gammeddage said that the Government had already compensated affected farmers and allocated Rs. 1 billion in the 2026 Budget to address the long-term issues surrounding the barrier.“However, we cannot remove it until the feasibility report is submitted,” he said.&nbsp;“Until then, we have decided to use that allocation to cut the necessary canals and improve water drainage in high-risk areas. The relevant decisions have already been taken. The team has informed us that the report will be submitted within this year, and future action will be decided based on its recommendations,” he added.&nbsp;The HRCSL’s findings, released last week following an investigation prompted by complaints after the devastating 2023 monsoon season, found that while heavy rainfall had contributed to the disaster, Government infrastructure projects had significantly worsened the flooding.&nbsp;According to the commission, floodwaters that had previously receded within days during the major floods of 2003 and 2017 had remained stagnant for several weeks in 2023, disrupting normal life across the district.&nbsp;The report states that thousands of acres of paddy land in areas such as Kirala Kele and Akurugoda were destroyed, depriving farmers of their livelihoods. It also highlights a surge in leptospirosis (rat fever) and dengue cases caused by stagnant water, while crocodiles entering residential areas posed an additional threat to public safety.&nbsp;The commission identified the Nilwala salinity barrier, completed in 2022, as one of the principal factors that obstructed the river’s natural flow. It found that construction materials, including sheet piles and sandbags, had not been properly removed after completion, creating a physical obstruction in the river.The HRCSL also found that the Southern Expressway had blocked natural drainage paths in several low-lying areas, while inadequate maintenance of historical drainage systems, including the Dutch Canal, and ageing pumping stations further worsened the flooding.&nbsp;The commission concluded that the State’s failure to address these foreseeable risks amounted to violations of the constitutional rights to equality and livelihood, affecting thousands of farming families.To address the issue, the HRCSL recommended a series of time-bound measures, including scientific assessments for compensation, modernisation of pumping stations, restoration of the Dutch Canal, removal of obstructions from the Nilwala River, and the establishment of a disaster compensation trust fund.&nbsp;The Nilwala salinity barrier was originally constructed by the National Water Supply and Drainage Board (NWSDB) to prevent seawater intrusion into the Nilwala River and secure drinking water supplies for approximately 600,000 consumers in the Matara and Hambantota Districts.However, since its completion, farmers and residents have consistently argued that the structure has restricted the river’s natural drainage capacity, leading to severe flooding, crop loss, and damage to homes and infrastructure during periods of heavy rainfall.&nbsp;Earlier this year, the Government allocated more than Rs. 1.2 billion to compensate over 5,000 affected farmers for cultivation losses across nearly 12,800 acres of farmland covering seven cultivation seasons from the 2019 Yala season to the 2022 Yala season.

Nilwala salinity barrier: Govt. commissions fresh study

President Anura Kumara Dissanayake’s planned official visit to France has been postponed, The Sunday Morning learns from reliable sources familiar with the matter.&nbsp;The latest postponement affects the visit scheduled to commence on 16 July. While no official reason has been disclosed, neither the President’s Media Division nor the French authorities have announced a new date for the visit.&nbsp;The President was expected to hold talks with French leaders on strengthening bilateral relations, expanding economic cooperation, and encouraging French investment in Sri Lanka.&nbsp;The visit was originally scheduled earlier this year before being deferred.&nbsp;

President’s France visit postponed

The countdown to Ramayana has officially begun. Days after the film's first glimpse generated massive buzz online, the makers have now announced that the official trailer will be released worldwide on July 24, 2026.&nbsp;&nbsp;For the past several days, the rumour mill were burning high on the Ramayana Part 1 trailer release date and now makers have made an official announcement on Saturday.&nbsp;The first glimpse had introduced audiences to the scale and visual ambition of the project without revealing much of the story. The trailer is now expected to offer a better look at the film's world, its lead characters and the epic narrative that director Nitesh Tiwari is bringing to the big screen.&nbsp;Inspired by the ancient Indian epic, Ramayana brings together an ensemble cast led by Ranbir Kapoor as Lord Ram and Sai Pallavi as Sita. Yash takes on the role of Ravana, while Sunny Deol will be seen as Hanuman and Ravi Dubey plays Lakshman.&nbsp;The film has been mounted on a massive scale and is expected to rely heavily on cutting-edge visual effects while staying true to the emotional essence of the timeless story.&nbsp;On April 2, 2026, the makers gave the first look of Ramayana to the public, marking their introduction to Ranbir Kapoor as Lord Ram for the first time. This beautifully designed teaser received overwhelming positive reactions from the fans through all forms of social media, with many admiring the scope, VFX, and cinematic nature of the film. The film was perceived as a fresh interpretation of the epic by the viewers while Ranbir's regal performance as Lord Ram proved to be one of the key subjects of discussion.&nbsp;Directed by Nitesh Tiwari, Ramayana is being produced by Namit Malhotra's Prime Focus Studios in association with DNEG, the Academy Award-winning visual effects studio behind several international blockbusters, and Yash's Monster Mind Creations.&nbsp;Planned as a two-part cinematic event, the film will be released in IMAX across the world. Part One will be released in the cinemas on Diwali 2026, whereas Part Two is to be released in Diwali 2027.&nbsp;&nbsp;Source: India TV

Ramayana trailer to premiere worldwide on July 24 as excitement builds for Ranbir Kapoor's epic

President Anura Kumara Dissanayake says the government plans to expand the rice market by promoting the production of value-added rice-based products. He said the move, made possible after lifting restrictions on using rice for non-food products, aims to create greater demand for paddy, increase market competition and ensure better prices for farmers. The government plans to encourage the use of rice in products including animal feed, beer, wine, biscuits and cakes.

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NCM against Justice Minister: ...

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Rice imports soar above target

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President’s France visit postp ...

Ramayana trailer to premiere worldwide on July 24 as excitement builds ...

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Govt plans to expand market for rice-based products - President

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Deadly Negombo Prison riot: Govt. scrambles to probe incident

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Rice imports soar above target

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