• CoPF Chair notes ‘multiple irregularities’ 
• Says Public Debt Management Office mandated to handle payments
• Slams Planning Service appointments to top posts over SLAS experience 
• Finds improper delegation of financial authority 

Multiple administrative irregularities within Government systems were key to the US$ 2.5 million cyber fraud, Chairperson of the Parliamentary Committee on Public Finance (CoPF) Dr. Harsha de Silva told Parliament yesterday (5), describing the breach as a “massive theft”. 

According to Dr. de Silva, who chairs the CoPF that recently reviewed details of the transaction, one issue was procedural uncertainty within the Finance Ministry over which institution – the External Resources Department (ERD) or the Public Debt Management Office (PDMO) – is legally mandated to handle such payments. He explained that while the ERD’s role is limited to negotiating bilateral loans, debt servicing is carried out by the PDMO.

Another issue flagged by Dr. de Silva relates to appointments to top ministerial departmental positions such as Directors General (DGs), which, he said, are increasingly being filled by officials from the Planning Service rather than the Sri Lanka Administrative Service (SLAS), the latter traditionally possessing broader administrative experience.

A further concern raised was the improper delegation of financial authority, including instances where Secretaries had delegated approval powers to Directors.

Dr. de Silva said that the recent cyber fraud involving a Government payment of US$ 2.5 million “certainly involves a massive theft” and that the next step is to identify those responsible, a task to be handled by the Criminal Investigation Department (CID).

Speaking in Parliament yesterday, he said that although the Deputy Finance Minister had presented the incident as routine and without serious implications, the details reviewed by the Committee suggested otherwise.

He noted that the CoPF had held a closed-door session on the matter and requested that a summary of the facts be submitted to Parliament and made available to the public. Based on those discussions, he said, it was evident that multiple administrative irregularities had occurred within the relevant processes.

Dr. de Silva questioned the ERD’s involvement in the transaction, stating that it had no direct role in such payments. “The relevant law clearly limits the ERD’s role  negotiating bilateral loans. Debt servicing should be carried out through the PDMO, in line with established procedures. This situation indicates a lack of clarity among the relevant parties themselves. They appear to be uncertain about their own duties,” he said.

He also drew attention to appointments to key positions within institutions such as the Finance Ministry and the PDMO, noting that such roles are traditionally held by experienced SLAS officers who have served across multiple institutions before reaching senior posts such as DG. However, he alleged that individuals from the Planning Service had been appointed to these roles instead.

“I challenge anyone to correct me if I am wrong. To my knowledge, both the DGs of the PDMO and the ERD are from the Planning Service and do not possess the required level of experience for such responsibilities,” he said.

Dr. de Silva further noted that the Secretary to the Treasury was, for the first time in Sri Lanka’s history, a former Parliamentarian, and claimed that this reflected a lack of administrative experience at the highest level. “When both the Ministry Secretary and the DGs lack adequate experience, it is no surprise that such incidents occur,” he said.

He also questioned the approval process for the payments, referring to an alleged statement by the Deputy Finance Minister that a payment of US$ 900,000 had been approved by a Director. He argued that proper delegation of authority procedures had not been followed.

“In any Ministry, one of the first responsibilities of a Secretary is to clearly define financial authority – who can approve what amount. Can a Director approve such a payment? Was this delegation properly done?” he asked.

Speaking further, he said: “There has been a theft here. No one can escape it. The thieves must now be caught. The CID will handle that. As the CoPF, we will identify the administrative issues and recommend the necessary action.”

Dr. de Silva also criticised the Ministry for failing to appear before the Committee despite being summoned on three previous occasions. He said that neither the Secretary nor a Deputy Secretary had attended the sessions, and that he had written to the President on the matter.

“It was only after that letter that we were informed they could not attend. That is not acceptable,” he said, adding that although he had refrained from pursuing a privilege motion and instead granted additional time, that leniency should not be taken for granted.

He concluded by warning that the financial loss would ultimately fall on taxpayers if those responsible are not held accountable and required to repay the funds.

“This is not money that can be sourced elsewhere. Either it must be recovered from those responsible, or the Government must openly state that the burden will be passed on to the public through taxes,” he said.

He added that under the relevant legal provisions and Standing Orders, the CoPF has full authority to examine matters related to public debt servicing, and insisted that the Committee would carry out its work in a professional and impartial manner.

The incident in question involves an alleged cyber fraud in which nearly US$ 2.5 million from a Government payment linked to a bilateral transaction with Australia was diverted after email communications related to the transfer were compromised. Although the payment was processed through official systems, the intended Australian recipient did not receive the funds.