The controversy surrounding the release of over 300 containers without subjecting them to any checks continues with Opposition legislators calling on President Anura Kumara Dissanayake, who is also the Finance Minister, to assume responsibility for the mishaps surrounding Sri Lanka Customs.
The department is under intense scrutiny following revelations that more than 300 shipping containers flagged for inspection were released without being physically checked.
The controversy took a new twist with Samagi Jana Balawegaya (SJB) MP Mujibur Rahman recently tabling the report of a committee appointed by President Dissanayake in Parliament. The report had made several startling revelations about the manner in which the controversial containers had been released.
The issue first came to light in January, when it was revealed that 323 containers marked ‘red’ by Customs’ Risk Management System (RMS), indicating a high risk and requiring mandatory inspection, had allegedly been cleared through the green channel, which is reserved for low-risk cargo that does not warrant physical examination.
Red flags ignored and systemic breaches
The RMS is a key tool used by Sri Lanka Customs to identify potentially risky consignments. A former high-ranking official of Customs, speaking on condition of anonymity, explained that the RMS, which is largely Artificial Intelligence (AI)-driven, automatically flags suspicious consignments.
“Containers marked with a red label are deemed high-risk and must undergo mandatory scanning and often physical inspection. However, in this case, multiple red-flagged consignments were released without the standard checks,” the official said.
He stressed that even if preliminary checks suggested a container could be released, the process could not be completed without the requisite scanning, adding that this was non-negotiable under RMS protocols.
An investigative committee led by Treasury Deputy Secretary A.K. Seneviratne was appointed to probe the incident. The committee’s report, which was handed over to the Treasury Secretary, had found that out of 151 red-labelled containers processed on 18 January, 37 containers were not scanned at all, while 114 containers that were scanned had showed anomalies, such as suspicious density levels, and should have been subjected to further inspection.
Despite this, all were allowed to exit the port. The report had further noted that scan officers had recommended further physical inspection for these containers due to the anomalies, but these recommendations had been ignored.
The former Customs official, referencing the report, warned that the incident pointed to both a breakdown in standard Customs procedure and questionable political interference, emphasising that the release of 38 containers without completing the scanning process was a clear violation of protocol.
The investigative committee report had further revealed that this was not an isolated incident. Since mid-2024, at least 999 red-flagged containers had been released without inspection over 13 separate occasions, with the total number of improperly cleared containers, red and amber included, reaching 2,218. The report had highlighted that this action, often cited as an effort to ease port congestion, had broken away from accepted Customs procedures and legal boundaries.
SJB MP Rahman pointed out that the report clearly stated that 151 red-labelled containers and 158 amber-labelled ones had been released without the mandatory physical inspections.
One of the most concerning aspects of the report is the alleged disregard for existing regulations and standard operating procedures. According to the Customs Ordinance and RMS guidelines, containers marked ‘red’ cannot be released unless a senior Customs officer physically verifies their contents or authorises otherwise with justifiable cause.
The committee had concluded that the method of releasing these containers was against the law and that accepted methods and procedures had been violated. Rahman emphasised that the committee clearly noted that the process followed had been unlawful.
In the January incident, some containers had reportedly been released even before the appointed committee met to discuss their clearance. The committee’s report had stated that these premature releases amounted to a violation of procedure and a breach of national trust, directly criticising the Director General of Customs for approving the release without following due process.
Govt. response and denials
Customs Spokesperson and Additional Director General Seevali Arukgoda had previously defended the releases, claiming the consignments in question had mostly consisted of industrial raw materials. He had claimed that the declarations had matched the documents submitted and that no evidence of smuggling or prohibited items had been found during spot verifications.
Arukgoda had also stated that all necessary steps had been taken to release the containers only after thoroughly checking the import documents. However, when contacted on the findings of the report last week, he stated his unwillingness to comment on the subject pending the official handing over of the report to the Customs.
Customs Director General P.B.S.C. Nonis stated that the decision to release the containers had been taken to address the overwhelming burden resulting from the volume of containers arriving at the port. He also noted that he was aware that the report had been signed by two members, while three members had issued dissenting comments, with the report awaiting the directive of the Minister of Finance.
The former Customs official noted that the Criminal Investigation Department (CID) had reportedly been alerted to claims that ethanol had been smuggled into the country via one of the improperly released containers, and that there was concern that more serious contraband, possibly even weapons, may have come in, although the entries were still held by Customs and no definitive conclusion could be drawn yet.
“Now that Customs has released the containers without checking, we cannot dispel the claims of MPs such as Ramanathan Archchuna even if they seem outrageous,” the official said.
Political fallout
Opposition politicians have demanded greater transparency, calling for the release of the full committee report and for those responsible to be held accountable.
MP Rahman tabled the Customs inquiry report in Parliament, alleging that the Government was concealing the findings. He questioned the chain of command behind the clearance decisions, stating that Customs officers must come forward and clarify whether they acted on instructions from political authorities.
The MP also stated that it was known that a committee formed under the authority of the President had been involved, and a January media statement by Customs had even cited this committee’s guidance as the basis for releasing 309 containers. “If that is true, it proves political involvement,” Rahman said.
The former Customs official also questioned the legitimacy of the decision-making process that led to the container release. He stressed that the legal authority to approve such releases lay solely with the Minister of Finance, not a committee or sub-ministerial official, and if Customs was now claiming another minister had given consent, that in itself was problematic.
On the issue of container backlogs, which Customs and the Sri Lanka Ports Authority (SLPA) have cited as a reason for bypassing standard procedures, Rahman acknowledged the administrative challenges. However, he was firm that this could not justify breaching regulations by stating that this was an administrative issue.
He added that if there was a backlog, the Government needed to strengthen Customs capacity, hire more officers, invest in scanners and infrastructure, and expand facilities.
Reforms on the horizon?
This incident has accelerated calls for reforming Customs, focusing on automation, accountability, and audit trails. The former Customs official emphasised that technological upgrades must be coupled with robust internal enforcement, regular audits, and real-time oversight.
“The investigative committee recommended halting the current container release method, conducting a full post-audit to calculate losses and performing a forensic audit of all disputed releases. It also suggested using AI for improved scanning and better information-sharing between importers and Customs,” he said.
The official stressed the need for full digitalisation to eliminate loopholes, as the current system’s physical handling allows for lapses without real-time digital oversight. He further clarified that only the Investigation Branch was authorised to intercept transhipment containers, which were normally cleared based on documentation, although misuses had occurred even with these.
Deputy Minister of Ports and Civil Aviation Janitha Ruwan Kodithuwakku, while declining to comment on the Finance Ministry report, underscored the urgent need to expand the country’s port handling capacity, particularly through the long-delayed East Container Terminal (ECT) project, calling it one of the most crucial investments for the national economy.
Kodithuwakku noted that Sri Lanka’s total annual handling capacity was approximately seven million Twenty-foot Equivalent Units (TEUs), significantly lower than global port hubs like Singapore. This disparity, he noted, forced Sri Lanka to turn away international inquiries and proposals to use the Port of Colombo as a transhipment hub due to insufficient available berths.
At the centre of these limitations is the delayed ECT, a key State-owned infrastructure project that has faced years of political indecision, contract disputes, and bureaucratic gridlock. Kodithuwakku noted that the ECT should have been completed long ago, but that repeated setbacks had delayed progress until recently. He stated that the project had now been fully taken over, adding that efforts were underway to complete it within the current year.
He also emphasised the strategic and financial significance of the ECT for Sri Lanka, since as a fully owned terminal by the SLPA, it represents a rare opportunity for the country to retain full control over revenue generation from transhipment operations, unlike joint-venture terminals. He described it as one of the safest and most worthwhile investments, essential for maximising earnings from the ports sector given current economic challenges.
While acknowledging ongoing operational and logistical challenges, Kodithuwakku stated that the SLPA hoped to commence at least 50% of ECT’s operations by September or October, with full commissioning to follow. The ECT project, once completed, is expected to add at least three million TEUs of additional capacity to the Colombo Port.
Whilst the indecision on how the matter will proceed lies with the Ministry of Finance, and not with the Ministry of Ports and Civil Aviation, President Dissanayake has maintained silence on the matter since the report was formally handed to him.
Deputy Minister of Economic Development Prof. Anil Jayantha Fernando, whilst acknowledging that the report had been handed over to the President, did not divulge any further information or answer any additional questions on the subject, even refusing to answer calls or respond to messages. Finance Ministry Secretary Dr. Harshana Suriyapperuma did not attend to calls either.