Four officials of private commercial banks arrested over an alleged racket that moved about US$1 billion out of Sri Lanka have been remanded until August 20, after the Colombo Magistrate’s Court refused their bail applications on Monday.

The four were produced before Colombo Additional Magistrate Liyan Varushavithana following their arrest earlier the same day by the Financial Crimes Investigation Division (FCID) of the Criminal Investigation Department, NewsFirst reported. All four were taken into custody at their respective branches — the first time bank staff have been arrested this way in Sri Lanka, police said.

Accounts of their seniority differ: Daily Mirror and Ada Derana described the four as managers at leading private banks, while Hiru News reported the group as one branch manager and three junior officers.

The case put to court

Investigators told the court the inquiry began with the arrest of Jeffrey Mohamed, alleged to have set up about 36 bogus companies registered in the names of eight people, ostensibly to import goods. Money was remitted abroad as payment for those imports, but no goods ever arrived. Hiru News reported the state counsel put the transfers at more than 199 telegraphic transactions.

The CID alleged the four officials met Mohamed almost every Friday, filled out the overseas transfer applications themselves and were paid regularly for the assistance — sums ranging from Rs. 30,000 to Rs. 100,000 a week, with one official said to have received about Rs. 1 million on a single occasion. Prosecutors said the officials failed to verify whether the companies were legitimately registered before opening accounts for them.

NewsFirst reported per-suspect figures placed before court: one branch manager linked to roughly US$5.5 million; a sales promotions manager who executed 25 telegraphic transfers worth US$647,207; an executive officer who facilitated 1,067 electronic transfers totalling US$24.6 million; and another who allegedly moved about US$32 million through 943 transactions. Investigators said customs reports and supporting documents were forged, and that the suspects trained others in preparing false paperwork, in breach of Central Bank rules.

Ada Derana reported that about Rs. 6.5 million of the money sent overseas is believed to have reached drug traffickers. Mohamed, arrested on June 19 and remanded on August 6, has been indicted in the Colombo High Court over allegedly channelling funds to a large-scale trafficker.

Defence contests responsibility

Counsel for the four — including President’s Counsel Sampath Mendis and Nalinda Indratissa — argued their clients were junior employees whose duties were limited to collecting customer information, and that verifying whether companies had genuinely imported goods rested with senior management. Holding them responsible for an operation of this scale would be unjust, they said, and asked for bail on any conditions.

The magistrate rejected those applications and ordered all four held until August 20.

The case forms part of a wider CID investigation into telegraphic-transfer fraud that has already reached Parliament’s Committee on Public Finance, where officials put the sums moved abroad on false import documents at around US$715 million across 105 companies. Figures cited for this strand of the inquiry vary between US$700 million and US$1 billion depending on the outlet and the period covered. The banks and the Fort money changer at the centre of the case have not been named.

Sources