-By Legal Correspondent
(Lanka-e-News -08.April.2025, 11.10 PM) If you listen carefully in the corridors of Colombo’s power circles these days, you might just hear the sound of cutlery clinking—but not at a cocktail party. It’s the subtle rattle of silver spoons being hastily hidden, offshore accounts nervously refreshed, and hastily scribbled letters to attorneys who once claimed to be “just family friends.”
The reason for all this panic? A rather dry-sounding but revolutionary piece of legislation: the Proceeds of Crime Act, freshly inked into law by the National People's Power (NPP) government. With this Act, Sri Lanka may be turning a legal corner—or, if you're part of the old guard, walking straight into a legal trap.
This isn’t just about justice. It’s about money. Big money. And now, finally, it’s about getting it back.
Previously, Sri Lanka’s Money Laundering Act or Bribery Commission could only act decisively after one crucial thing: a criminal conviction. A proven crime in court. A process that, to put it diplomatically, moves at the pace of coastal erosion.
Under this old framework, authorities were trapped in a legal Catch-22. To seize assets, you needed a conviction. But getting a conviction meant years of court cases, missing files, uncooperative witnesses, and sometimes mysteriously vanishing prosecutors.
The Proceeds of Crime Act flips the script. Under the new rules, the government can now initiate asset recovery proceedings based on reasonable suspicion—before a criminal trial is concluded.
If an investigator uncovers a luxury mansion, 17 foreign bank accounts, and five Dubai-based shell companies belonging to a public servant whose declared monthly salary is Rs. 110,000—they don’t have to wait for a conviction. They can freeze or seize the assets. And now it’s your job to explain where it all came from.
As a senior legal advisor from the Attorney General's Department (who asked not to be named) put it: “We’re not saying you’re guilty. We’re saying prove you’re not.”
Sri Lanka’s corruption problem is less of a leak and more of a flooded dam. Much of it is hidden in plain sight: politicians’ family members winning exclusive tenders, shell companies popping up during mega infrastructure projects, and sudden spikes in net worth after a ministry portfolio is handed out.
The new law finally arms investigators with a tool they’ve been lacking—a reverse mechanism that doesn’t require proving the underlying crime first. Suspicion + evidence of disproportionate wealth = state intervention.
Even the infamous “intermediaries”—businessmen who never sign contracts themselves but conveniently hold board seats, commissions, or overseas trusts—are now vulnerable.
A confidential NPP briefing pointed fingers at “several large-scale contractors” in the road and energy sectors who are under investigation for earning “undue profits through proximity to power.”
One senior official quipped: “You can no longer hide behind your son-in-law’s Range Rover. If the car was paid for with your bribe, we’ll take the car. And then ask your son-in-law a few questions too.”
Perhaps no name in the new corruption lexicon draws more gasps than Dhammika Perera, the flamboyant former BOI chairman turned corporate juggernaut.
The EU’s ongoing investigation into alleged GSP+ export fraud—where Chinese or Taiwanese bicycles were exported to Europe as “Made in Sri Lanka”—could cost the country upwards of €500 million in damages and trade penalties. The scandal centers around allegations that Perera’s BOI authorized operations that fraudulently leveraged Sri Lanka’s preferential trade status.
Under the new law, the NPP government is reportedly building a case to not only recover state revenue lost from the fraud but also to seize assets from any BOI-connected official or business entity that materially benefited from the scheme.
This includes key players in logistics, apparel, and export finance. A source familiar with the investigation said: “If you benefited, you can’t hide behind ignorance anymore. It’s not just about criminal liability—it’s about restitution.”
The nation’s clothing industry—once its pride—now faces tough scrutiny.
During the 1990s and 2000s, Sri Lanka received generous international textile quotas. But multiple apparel firms reportedly routed profits into overseas holdings, avoiding Sri Lankan taxes altogether. Their trick? Using the country’s quota but billing and banking everything offshore.
Investigators allege that hundreds of millions of dollars were never brought into the country. One executive now under investigation allegedly owns luxury properties in London and Singapore—but has declared less than Rs. 2 million annually to the Inland Revenue Department.
With the new law, authorities can now freeze overseas properties, pending explanation. If the declared income doesn’t match the asset, it's fair game.
The Act also covers “emerging forms of wealth.” Translation: crypto bros, beware.
High-profile sports personalities and entertainers are also on the radar. Some have allegedly failed to declare income from endorsements, YouTube royalties, and overseas appearances. Others invested in digital assets with no paper trail.
As one Financial Intelligence Unit source put it: “Just because it’s on the blockchain doesn’t mean it’s invisible to us.”
Contrary to public perception, corruption isn’t exclusive to politicians. Wealthy professionals—including senior consultants, architects, and lawyers—are now under scrutiny.
The law targets wealth acquired through unregulated means: side businesses, undeclared private income, or kickbacks for services.
One Colombo-based cosmetic surgeon was reportedly flagged after a lifestyle audit revealed overseas property in Dubai and regular travel on private jets—despite declaring a modest Rs. 4 million in income.
It’s not a witch hunt, say officials. It’s just basic math.
Then we have the shadow financiers: informal lenders, gold pawn brokers, and cash-based traders who operate outside the formal financial system.
Walk into any jewelry shop in Pettah and ask for a receipt. Odds are, you’ll be politely laughed out of the store. These informal traders, often making millions in profit, declare little or no income to the state.
Many have become so rich they now finance legitimate businesses—laundering their black wealth into “white” enterprises. Now, they’ll be required to justify the origin of their capital.
As one NPP official noted: “If your books are clean, show us. If they’re not, hand over the keys.”
Unsurprisingly, the legal community is divided. Some call the law a constitutional landmine—particularly the sections that reverse the burden of proof.
Senior attorney and constitutional scholar Deshan Fernando warned:
“Presumption of innocence is a cornerstone of the rule of law. This law puts that on shaky ground. It may be challenged in the Supreme Court—and rightly so.”
But defenders argue this is a civil forfeiture law—not a criminal statute. The difference is crucial. You don’t go to jail based on suspicion—but you may lose your assets unless you can account for them.
Several countries—including the UK, Australia, and Canada—have similar laws. What matters is how Sri Lanka implements it.
The opposition smells blood—or rather, a political vendetta.
Critics argue that the NPP is using the law selectively to punish rivals. A spokesman for a former cabinet minister called the law “a legal machete disguised as a scalpel.”
There’s truth to the concern: without independent oversight, even the most noble legislation can become a tool for political score-settling.
But public sentiment seems unmoved. After years of economic collapse, fuel lines, and financial scandals, even cynical citizens appear to support the idea of rich people being held accountable.
As one tuk-tuk driver in Borella put it:
“We were taxed when we had nothing. Now it’s their turn.”
There is talk of creating a Public Asset Registry—a digital database showing declared wealth and foreign assets of all elected officials and senior public servants.
Also on the table: a “luxury lifestyle audit” division under the Inland Revenue Department, with powers to investigate individuals whose spending dramatically exceeds their declared income.
A controversial clause in the draft amendment suggests making certain asset seizures public knowledge—a move that could spark a name-and-shame storm in media and social networks.
Sri Lanka has suffered for too long from a type of corruption that’s hidden in velvet gloves. It’s not violent. It’s not loud. But it is devastating.
The Proceeds of Crime Act is an overdue reckoning. It's imperfect, yes. Possibly unconstitutional in parts, yes. But it's also bold, necessary, and for once—immediately impactful.
There will be court battles. There will be scandals. But for now, the country is watching. And if you can’t explain your sudden wealth?
Start explaining. Or start packing.
-By Legal Correspondent
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by (2025-04-08 19:57:41)
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