Court Battle Begins: Shareholders Seek to Sue NDB Board Over Rs. 13.2 Bn Fraud ⚖️

• Legal Action: Petitioners appeared before the Commercial High Court seeking leave to bring a derivative action against the Board of Directors and external auditors of National Development Bank (NDB). Shareholders argue that a severe lack of due oversight, and not just the fraud itself, caused the bank's massive losses. • The Financial Impact: The alleged fraud totals approximately Rs. 13.2 Bn, which constitutes a significant 15.3% of NDB’s Rs. 86 Bn net asset base. Court filings reveal receivables tied to CEFT transactions skyrocketed eight-fold in two years, jumping from around Rs. 1.4 Bn in 2023 to over Rs. 12.2 Bn in 2025—a pattern petitioners argue bankers and auditors should have flagged. • Systemic & Governance Failures: Evidence from the bank's IT department exposed a "password-sharing culture" where staff could log into colleagues' accounts via personal laptops. Furthermore, NDB's public assurances of stability were quickly undercut by a Fitch Ratings downgrade citing weak internal risk controls. • Conflicts & Next Steps: Petitioners questioned the independence of NDB's forensic audit due to the Audit Committee Chair’s past ties to PwC Sri Lanka (now absorbed by Deloitte, the firm conducting the review). The Board is accused of breaching statutory duties of care and good faith under the Companies Act. _Status_: Based on initial court proceedings; the matter resumes in the Commercial High Court on 8 July 2026.