A major private bank in Sri Lanka is at risk of financial collapse following a large-scale fraud involving two key executives from Hela Apparel, a prominent clothing manufacturer. The father and son duo, who are at the center of this controversy, are accused of orchestrating a financial scam that could result in a 3 billion rupee loss for the bank.
The son, in particular, is said to have purchased a bankrupt UK-based company, Focus Brands, for 2.4 billion rupees using a bank loan. However, the company had no assets beyond its debts, and financial reports were allegedly falsified to secure the loan. According to financial analysts, the loan’s interest now exceeds the total monthly income of Hela Apparel, and there is a significant risk that this amount will soon be classified as bad debt. This could potentially lead to the collapse of the bank and severely impact Sri Lanka’s financial sector.
Both the CEO and the CFO of Hela Apparel have resigned, citing dissatisfaction with the fraudulent practices under the father and son’s leadership. Internal sources have revealed that despite claims of profitability, the reports published last week regarding Hela Apparel’s financial recovery were manipulated.
Adding to the complexity, Hela Apparel is partially owned by the English company Rienta, which holds a 48% stake. The international business community is now concerned about the reputational damage that Sri Lanka could face as a result of these fraudulent activities.
As the father and son duo are Canadian citizens, Sri Lankan authorities face significant challenges in holding them accountable. The financial scandal is expected to have wide-reaching consequences, both domestically and internationally, unless urgent action is taken.
