One of the most dangerous words in corporate governance is not “fraud.” It is “independence.”
Because modern financial systems do not survive merely on audits, committees, glossy annual reports or regulatory speeches. They survive on one fragile but absolutely essential ingredient:
public confidence that the people investigating a problem are genuinely independent of the people who may have helped create it.
And that is precisely why serious questions are now beginning to emerge regarding the governance optics surrounding the forensic review into the now infamous Rs. 13.2 billion fraud disclosed by NDB Bank.
At the centre of those questions sits an uncomfortable institutional overlap.
NDB’s Board Audit Committee is chaired by Sujeewa Mudalige, a highly respected former Managing Partner and Territory Senior Partner of PwC Sri Lanka & Maldives. Publicly available reports confirm that PwC Sri Lanka subsequently exited the PwC network in 2023, with its partners and staff joining the Deloitte South Asia network.
That, by itself, proves absolutely nothing improper. Let us be clear.
Professional transitions happen globally all the time. Large audit firms merge, separate, rebrand, affiliate and restructure continuously across jurisdictions. None of that automatically creates misconduct, impropriety or corruption.
But corporate governance is not merely about actual misconduct.
It is also about perception.
And perception matters enormously in banking. Because once a bank discloses a fraud of Rs. 13.2 billion after initially disclosing approximately Rs. 380 million – the public no longer merely asks whether an investigation exists.
The public asks whether the investigation itself is genuinely insulated from influence, familiarity, professional overlap or institutional comfort.
That is where the Deloitte question becomes extraordinarily delicate.
Because Deloitte India has reportedly been appointed to conduct the forensic review into the fraud. Yet the chair of the Board Audit Committee overseeing governance within the bank itself comes from a professional lineage that only recently transitioned from PwC into the Deloitte South Asia ecosystem.
Again, this does not establish wrongdoing.
But it absolutely creates a legitimate governance question.
Can an investigation be perceived as fully independent where institutional, professional and historical relationships intersect so closely with the parties connected to the oversight framework now under scrutiny?
That is not a personal question. It is a governance question.
And sophisticated banking systems globally take such perceptions extremely seriously.
In major financial scandals internationally, forensic investigators are often deliberately selected not merely for competence but for visible institutional distance from management, directors, prior advisers and governance structures connected to the underlying issue. The reason is simple:
credibility.
Because if the public begins suspecting that investigators may be culturally, professionally or commercially too close to the ecosystem they are investigating, confidence in the outcome itself weakens even before the first report is written.
And perhaps that is the larger issue now confronting NDB.
Not simply whether Deloitte can conduct a competent investigation.
But whether the structure surrounding the appointment creates avoidable questions regarding appearance, independence and governance optics.
This becomes even more sensitive because the allegations and concerns now circulating extend far beyond operational fraud alone. Increasingly, the debate involves:-
board oversight,
audit committee effectiveness, external audit scrutiny, prudential supervision,
risk escalation failures,
and governance culture itself.
In other words, the very oversight architecture connected to the bank is now part of the wider public discussion.
And that naturally creates a deeper philosophical problem:
can individuals or systems meaningfully investigate structures in which they themselves are institutionally intertwined?
Perhaps they can. Perhaps they cannot.
But modern governance increasingly recognizes something profoundly important:
justice must not merely exist.
It must also be visibly independent.
That principle is foundational not merely in courts but in banking, regulation, auditing and corporate governance itself.
Which perhaps explains why the issue now emerging is not necessarily one of corruption or illegality.
It is potentially something equally dangerous:
the appearance that Sri Lanka’s corporate and financial elite circles have become so small, interconnected and professionally intertwined that true institutional distance is becoming increasingly difficult to demonstrate when crises emerge.
And once that perception takes root, confidence itself quietly begins eroding underneath.
Because in banking, perception is not cosmetic. Perception is capital.
