A minority shareholder has filed a derivative action against National Development Bank, its external auditors Ernst & Young, and E&Y’s partners in the Commercial High Court of the Western Province, the bank disclosed to the Colombo Stock Exchange on Monday.
The Commercial High Court has reserved its order in the case for May 13, EconomyNext reported, citing NDB’s disclosure to the CSE. The lawsuit marks the first civil litigation in connection with the Rs. 13.2 billion fraud at the bank, opening a new accountability track distinct from the parallel criminal investigation by the Criminal Investigation Department, the supervisory probe by the Central Bank of Sri Lanka and the parliamentary oversight by the Committee on Public Finance.
Ernst & Young served as NDB’s external auditor at the time the fraud is alleged to have occurred. The bank appointed KPMG as its new external auditor for FY2026, citing Banking Act Direction No. 5 of 2024 which limits engagements to six years. A derivative action allows a shareholder to sue on behalf of the company against directors, officers or third parties whose conduct is alleged to have damaged the company.
NDB shares traded down 0.21 percent at Rs. 117.50 at midday on Tuesday following the disclosure. The benchmark All Share Price Index was up 0.19 percent at 23,056.19 points on a market turnover of Rs. 1.25 billion.
The Rs. 13.2 billion gross fraud was first disclosed by EconomyNext, while NDB itself has put the after-tax loss at around Rs. 4 billion. Fitch Ratings has downgraded NDB, the Central Bank is conducting a forensic audit through an international firm, the CID has arrested four suspects, and the Committee on Public Finance has flagged audit failures. The site’s NDB fraud explainer tracks unresolved questions in the case.
The Commercial High Court order on May 13 is the immediate watchdate.
