-By LeN Financial Affairs Correspondent
(Lanka-e-News -24.April.2025, 11.00 PM) In the world of Sri Lanka’s booming garment industry, Brandix has long stitched itself a reputation as the paragon of corporate responsibility—a flag-bearer of sustainable fashion, ethical manufacturing, and impressive export figures. But behind the eco-friendly fabric swatches and sustainable cotton press releases lies a tangled weave of deception.
Or so say senior Sri Lanka Customs officials, who allege that Brandix—under the stewardship of its CEO Ashraf Omar—may have been central to a massive duty fraud operation involving hundreds of containers of textile material being diverted from free trade zones to the domestic market, in what amounts to a corporate betrayal of national interest.
Yes, dear reader, buckle in. Because this isn’t just a story about misdeclared fabric. It’s about betrayed regulations, bribed Customs officers, and how a celebrated export icon might have quietly become a black-market baron.
For years, the apparel sector has enjoyed an elite status in Sri Lanka. Recognized as the country's number one net foreign exchange earner, garment factories have operated within Board of Investment (BOI)-approved free zones, where raw materials—mostly imported—are allowed duty-free strictly for re-export purposes.
That’s the key phrase. Strictly for re-export.
And yet, in what is being described as one of the largest scams ever unearthed in the textile sector, Sri Lanka Customs has confirmed that two BOI-approved companies—widely understood to include Brandix or entities linked to its network—imported over 300 containers of fabric and garments over the last several years without paying duty.
While 65% of those materials were reportedly used for exports, a staggering 35% were diverted into the local market, in blatant violation of both BOI and Customs regulations.
The modus operandi, according to sources within the Customs Intelligence Unit, was as elegant as it was illegal.
Raw textile materials and finished garments were imported into Brandix-run or affiliated factories under duty-free provisions tied to export manufacturing.
Instead of converting the entire stock into export products, a significant percentage of the fabric and finished garments were quietly siphoned off—either directly sold to local textile traders or offloaded via proxy dealers in Pettah and Galle.
Customs officers, allegedly bribed or complicit, either overlooked the container tracking or colluded to “close” export files without verifying the full usage of the goods.
The result? Tens of millions of rupees in lost government revenue—and a thriving local apparel market stocked with luxury fabrics meant for Europe and North America.
Ashraf Omar, scion of one of Sri Lanka’s most prominent business families and the very public face of Brandix, has yet to respond formally to these allegations.
Known for his affable charm and buzzword-heavy speeches on “circular fashion” and “value-added supply chains,” Omar has, until now, managed to sidestep any suggestion of impropriety. Brandix is often the first name invoked when Sri Lanka boasts about its ethical apparel production.
But according to Customs insiders, it is Omar’s knowledge of the import-export funnel, and his control over multiple subsidiaries—some of which operate in the shadows of Brandix’s better-known operations—that is under fresh scrutiny.
“There is no way the top brass didn’t know,” said one senior Customs investigator, speaking on condition of anonymity. “The scale, the repetition, the manipulation of documents—it wasn’t rogue middle managers. This required executive-level signoff or, at the very least, executive-level negligence.”
In a rare act of institutional candor, Sri Lanka Customs, under a directive from its Director General, decided to expose the fraud to the media, citing the magnitude of the scam and its implications for BOI oversight.
The language was refreshingly blunt.
“This is a national scandal,” said a spokesperson. “It’s not just about evading taxes. It’s about undermining the credibility of our BOI system, and the entire garment export framework that the country relies on.”
The department has now launched a special audit into over 800 shipping manifests, dating back to 2021, related to Brandix and its supply chain partners.
And while the monetary figure is still being tallied, early estimates suggest losses to the treasury in the range of Rs. 1.2 to 1.5 billion.
The plot thickens further with allegations that Customs officers—some still serving, others quietly transferred—were handsomely compensated to look the other way.
In one telling example, a junior officer who flagged inconsistencies in a container manifest was reportedly reassigned to the Galle office within 48 hours, while his report was conveniently “misplaced.”
A parallel CID investigation is said to be underway to determine the extent of collusion between public officials and private sector executives, with more names expected to be revealed in the coming weeks.
As one senior intelligence analyst put it:
“Bribery isn’t a side dish in this affair—it’s the main course.”
With the newly elected NPP government pledging to clean up systemic corruption, this scandal could serve as a litmus test.
Already, whispers within Parliament suggest that several senior figures within the BOI were aware of the long-running duty leak—but chose to ignore it, either due to political pressure or personal benefits.
The NPP’s Justice Ministry, often vocal about cleaning up the judiciary, has thus far remained strangely silent about the Brandix allegations.
But pressure is mounting. A group of left-leaning MPs has demanded a Parliamentary Select Committee to investigate large-scale BOI fraud and abuse of duty concessions, and the Auditor General’s Department is reportedly being asked to conduct a full forensic audit into garment sector duty exemptions.
When contacted for comment, Brandix issued a terse, two-line statement:
“Brandix is a BOI-approved entity and adheres strictly to all regulations regarding import and export operations. We are fully cooperating with ongoing reviews.”
The irony, of course, is that Brandix’s very compliance may be what is being reviewed—and found wanting.
While Brandix may be the marquee name now caught in the crosshairs, insiders say the issue is wider, deeper, and more systemic.
“The whole free zone model has been abused for years,” said an economist formerly with the Ministry of Finance. “Import goods for ‘export manufacturing,’ use 60-70% for foreign orders, then dump the rest into the Pettah market. It's been an open secret. The only difference now is someone got sloppy—or greedy—and Customs decided to wake up.”
And therein lies the larger tragedy. Duty-free imports were intended to stimulate exports. Instead, they have become a tax loophole bonanza for well-connected corporations and a pipeline of untaxed goods into the domestic economy, which local manufacturers—who pay full duties—simply cannot compete with.
Will Ashraf Omar be summoned for questioning? Will Customs officers be arrested? Will Brandix be penalized?
If history is any guide, the answer is: perhaps, for a few weeks, until something else captures the public’s attention.
But there is a chance—however slim—that the NPP government, looking to stake its reputation on accountability, might turn this case into a watershed moment for corporate governance.
As one anti-corruption activist bluntly put it:
“You can’t build a clean economy with dirty shirts.”
-By LeN Financial Affairs Correspondent
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by (2025-04-24 17:36:23)
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