-By A LeN Investigative Correspondent
(Lanka-e-News -21.June.2025, 11.40 PM) What began as an ambitious government plan to boost Sri Lanka’s milk production through the importation of thousands of Australian dairy cows has devolved into a multi-million-dollar fiasco, now mired in international banking scandals, a failed livestock import, and a deeply questionable tender process.
At the heart of this debacle lies a murky commercial loan secured from Dutch banking giant Rabobank—currently the subject of a money laundering probe in the Netherlands—and an advance of over $11 million paid to an Australian livestock exporter without receiving a single cow in return.
The cows never came. The money, it seems, may never return.
This week, the Dutch Public Prosecutor’s Office (Openbaar Ministerie) announced it would subpoena Rabobank U.A. for “structural violations” of the Money Laundering and Terrorist Financing (Prevention) Act. The bank allegedly failed to perform due diligence or flag suspicious transactions for years, according to the country’s central bank regulator.
Rabobank, which underwrote the loan for the Sri Lankan dairy cow import scheme, has acknowledged ongoing discussions with Dutch prosecutors but disputes the proposed out-of-court settlement.
Though Rabobank insists it is cooperating, the scandal has reverberated across continents—from The Hague to Colombo—putting the bank’s due diligence under sharp scrutiny and raising serious questions about the oversight (or lack thereof) in Sri Lanka’s contracting and loan agreements.
Back in 2014, with Mahinda Rajapaksa’s government looking to increase domestic milk yield, a contract was signed between Sri Lanka’s Economic Development Ministry and the Australian company Wellard Rural Exports (Pvt) Ltd for the phased import of 20,000 dairy cows.
The project was pushed forward during the Yahapalanaya government. In 2017, the National Livestock Development Board (NLDB) paid an advance of US$ 11.09 million to Wellard, reportedly to secure a consignment of 15,000 pregnant milch cows.
But the cows never materialised.
A forensic investigation by Sri Lanka’s National Audit Office (NAO) reveals that while the advance was paid, not a single animal from this batch arrived on the island. The money has not been recovered. No insurance was maintained against default. And the government has been left with the costly consequence of a failed deal—with no cattle, no milk, and no accountability.
The audit reveals something more disturbing: despite serious veterinary concerns raised during an earlier phase of the programme—in which 5,000 cows were shipped in 2017 and reportedly infected with bovine viral diarrhoea and fasciola hepatica—Sri Lanka forged ahead with Wellard without a fresh tender or public procurement process.
Moreover, the advance paid in 2017 accounted for 15% of the contract’s total value, even though there was no Cabinet approval or legal clearance from the Attorney General’s Department. The Steering Committee that should have assessed the payment never formally discussed the advance.
One could be forgiven for wondering if anyone in the government was actually minding the dairy farm.
The loan used to pay Wellard was secured from Rabobank, underwritten by Australia’s EFIC (Export Finance and Insurance Corporation). The terms were eye-watering: a 5% annual interest rate, two-and-a-half-year grace period, and repayment tenure of just three and a half years. The loan covered the full contract value of nearly US$ 74 million.
By May 2020, around US$ 18.4 million had been spent importing the initial 5,000 cows. But the next phase, worth US$ 55.5 million, remains unfulfilled. To add insult to injury, the cost per cow was US$ 665 higher than the previous batch.
The money was gone. The cows were gone. And Sri Lanka’s taxpayers were left footing the bill.
But the trail doesn’t stop there.
Dutch authorities are also probing an entirely separate case involving the same Dutch banking system: payments made from a Netherlands-based healthcare company, Enraf-Nonius, into the offshore account of a British Virgin Islands firm with connections to a prominent Sri Lankan businessman.
The firm, Sabre Vision Holdings Ltd (SVHL), held a Singaporean bank account into which several large sums were deposited in 2012, including one from Rabobank Nederland via Enraf-Nonius. The Dutch Fiscal Intelligence and Investigation Service (FIOD) is now unravelling the tangled threads of this case, which spans hospital construction contracts in Hambantota and Nuwara Eliya.
The recurring name in both cases—Rabobank—has left many in Colombo’s financial and political circles deeply uneasy.
In July 2021, Wellard wrote to the Sri Lankan government stating that the 2014 agreement had been terminated. The firm claimed significant losses from failed quarantine farm setups, veterinary checks, and irrevocable cattle purchase agreements with Australian farmers. It blamed the Sri Lankan government for chronic delays and insisted that the financing arrangement with EFIC and Rabobank had lapsed due to government inaction.
Most strikingly, Wellard denied that the US$ 11 million was an “advance” at all. Rather, it argued, it was part of a scheduled series of payments per contract terms.
The NAO, however, is unpersuaded.
The NAO’s report is scathing. It states that the Ministry of Rural Economic Affairs—headed at the time by P. Harrison—instructed the Finance Ministry to release the funds to Rabobank, which were then transferred to Wellard without appropriate checks or guarantees.
The Auditor General warns that the deal left Sri Lanka exposed to further foreign exchange losses and mounting interest expenses, with over Rs. 2.1 billion (roughly £44 million) already down the drain.
In 2018, the Department of Animal Production and Health warned that the imported cows were carrying diseases that could infect local cattle and even humans. Yet, inexplicably, preparations to import 15,000 more were underway, including a repeat payment of millions of dollars.
Not only was this a scandal of procurement, but it appears to have been a public health time bomb as well.
Years later, with the loan now due and the cows long gone, there is no indication of a formal arbitration process. No legal case. No political will. And certainly, no one held responsible.
It is as if the cows took not only the money but the truth as well.
This saga serves as a cautionary tale—one that extends far beyond agriculture. It’s a symbol of a governance system where deals are cut in haste, laws are bypassed, public funds are gambled on opaque contracts, and entire industries are left in ruin.
As Sri Lanka limps from one financial crisis to another, the $11 million dairy cow scandal may seem, in scale, relatively small. But the rot it reveals is bovine in size and bureaucratic in nature: a country that outsourced its cattle, its cash, and its common sense—and got nothing in return.
A nation milked, indeed.
-By A LeN Investigative Correspondent
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by (2025-06-21 21:33:17)
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