Audit Exposes Mismanagement and Losses at Colombo Lotus Tower

Serious governance and operational lapses have surfaced at the iconic Colombo Lotus Tower, following the revelation of questionable management practices and financial irregularities involving its hospitality operations run by Citrus Leisure PLC.

According to audit findings, Colombo Lotus Tower Management (Pvt) Ltd. had entered into agreements with Citrus Leisure PLC to operate hospitality facilities located on the 25th to 28th floors of the tower, including the kitchen area. The agreement, signed under Clauses 8.1 and 8.2, required Citrus to pay a management fee of 3.5% of gross revenue and an additional 10%, excluding total employee costs, each month. A further 20% of gross operating profit was also due to the Lotus Tower Company.

However, during the period from October to December 2023, Citrus Leisure reported a net loss of Rs. 20.3 million, while Colombo Lotus Tower Management still disbursed Rs. 1.4 million as management fees and Rs. 1.06 million for employee salaries. Notably, the agreement lacked any clause specifying how losses should be managed in the event of negative operating results.

In addition, auditors found that Rs. 1.01 million had been spent on mobile phones, despite no contractual approval for such expenditure.

The audit also noted physical damage to the Lotus Tower’s observation deck, where visitors had scribbled names and images on the walls. To mitigate this, management spent Rs. 1.08 million installing illuminated plastic panels on the viewing platform, but these too were later vandalized.

Although security cameras had been installed and staff assigned to monitor footage, the management failed to deploy adequate security personnel, leaving the site vulnerable to repeated acts of vandalism.

The findings highlight serious deficiencies in oversight, accountability, and financial management at Sri Lanka’s tallest landmark, raising questions about the enforcement of public–private partnership agreements and the long-term sustainability of the project’s commercial operations.