The roots of the scandal lie in a special perk for Sri Lanka's lawmakers which allows them to import cars without paying the country's massive duties, which are often double or triple the cost of a vehicle. The law bars them from selling their tax-free cars for five years, but it is common practice for lawmakers to do so, importing expensive vehicles in their names and turning the keys over to wealthy businessmen for a hefty fee.

Mr Medhananda has denied accusations that he has sold his new silver E-class Mercedes for a huge profit. But even as he insists the car is still his, a top political rival is driving the vehicle around town.

For many in Sri Lanka, even allegations that a Buddhist monk would break the law to make tens of thousands of dollars are too much, especially when most of the people are struggling to eke out a living amid a bitter civil war.

Mr Medhananda's party, the monk-led Jathika Hela Urumaya, or National Heritage Party, called accusations that it sold the car to businessman Hemantha Nishantha a political smear.

The party, which calls for the government to aggressively fight against Tamil separatists, wields great influence among the 70 per cent of Sri Lankans who are ethnic Sinhalese and mostly Buddhists.

The car controversy exploded into a near farce recently when opposition leader Ranil Wickremesinghe - an intense political rival of Mr Medhananda's - turned up for a meeting driving it.

Mr Wickremesinghe said Mr Nishantha lent him the car. The businessman had said in an interview that he paid 13 million rupees (S$178,000) to an intermediary for the car.

Mr Medhananda's party colleagues accused Mr Wickremesinghe of stealing the monk's car, and threatened to press charges.

Many Sri Lankans said the incident underscored the corruption plaguing the country, but the involvement of a monk made it even more difficult to tolerate.

ASSOCIATED PRESS