The roots of the scandal lie in a special perk for Sri Lanka's lawmakers that allows them to import cars without paying the country's massive duties, which often double or triple the cost of a vehicle.

The law bars them from selling their tax-free cars for five years, but it's 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.

Devout monk-legislator Ellawala Medhananda has denied accusations he sold his new silver, E-class Mercedes for a huge profit. But even as he insisted the car was still his, a top political rival was driving around town in it.

"They (the monks' party) came into politics promising to set new standards for the political mainstream, but see what they are doing today. This is unacceptable," opposition lawmaker Gayantha Karunathilake said Monday.

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.

"We have not sold or transferred the ownership of vehicles. This is merely a well-planned political campaign to discredit our party and weaken the government, which has shown military success against terrorism," party spokesman Udaya Gammampila said.

The monks' party, which calls for the government to aggressively fight against mainly Hindu Tamil separatists, wields great influence among the 70 percent of Sri Lankans who are ethnic Sinhalese, most of them Buddhist.

The conflict, one of Asia's longest running, has left some 70,000 dead since 1983 and displaced hundreds of thousands. The country was also hard-hit by the 2004 Indian Ocean tsunami and many people are still struggling to recover, having lost family and livelihoods.

The car controversy exploded into a near farce recently when opposition leader Ranil Wickremesinghe — an intense political rival of Medhananda — turned up for a meeting with another prominent monk at a Buddhist temple driving the Mercedes.

Wickremesinghe said the businessman, Nishantha, who happens to be a supporter of his, lent him the car.

Through intermediaries, Nishantha declined requests for comment. In an interview in The Sunday Leader newspaper, he said he paid 13 million rupees (US$116,000; €85,350) to an intermediary for the car and had received an offer from the JHU to buy it back for less than half that amount.

Medhananda's exasperated party colleagues accused Wickremesinghe of essentially 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 digest.

Manoj Dissanayake, a local businessman, said Buddhist monks should stay away from politics. "For centuries, the role of Buddhist monks was to advise rulers and not to become rulers," he said.

The Morning Leader newspaper said Medhananda should be held to a higher ethical standard than other politicians.

"It could be argued that transfer of such permits by (members of Parliament) to outsiders for millions of rupees is an open secret," it said in an editorial last month. "But should MP monks, said to be the epitome of morality and virtue, engage in such shady practices?"