The funds were procured from the Ministry of Sports.
The allegations were made by the Secretary General of the Colombo District Wrestling Association HM Luxman to the Sunday Observer.
He also said that the allegations were brought to the notice of former Sports Minister Harin Fernando who had appointed a special committee to investigate the matter.
The three-member committee consisted of KS Perera who was the chairperson of the probe committee along with LG Wijesinghe (member) and NK Abeysinghe (member).
The sum of money mismanaged is said to be the highest amount in the 80-year history of the Federation.