Yeah, it's almost certainly not a conspiracy by Big Umpire who want to hold Sri Lankan cricket down.
He's got an action that looks a bit questionable to the naked eye. Sure, it's unfair to go "ZOMGZ HE CHUCKS" on the basis of the 2D representation of a 3D bowling action that you see on TV, but I don't really see why anybody would get upset with the umpires going "well, it looks a bit dodgy, better get it checked out". I mean, there's set protocol in place to try and catch out those who do throw. If his action is fine, he'll be vindicated by the testing and probably be in the clear for a couple of years or so.
In an ideal world we'd probably test every single bowling action around -- would be nice for the stats nerds if nothing else -- but that obviously isn't practical. As such there has to be some sort of screening device, and that's what umpires see visually. It's better to be conservative and over-test this kind of thing -- catching bowlers who look a bit off but aren't breaking the laws in the screening net -- than it would be to miss guys who are blatantly chucking.
As for why it wasn't reported at the start of the series -- probably because they didn't want to report it prematurely and force him into testing unless they thought it was actually justified. Better to take your time, use a few matches as guides, and then come to the decision of whether to report or not, rather than seeing one delivery and deciding to report based on that alone.
And it's hardly like they can report his action when he isn't bowling. And when he's bowling, being a pretty decent spinner, he's probably taking wickets, so...