Business activity stifled by extortion rackets

Trade bodies warn that business growth and even foreign investments are threatened by the increasing trend of abductions and extortion targeting business people. Businesses say the ‘pay up, or else’ culture that is spreading targeting business people, particularly in the western province, is stifling business activity by creating a fear psychosis.

The extortion targets are mainly business persons operating in the cash economy and the impact is being felt across the economy.
“Outstation business transactions are generally done in cash. Some traders don’t even take cheques and most small traders in the network to supply goods outside Colombo, don’t use cheques. So to do business we still need cash. But now, because of these abductions and ransom demands businessmen don’t like to come with cash to Colombo. This has caused a drop in business activity,” said a spokesperson for the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL).

The fear is also putting business activity on go-slow-mode. “Business people don’t like to do large transactions any more because they think the news will spread and they will be hit. So they are all waiting. Business is very slow. They are not doing large transactions,” said a spokesperson for the Ceylon Hardware Merchants Association of Moor Street.

This association went on public protest on March 16, against mass extortion attempts on its majority Tamil membership. “27 members of our association were contacted for money and threatened all kinds of things if they did not pay up. They attempted to kidnap one person. But we protested and went on a harthal,” the association spokesperson said.

This strong reaction by the intended victims may have caused a change in the extortion activity by re-directing it elsewhere. “After our protest they have so far left us alone. We have not had any ransom demands since then. But now it looks like they are hitting on the Muslim businessmen,” he said.

Big money for crime
Although easy money, extortion sums could be large amounts and are strengthening criminal elements by feeding them with huge amounts of cash.“The amounts demanded from our members ranged from Rs 50 million to Rs 100 million. As much as half of the people threatened may have actually paid up something. We don’t know how much was paid. The police was very helpful but as far as we know, no one was caught for making these extortion demands,” he said.

Some feel the extortion activity is too well organised to be simple street crime.
“If it is done by small criminals how do they know who has money and whom to target. How do they get that information?” asked the FCCISL spokesperson.
The businesses say the impact on the economy too will worsen, unless the crime trend is contained fast.
“If this is not controlled it will spread. So eventually this will also impact foreign investments because they will not like to invest in a country under these conditions, because it increases the cost of business,” the FCCISL official said.

International attention
The Civil Monitoring Commission, which has been in the forefront of protests over the abductions, says it has already brought this rising trend of abduction and extortion, directly to the notice of the United Nations (UN).

“On March 25 we brought up the abductions and disappearances at the UN Human Rights Council, in Geneva during our visit to discuss human rights violations,” a Civil Monitoring Commission official said.
From April 2006 to now, the civil monitor has recorded around 148 disappearances in the Western Province, mainly in Colombo.