National lotteries or highway robberies

The National Lotteries Board has notched up an operational surplus of Rs. 809,249,253 in 2006, but in a damning indictment the Auditor General has spotlighted massive wrongdoings in his report on the accounts. The profit for the previous year was Rs 846,249,700.

The Auditor General’s report on the latest available audited accounts of the National Lotteries Board for 2006 is replete with exposures of wrong doings running in to hundreds of millions of rupees in just a single financial year. And might raise questions whether what is happening is national or anti national and whether some of the lotteries are more like highway robberies.

Some of the audit queries raised by the Auditor General on the accounts of the Board for the ensuing year also showed that things were no better in 2007 or could be even worse. Realising the pathetic state of affairs in the NLB and in the other lottery operator, the Development Lotteries Board and their own fast evolving tragic fate, the United Lotteries Sales Agents’ Union, representing about 3000 sales agents and more than 40,000 street sellers working under them threatened to go on a two-day strike on February 5 and 6 and also hold a massive demonstration near the Vihara Maha Devi Park on February 5. This unanimous decision for trade union action was taken at a meeting presided by All-Sri Lanka Trade Union Federation Chairman K.D. Lal Kantha as the authorities had failed to respond to ten demands presented by the Union to overcome the deteriorating situation.

The trade union action was called off after the Finance Minister and Deputy Finance Minister Ranjith Siyambalapitiya wrote to the Union on January 31 asking it to come for a meeting on February 13 to discuss the issues. On the evening of the day prior to this meeting however the Deputy Minister’s Coordinating Secretary telephoned the Union to inform that the meeting had to be cancelled because of the visit of Maldivian President Gayoom and the Deputy Minister having to meet the visiting dignitary that day. United Lotteries Sales Agents’ Union President H.M.N.B. Herath told The Sunday Times yesterday that their Union had now given the government one week’s notice to fix a fresh date to sort out matters through discussions failing which they would launch trade union action.

Mr. Herath also said that since challenging the highly corrupt practices in the NLB, its Chairman Upali Liyanage had instructed the Colombo area lottery ticket-distributor not to sell tickets to him, though he had not been informed of this decision by the Board or given any reasons for such a decision.

Lotteries Board Chairman Upali Liyanage contacted for comment said he was busy worshipping God Kataragama and he requested us to contact the Board’s Deputy General Manager Finance Rohana Wijewickrema on Monday. Other informed sources, however said the Chairman was busy attending the Carlton Super Cross at Tissamaharama.

As for the published accounts for 2006, some of the most glaring “Uneconomic Transactions “ spotlighted by Auditor General P.A. Pematilaka are reproduced verbatim below:

“The Board had acquired a building at a cost of Rs 84 million. However, the Board had not shifted to its new premises due to the poor condition of the building. But at the time of purchase, it was considered suitable for the Board’s requirements after necessary renovations. The Board has paid a sum of Rs 20.3 million as building rent for the building it presently occupies.”

(The Sunday Times learns that to date the Rs 84-million building remains unutilized and the NLB continues to pay the exorbitant rent for the building it continues to occupy.)

“The Board has invested a sum of Rs 783 million in a subsidiary company with 100% capital rights. In addition to the above, a sum of Rs. 200 million had been granted as a loan to this company. The expected annual rate of return from the total investment was 10.29 per cent. However this company has been liquidated in 2006 due to heavy losses incurred. Therefore the Board will not reap the benefits from its large investment. Further, accumulated interest of Rs. 31,024,922 up to December 31, 2005 has been written off by the Board. No provision had been made for any doubtful debts for this investment.

“Marketing and sales promotion expenses total Rs. 419 million for the year under review as against Rs. 247.6 million in the previous year. Although the marketing and sales promotion expenses have increased by 69 %, sales have increased by only five percent.

“Although the Tender Board has approved the purchase of 100,000 wall calendars, 420,000 wall calendars have been purchased and the cost for the extra 320,000 calendars is Rs 4,960,000.”

In addition to such extravagant expenditures Rs. 76.2 million had been incurred on Corporate Image during the year, exceeding the budgeted amount of Rs 61.2 million by Rs. 15 million. Comparatively in 2005 only Rs. 21 million had been spent on this activity.

Another obvious discrepancy had been in the purchase of computers during the year. The Auditor General pointed out that while the budgetary allocation for purchasing computers and accessories for 2006 was Rs 25 million, it had been exceeded by Rs19.8 million without any relevant approval from the Finance Ministry in terms of Section 8 of the Finance Act No.38 of 1971.

We hope to publish some of the audit queries raised by the Auditor General regarding the 2007 accounts of the Board next Sunday, when we receive the DGM Finance’s comments on Monday.