BOI gets tough with bribe-demanding officials
View(s):The Board of Investment (BOI) is to permit foreign firms to invest in BOI companies, a move which wasn’t encouraged earlier, officials said. In another move, the agency is getting tough with politicians and local government officials demanding bribes to approve investments in the provinces.
“Earlier (due to Exchange Control) foreign firms weren’t allowed or encouraged to invest in equity (shares) in BOI firms as they were be required to repatriate dividends to their home countries, even though the BOI Act Section 17 provides for it. So, it is only a matter of accommodating such interested firms. From now on we’ll encourage this type of equity investments,” Upul Jayasuriya, Chairman BOI told the Business Times.
Infact an investment company in Hong Kong has made an application to this effect recently and the BOI will process it, he added.
“They want to invest US$ 100 million in undercapitalized BOI firms (after doing an analysis of such companies) which will boost their cash flow situation,” Mr. Jayasuriya said, explaining that each year the trend at the BOI has been for some five to six firms to close due to financial issues.
He added that encouraging such foreign equity investments will help sustain BOI companies. “We’re taking a practical view in this instance. The bigger issue is sustaining firms while repatriating their dividends is secondary (in terms of exchange control/sending money out) next to what such investments can do for firms and the country at large.”
Mr. Jayasuriya pointed out that this isn’t a new phenomenon, but something that was already in the BOI Act (Section 17 which allows BOI to exempt exchange control, Customs, etc) and from now on such archaic practices will be stopped. The investment promotion authority has listed out as a primary task to eradicate bribery and corruption, rampant in all areas of their business right down to the lowest official in related line agencies.
Mr. Jayasuriya pointed out that local politicians to the last person in different agencies accept, encourage and demand bribes and that the BOI is looking to get ‘tough’ in these situations. “We have got so many complaints of such situations (during the past nine months) and the Horana Pradeshiya Sabha is a top culprit. Also in Puttalam, an Indian investor is being harassed by a local politician. We’re re-looking at the practical situation in order to put a stop to corrupt practices, thereby assisting a free flow of FDIs. We’re going to ‘trap’ the offenders in the act.”