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PMB paddy at cut rate for Aloysius’ liquor company
View(s):By Kasun Warakapitiya
The Paddy Marketing Board (PMB) has sold paddy stocks stored at Mattala Rajapaksa International Airport at cut rate to W M Mendis and Co — a liquor manufacturing firm owned by the influential Aloysius Group, which is associated with the Central Bank bond issue now under investigation.
The paddy was hawked off to the company at Rs 24 a kilogram. The PMB had bought the stocks for between Rs 38 and Rs 42 a kilogram. The loss to the Board is, therefore, between Rs 14 and Rs. 18 a kilogram.
The total quantity of paddy sold was 590 metric tonnes, PMB Chairman M.B. Dissanayake, said, claiming that it was pushed off to Mendis because other buyers could not be found. This means that the Board — which comes under the purview of the Rural Economic Affairs Minister P. Harrison — has lost between Rs 8,260,000 and Rs 10,620,000.
Mr. Dissanayake insisted that the stocks were too old to be used and needed to be cleared out. “We tried to export the stocks, sell it to millers, vend it as animal feed but no one bought it,” he said. Some of it was sold to the World Food Programme and certain other buyers but he declined to name the latter. He also said tenders had been called.
A leading union of farmer associations and of small millers contested Mr Dissanayake’s numbers. The All-Island Farmers’ Federation (AIFF) said that as much as 4,000 metric tonnes had been sold to Mendis. If true, this would multiply the PMB’s losses to between Rs 56,000,000 and Rs 72,000,000 (on the basis of information provided by the PMB on the prices it bought and sold the stocks at).
Even while claiming a shortage of paddy in the country, these stocks were stored at MRIA without releasing them to millers, AIFF National Organiser Namal Karunaratne charged. “Then they were sold to a private company manufacturing liquor,” he claimed.
Significantly, the sweetheart sale of paddy to Mendis comes amidst the company starting construction on a Rs 4 billion grain-based extra neutral alcohol (ENA) distillery in Kalkudah in the Batticaloa district. Approval to set up the distillery was granted to the company just 18 weeks after the presidential election was won, among other things, on a premise of eradicating drugs and alcohol. Building is now suspended on an order of the Koralaipattu Pradeshiya Sabha (PS). Local and provincial officials are opposed to the project.
Excess stock from the 2015 paddy harvest was dumped at MRIA in August-September that year due to a lack of adequate storage space and the absence of a plan to distribute paddy to millers. “When certain millers created an artificial rice shortage, the Government had the opportunity to convert the paddy to rice using its own mills at Hasalaka, Galgamuwa or Embilipitiya, said Mr Karunaratne. Some of the paddy was released at animal stocks last year and in January 2017 in private business deals of politicians, he alleged.
Local paddy is used to manufacture beer, while imported rice is provided to consumers, said Mudith Perera, President of the United Rice Millers’ Association (URMA). They too put in tenders to buy some of these stocks but they were not released. There were sufficient millers in Hambantota and other areas willing to purchase the paddy. Yet the Food Committee of the Finance Ministry decided it should be sold to Mendis at Rs 24 a kilogram. The Finance Ministry, through its Fiscal Policy Department and Department of Excise — also approved the Kalkudah distillery.
The allegation that PMB stocks were sold to a liquor company must be inquired into, State Finance Minister Lakshman Yapa Abewardena told a news conference this week. He said he did not know how tenders were called or how the decision to provide the paddy to Mendis was made.
The Sunday Times contacted W M Mendis and Co. Officials there declined comment, even after inviting this journalist to its head office at Welisara in Wattala. Subsequent phone calls to the company went unanswered.