Laksala shops violate AR & FRs
The Laksala handicraft boutique chain owned by the Sri Lanka Handicrafts Board is offering up to 25 per cent commission for brokers who direct local and foreign consumers violating state financial regulations, an audit inspection revealed.
The loss incurred by Laksala last year was Rs. 85.7 million and it was around 12 per cent of the total turnover of Rs. 737 million, Finance Ministry sources revealed.
The present management functioning under the Ministry of Industry and Commerce should obtain the Treasury approval for a large expenditure from the turnover in accordance with government Administration and Financial regulations (AR and FRs), a senior ministry official said.
Making payments amounting to millions of rupees as commissions for Laksala brokers was a financial misappropriation and causing a massive loss to the government, he alleged.
Meanwhile Laksala is to diversify its functions with the aim of popularising and promoting local handicrafts industry both locally and globally following the turnaround of the once, loss-making entity to a profit-making venture, a top official of Laksala said.
From the inception by the Sri Lanka Handicrafts Board, Laksala has followed government financial regulations.
However as a commercial operation it has to formulate its own AR and FR in accordance with the National Crafts Council and the Allied Bodies Act 35 of 1982 Act, he said adding that this was not done so far.
Under these circumstances Laksala should adhere to the state AR and FRs and it cannot violate those regulations, he added.
According to the 1962 Act of the National Crafts Council, there are 35 varieties of handicrafts in the island made from indigenous raw materials.
Laksala is presently selling less than 10 of those varieties. Instead its outlets sell underwear, slippers, oils and cosmetics.
Some 50 per cent of the goods sold at Laksala contravenes the Act, the ministry official disclosed pointing out that it is high time to amend the Act thereby enhancing the growth potential of the gift and souvenir category and adding value to the tourism sector.