New faces, new scam
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It was a rainy evening, the previous day. However, on Thursday morning the weather had cleared with bright sunshine streaming through the branches of the margosa tree which looked forlorn as if it waited with anticipation for the weekly under-the-tree chat by the trio.This morning, however, they were chatting at the gate with Aldoris, the choon- paan karaya, who had come down the lane with his cheerful ‘tune’ filling the neighbourhood, making everyone rush to their gates to purchase their breakfast.
He also sounded elated. “Ada ogollanta, mata ke-gahanna be mila gena. Parlimenthuwe ayath kiyanawa mila hondatama wedi wela kiyala hema ekema, seenith athuluwa (Today, you can’t shout at me because prices of my products have gone up. Even parliamentarians are saying prices including that of sugar have gone up sharply),” he said with conviction. The trio, earlier ready to launch another argument, then smiled in response.
“Ow, ow…….Api dannawa oyata karanna deyak ne kiyala jeevana viyadama wedi wena kota. Balannako, elavalu gana me davas wala (Yes… yes… we know, you don’t have a choice as the cost of living has gone up. Look at the prices of vegetables these days),” said Serapina.
“Loku prashnayak thiyenawa seeni mila gena, samahara ayojakayanta vaasi labuna kiyala (There is a big problem over sugar prices as some importers seem to have benefited),” noted Mabel Rasthiyadu.
“Ow, monavahari magadiyak thiyenawa wage pita ratin gena seeni sambandawa. Badu sahana gena samahara kattiyata (Yes, there seems to be some corruption in sugar imports. It’s to do with the tax rates which benefited a few traders),” said Kussi Amma Sera.
The corruption scandal surrounding sugar imports appears to be even bigger in financial terms than the Central Bank bond scam which revealed a loss of over Rs. 10 billion.
As the trio was discussing prices and the crisis in the sugar trade, I was also perusing some information pertaining to the sugar scandal which is the subject of this week’s column. Before proceeding any further, the scam – which was virtually acknowledged by the Finance Ministry in their submission of a loss incurred when presenting a report to the Parliamentary Committee on Public Accounts (COPA) on Tuesday – should be investigated with all the resources of the state, without fear or favour. A highly-influential businessman with close ties to the current regime is in the dock over gaining millions of rupees in profits after benefiting from reduced taxes.
What actually happened? The matter was brought up late last year in Parliament by the JVP who alleged that by the reduction of the Special Commodity Levy on sugar from Rs. 50 per kg in May last year to 25 cents in October 2020, the government had lost billions of rupees in tax revenue.
Then on Tuesday, the Finance Ministry dropped a bombshell during the COPA meeting, stating that the government lost nearly Rs. 16 billion in tax revenue due to the lower tax imposed on sugar.
So how did the scam occur? When the tax rate was reduced to 25 cents per kg from Rs. 50, the influential businessman and a few other cronies imported sugar at this lower rate, kept it in bonded warehouses and private storage facilities without releasing it to the market to be sold at the lower price. There was a hue and cry with sugar prices rising due to a shortage in the market.
Then a few weeks later, the tax was increased to Rs. 40 per kg and at this point the stocks of sugar (imported at 25 cents) were released to the market and sold at around Rs. 100-135 per kg. There are serious accusations that this particular business group had influenced certain high-level officials to adjust the sugar tax to their gain. Eventually, the government lost nearly Rs. 16 billion in revenue and the consuming public didn’t benefit from the lower tax of 25 cents imposed on sugar. It was only this group of businessmen with the influential trader apparently raising his share of the market (in the post 25 cents taxation period) to over 50 per cent from less than 5 per cent earlier, that gained, opposition parliamentarians allege.
So will the government probe this case which is even bigger than the Central Bank bond scam?
As I pondered over this (and as I was writing at the same time), the phone rang. It was Arthika, my nonsensical economist friend also known as good-for-nothing Somey.
He was in a fiery mood today. “I say… why are we allowing corrupt businessmen in connivance with officials, to loot our country like this?” he said.
I sensed where he was going with this statement but nevertheless asked: “What are you talking about?”
“Why, Tuesday’s revelation before a parliamentary committee where the country has lost nearly Rs. 16 billion in tax revenue because of a fraud? Surely, you heard this too,” he asked, expressing surprise. “Well… yes. In fact that is my column piece today and I was also going through some papers pertaining to the scam,” I said.
“With the Ministry of Finance itself admitting that they lost a substantial amount from taxes and implying that a few traders would have benefited from this by hoarding stocks, it is high time the government launches a full investigation and takes action against corrupt officials,” he said, adding: “The present set of ruling party politicians raised hell with the Central Bank bond scam during the tenure of the previous regime but is silent on the latest scam.”
“This is the eternal bane of politics in the country. When one set of politicians are in power, they allow corruption to take place but when they are out of power, they raise hell over corruption by the governing party. The question is, even if there is an investigation, will it be independent, transparent and without any political bias,” I said.
After discussing the sugar scam further and the reality that no investigation is likely to happen, we ended the conversation hoping to catch up again in the next few weeks.
As I looked out of the window, the margosa tree seemed to be rejuvenated with its branches playfully moving with the wind, as the trio had gathered under it to have their weekly conversation.
Sipping my second mug of tea, brought earlier by Kussi Amma Sera, I reflected on the lack of honesty and integrity of Sri Lanka’s political leadership to be courageous enough to probe scams even if it means acting against their own.