Fraud alleged in Rubber Co, Tea Shakthi fund
Serious financial irregularities involving more than a billion rupees have
been uncovered in state-owned tea and rubber companies, according to the
Minister of Plantations Industries, Lakshman Kiriella.
The ministry was investigating allegations of fraud during the previous
management of these organisations and had launched an investigation to
find out how big sums of money acquired from the Treasury and banks had
been spent, he said.
"The Treasury had given Rs. 800 million to four factories under the
Sri Lanka Rubber Manufacturing Company (SRMC)," he told The Sunday Times
Business. "We do not know what happened to the money."
No feasibility studies had been done nor lands acquired to build the
factories.
The ministry has now appointed a team of auditors to probe the SRMC
finances and might have to hand over the investigation to the Criminal
Investigations Department, he said.
SRMC's new chairman, Shiran Guneratne, said that apart from the Rs.
800 million taken from the Treasury, the previous management had also acquired
another Rs. 200 million from banks. "We're looking at what happened to
the money," he said. Tyres for bicycles made by the company were of such
poor quality that they had no sales, he said.
Ministry officials said losses at the SRMC had been mounting since the
late 1990s and that the company was facing an acute liquidity crisis with
not enough funds to run operations.
An investigation into the affairs of the SRMC commissioned by the ministry
has found that there had been no proper supervision by the ministry or
the Treasury.
The performance of factories under the company had declined since the
mid-1990s and the previous senior management had displayed a "total lack
of accountability", they said.
Production volumes at SRMC had fallen sharply, along with supplies of
field latex, while almost all except a dozen latex collection centres had
been closed, they said.
Payments to smallholders, who produce the bulk of the latex, as well
as to agents and plantations companies, were also in arrears, the officials
said.
One factory under the SRMC had even signed a contract to fulfil an order
for tyres from Afghanistan but no tyres had been sold, they said.
Kiriella said the ministry was also probing irregularities in the use
of funds by the Tea Shakthi fund, which had been set up by the Tea Smallholdings
Development Authority to help smallholders, who now produce more than half
the Ceylon tea crop.
Three cabinet papers had been submitted on November 15 - just before
the general elections - by the previous minister, Prime Minister Ratnasiri
Wickremanayake, seeking approval to provide Rs. 35 million each to build
five tea factories, he said.
But till now no factories had been set up, no tenders had been called
and the ministry had no idea where the money went, Kiriella said.
Another cabinet paper had sought approval to remove the Tea Shakthi
fund from the purview of the Auditor General and to have its accounts audited
by a private firm, he said. A new chairman had been appointed to the Janatha
Estates Development Board and the State Plantations Corporation and the
finances of these organisations too would be examined, he said.
Estates under these two outfits, mostly in Kandy and Matale, which are
in poor condition, would be privatised, he added.
Expansion of Central Bank primary dealer system
The primary dealer system of the Central Bank has been expanded to permit
licensed commercial banks to become primary dealers in government securities.
The Central Bank said in a statement that there will now be two categories
of primary dealers in government securities – licensed commercial banks
and independent primary dealer companies.
The new regulations are effective from February 1.
Under the new system, licensed commercial banks who are appointed as
primary dealers and the independent primary dealer companies will have
exclusive access to bid at the primary auctions for treasury bills and
treasury bonds conducted by the Central Bank and trade in these securities
in their own account and on behalf of customers.
All primary dealers are required to develop an efficient secondary market
in government securities by being "market markers". This is done by quoting
firm buying and selling prices for government securities and by trading
in all market conditions, thereby providing market liquidity.
Parakrama Dissanayake conferred ICS lifetime award
of excellence
Parakrama Dissanayake, Chairman of the Sri Lanka Ports Authority, has been
conferred the Institute of Chartered Shipbrokers (ICS) lifetime award of
excellence for the contribution he has made towards the maritime industry
of Sri Lanka. The award was presented by Minister of Ports Development
and Shipping, Rauff Hakeem at the eighth annual awards ceremony of the
ICS held on January 31.
Dissanayake, who commenced his career with the national line, Ceylon
Shipping Corporation in 1976, was instrumental in pioneering commercial
maritime education in Sri Lanka through the Institute of Chartered Shipbrokers,
Sri Lanka Branch, as one of its founder members, Secretary and Chairman.
Mr. Dissanayake serves on the UNCTAD panel as a shipping expert and,
as a member of the Shipping Task Force and Port Promotion Council, was
closely involved in the development activities of the Port of Colombo.
Bad planning created economic crisis - Choksy
Bad planning and fiscal and revenue raising measures over the past seven
years had created a "most unsatisfactory" economic and revenue position,
Finance Minister K.N. Choksy said last week. There had been a sharp rise
in recurrent expenditure and a shortfall in revenue in the last quarter
of 2001, Choksy told parliament when presenting the Vote on Account for
March-April to provide funds for recurrent and capital spending for on-going
programmes.
Government expenditure for the month would be Rs. 31 billion while the
anticipated revenue would be almost Rs. 19 billion with the shortfall being
met by borrowing, he said.
SLT to renegotiate with NTT of Japan
Sri Lanka Telecom (SLT) has said it was giving formal notice of termination
of the five-year management contract with NTT Communications of Japan,
which has a 40 percent stake in SLT. SLT said in a statement that the decision
to given notice of termination had been taken at a meeting of the new board
of directors on Wednesday.
Under the agreement SLT and NTT signed in August 1997 – and which ends
this August - either party could terminate the deal by giving six months'
notice.
The statement said it had been recommended by the government that SLT
should renegotiate terms and conditions with a view to concluding a new
management agreement.
Seminar on borrowings
The Merchant Bank of Sri Lanka and Lanka Securities Ltd are jointly organising
a seminar and panel discussion on stock borrowing and lending to be held
in Colombo on February 20.
Akbar Naqi of First Capital Ltd of Pakistan and Hiran Mendis, director
general of the Colombo Stock Exchange are the main speakers, followed by
a panel discussion.
Naqi, an expert on portfolio management, will share his experiences
on private client advice and discretionary portfolio management.
Eagle soars
Eagle Insurance Co Ltd net profits last year (calendar 2001) rose to Rs.
197 million, up from Rs. 164.8 million in the previous year. The company
said revenues topped Rs. 2.7 billion in 2001 compared to Rs. 2.2 billion
in 1999. The company has declared the payment of a first and final dividend
of Rs. 6 per share with this recommendation being presented at the AGM
on March 19 for ratification.
BOI signs 21 agreements
The Board of Investment (BOI) has signed a total of 21 agreements in November
to December totalling an investment of Rs. 5.8 billion, of which Rs. 2.3
billion consists of foreign investment. The projected direct employment
is around 2,162, a BOI statement said.
"A high point of the investment agreements has been the first investment
by Chun Cheng Lanka (Pvt) Ltd investing Rs. 1.3 billion and employing 300
people. The BOI has signed an agreement under the special technology category
to set up a fisheries project, which will utilise technology not previously
used in Sri Lanka. This Singaporean project would upgrade Sri Lanka's regional
competitiveness in the sector," it said.
Recogen (Pvt) Ltd has signed an agreement to set up a charcoal manufacturing
factory and an 8 MW power generation plant at Badalgama, with an investment
of Rs. 940 million. This project - a 100% owned subsidiary of Haycarb Ltd
- will produce combusting gases (rich in carbon monoxide, methane and hydrogen)
released during pyrolisis of coconut shells in a boiler that will in turn
run a steam turbine. Of the total 8 MW of electricity to be generated,
7 MW will be supplied to the national grid (under the standardised private
power purchase agreement), while the balance 1 MW will be used for internal
consumption.
Zyrex Power Company Erathna Ltd signed an agreement to set up a mini
hydro power generation plant investing Rs. 506 million. Royal Porcelain
(Pvt) Ltd has signed an agreement to set up a project to manufacture ceramic
floor tiles by acquiring the assets of Interbach Porcelain (Pvt) Ltd.,
which is a BOI approved company that ceased commercial activity. Royal
Porcelain made an additional investment of Rs. 722 million to obtain BOI
status.
Other projects are Kalutota Residence (Pvt) Ltd to set up a housing
complex in two locations in Colombo 3 and 5, Star Packaging (Pvt) Ltd to
manufacture corrugated cartons for the local market, International Trading
and Packaging Systems (Pvt) Ltd to manufacture corrugated cartons, poly
bags, hangers and acetate boxes for Marks & Spencer at Seeduwa, John
Keells Warehousing (Pvt) Ltd to set up a warehouse at Muthurajawela, Global
Rubber (Pvt) Ltd to make solid rubber tyres for the export market, Kailash
Metachem (Pvt) Ltd to set up a project to manufacture lead oxide, zinc
oxide, PVC stabilizers, etc. for the export market, Alchemy Boulder (Pvt)
Ltd to process silica quartz for the overseas market and The White Haven
(Pvt) Ltd to set up a 25-roomed hotel at Panadura.
Daiko Sri Lanka (Pvt) Ltd has signed up to manufacture machinery parts
and accessories for sewing machines and other similar machines for export
while in the garment sector, two companies Devouge (Pvt) Ltd and Challenge
Apparels (Pvt) Ltd have signed agreements to manufacture quota and non-quota
garments for exports.
Data Infoworks Lanka (Pvt) Ltd, DCS Centre for Information Technology
(Pvt) Ltd), and Netmedia International (Pvt) Ltd have signed deals in the
IT sector. Netmedia International (Pvt) Ltd has signed an agreement to
develop software for the export market. Data Infoworks Lanka (Pvt) Ltd
will set up a project to develop software for the domestic and export markets
while DCS Centre for Information Technology (Pvt) Ltd., will set up an
IT Training Institute under the 50 IT training centre programme.
Some UNF appointments raise governance issues
Some recent appointments by the new UNF government have raised questions
on whether the government would betray the trust reposed on them by the
public and fulfil expectations of supporters who gave them a massive mandate
for good governance.
For example, the ouster of the de Mels (Lalith and Lal) for no justifiable
reason gives food for thought. The fact that Lal has been replaced by a
CEO of a company is not germane to the issue; what is relevant though is
the fact that favour appear to be repaid out of political gratitude!
In any event the fact that they were appointed by the previous regime
is insufficient reason for their eviction - after all there are several
instances where the incumbents have been requested to continue as chairmen
of other statutory institutions.
This is as it should be particularly if it is found that those involved
are discharging their responsibilities with honour and acceptance.
The replacement of Lalith de Mel on the other hand by a controversial
appointee whose deeds and deals were the main topics in the free press
for a sustained period until a few weeks ago is definitely a matter for
investigation.
While both de Mels have an impeccable record in the private sector,
Lalith de Mel has an international reputation for total management professionalism.
Another strange appointment is that of an athletic coach about whom
there are many unsettled disputes, being selected as the Deputy Chairman
of the Livestock Board.
It is possible that these somewhat puzzling selections have been made
in gratitude for services rendered in the past to the UNF coalition. But,
then what is at stake is the public welfare. What is strange (and baffling)
is that these appointments are the actions of those who proclaimed that
'cronyism' will not even be a word in their administrative vocabulary during
the run up to the poll.
It is natural for anyone in a seat of power to choose his team from
among his friends and acquaintances but it is imperative that public appointments
involving taxpayers' money are made after careful thought and consideration.
Friendship and repayment of debts and favours have no place here and are
not the criteria for filling high calibre positions.
It is also absolutely necessary that any person appointed to public
office has no links whatever, with anyone or any activity that may affect
objective judgement.
It is well for the new 'rulers' to remember that there are many statutory
bodies that could be used as sanctuaries for their sycophants and supporters,
and these could house not only those referred to in this communication
but many others as well.
This is not all. The average citizen heaped praise on the new government
when they removed the notorious roadblocks and barriers. However, this
euphoria was short-lived - convoys carrying politicians ejecting and obstructing
normal motorists and others from proceeding on their legitimate business
have once again become a feature, albeit occasionally at the present time.
The public is impressed with the performance of the PM and some of the
cabinet ministers but a few are responsible for the above situation.
The latest action by the PM to stop a person referred to light-heartedly
as the wheat 'commissioner' should act as a precedent to be followed by
the entire team of ministers and their deputies.
Those guilty of any lapses should be given short shrift lest they corrupt
the rest.
B.J. Karunatileka
Nawala. |
