A top level probe has been initiated over the alleged fraudulent sale of a stock of 600 metric tons of sugar from the Sevanagala Sugar Co just as the company is being merged with Pelwatte Sugar Co, Finance Ministry sources said. Employees of the factory told the Business Times they have complained to the Treasury alleging that some officers with powerful political backing had sold 600 metric tons of sugar worth Rs. 54 million, sending the stock out of the factory secretly without making any entry in record books.
These officers took control of the factory with the support of powerful politicians in the area soon after the take-over of the Daya Group-managed factory by the government, they disclosed. When contacted, Secretary to the Productivity Promotion Ministry Lalith Kannangara, also Competent Authority of the Sevanagala and Pelwatte sugar factories, said that he also came to know about this incident. The government in the meantime has finalised plans to merge the two factories, both of which were taken over under the Revival of Underperforming Enterprises and Underutilised Assets Act. Pelwatte was run and managed by the Harry Jayawardena-led Distilleries Group. The cabinet sub-committee appointed to look into the 37 enterprises taken over by the government has given its consent to the merger and the proposal is now with the Attorney General's department for legal clearance, Mr. Kannangara said. He added that the two sugar plants will be operated separately under a new state owned company to be formed. However referring to the alleged fraud he noted that such a huge stock of sugar cannot be taken out from the factory secretly.
The Treasury is spending around Rs. 100 million monthly for salaries of workers and other costs of the factory since its take-over, a senior Finance Ministry official said.
Sevanagala will soon run into financial difficulties if such rackets are allowed to continue, the official said referring to the alleged fraud. Mr. Kannangara told the Business Times that the factory has sold 750 metric tons of sugar out of the current production of 850 metric tons.
The actual sugar production should be 1200 metric tons, he said adding that the shortfall of 350 metric tons was due to unavoidable circumstances. He noted that the factory purchased 21,464 metric tons of sugar cane from cultivators in the latest season and has crushed 21,308 tons. The reason for the shortfall was due to a sudden halt in the production process for around 10 days as a result of an interim injunction issued by the Embilipitiya District Court on May 20 based on a petition filed by Daya Group Chairman Daya Gamage, which was later revoked. In his petition, Mr. Gamage said the present authorities have no right to use machinery and other assets belonged to him, because under the Expropriation Act, the government has taken over only the land and buildings.
Meanwhile the International Court of Arbitration has decided to take up a complaint it has received against the Board of Investment of Sri Lanka in connection with the state take-over of Sevanagala, Mr. Gamage said.