Alleged front man of former President Mahinda Rajapaksa, Nandana Lokuwithana will have to pay approximately RS 2.5 Billion in taxes due to violation of the Board of Investment (BOI) agreement with Ceylon Steel Corporation (CSC).
Although Ceylon Steel Corporation was granted a ten year tax holiday, the Board of Directors of the BOI under former Chairman Upul Jayasuriya had decided to suspend the exemption granted for the import of raw materials due to non-fulfilment of terms and conditions of the agreement entered into with the BOI on 3rd June 2011. This was after an investigation carried out by the BOI’s Project Monitoring Unit.
According to the Board Paper submitted through the Chairman – dated 5th July 2017 – which is in the possession of Colombo Telegraph, the Project Monitoring Unit had sought board approval for the suspension. According to our information the board was in favour of the suspension although they had decided to wait until the CSC had submitted the clarification with regard to the issue the BOI sought. The BOI had received an unsatisfactory clarification from CSC on 7th July 2017. They claimed in their reply that the BOI had made a mistake in including a condition in the agreement stating that there should be US$ 125 million import substitution to be made by CSC. However in fact SCS had made an import substitution only up to US$ 12 million. They had forgotten the fact that the agreement was signed by both parties, the CSC and the BOI.
Prior to taking the decision on the suspension, the Chairman had come under pressure to withdraw the board paper. However he didn’t succumb to pressure and tendered his resignation and which was followed by the other members, Colombo Telegraph learns.
According to BOI sources, if the BOI had decided to suspend the agreement with the CSC, it will have to repay around RS 2.5 billion the CSC earned though the entitlement of 10% tax exemptions.
However this same board paper will be tabled at today’s board meeting which incidentally is the 1st board meeting of the newly appointed board and the Chairman Dumindra Ratnayaka.
Lokuwithana bought the Ceylon Steel Corporation for US$ 77 million at the invitation of the Rajapaksa regime. Apparently he is now a very close friend of President Maithripala Sirisena and Minister Malik Samarawickrama.