17 September, 2021

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Sri Lanka’s Slide From Perpetual Bonds To Pyramidal Sugar Bags  

 By Rajan Philips

Rajan Philips

A political observer with an exceptionally sharp mind offered this online comment recently: “With little on offer as a political alternative, many of us seem to wallow in idle gossip and pin hopes on plain speculation.” Who would disagree? Except to add that gossip,  speculations and outbursts are emanating more from within the government than from outside, indicating both frustration and helplessness in government ranks. As well, those who heralded the present government as once-in-a-generation of its kind – headed by the best ever non-political Sri Lankan to seek political office for the sake of the old country after forsaking the new, and those who sang hosanna to the highest from the outside, are now left with sugar on their faces. Literally. The sugar scam is not the only scam. And where there is no scam, there is rampant incompetence.

The question is how could a new government elected with unprecedented double majorities (one for the executive and another for the legislature) have come a cropper so early in its mandate? There was no want of goodwill. Even critics of Gotabaya Rajapaksa wanted the man to succeed as President. For the sake of the country. More so, after Covid-19 struck. And Covid-19 is no longer an excuse. If at all, the pandemic has become the biggest cauldron of examples for government confusion in decision making, crass sloppiness in dealing with medical professionals and scientists, and chaotic incompetence in rolling out Covid-19 vaccines.

One term too many?

One can see the manifestations of internal frustrations in Wimal Weerawansa’s warnings and outbursts, and in the responses and speculations of SLPP Parliamentarians. Mr. Weerawansa, before his latest outburst about Rishad Bathiudeen, was all about crowning President Gotabaya Rajapaksa as leader of the SLPP to let him learn the ropes of politics, as party leader, to become a successful president. The SLPPers, on the other hand, besides accusing Weerawansa of backstabbing and calling for his dismissal, have started speculating about a one-term presidency for Gotabaya Rajapaksa and musing about Basil Rajapaksa as the next patriotic presidential candidate with possible American affirmation.

What is going on? Who is getting tired of whom? After all the struggle of getting a two-thirds majority in parliament, is President Gotabaya Rajapaksa being coaxed and cajoled to limit himself to a single term? Or is it that he has had enough of this powerful but ineffectual presidential charade? Is one term too many even with two-thirds majority?       

Perhaps a more significant manifestation of the government’s internal troubles is in the work of the three parliamentary committees on – Public Finance (COPF), Public Enterprises (COPE) and on Public Accounts (COPA), and in the apparent audacity of their Chairmen, all government MPs (respectively – Anura Priyadarshana Yapa, Charitha Herath and Tissa Vitarana), to act with some independence and without looking for directions from the executive. It is their persistence that is widely believed to have forced Finance Ministry officials to come clean with the chronology of decisions and import activities behind the nearly Rs. 16 billion swindle in importing sugar. 

I am inclined to see some difference between the antics of Weerawansa and his SLPP detractors, on the one hand, and the workings of the three parliamentary committees, on the other. Taking note of this difference has some relevance to discussing the current political quagmire and the absence of serious alternatives. And the difference is that the Weerawansa/SLPP responses to the government’s paralysis are an indication of the tired and tatty state of the executive presidency as a political system regardless of who the incumbent president is. As against this, the workings of the parliamentary committees are indicative, no matter how slimly, of the possibilities of parliament in spite of the current presidential incumbent and the two-thirds majority he commands in the legislature.       

Bond scam and Sugar scam

Looked at it another way, there are also differences between the way the executive and the legislature responded to the bond scam of the last government, and the way they are responding to the sugar scam of the present government. The last government used parliament to do a more prolonged cover-up job than the present one. The current parliament has done a far more effective policing job with the sugar scam than its predecessor did with the bond scam. The JVP which was on mute mode for most of the bond saga, is now breathing fire and burning the government’s sugar, and has taken the case of the stolen sugar all the way to the Supreme Court. UNP MPs who were all for coverup then until it was too late, are now all reborn SJBers demanding total accountability.

One might also notice other curious similarities and contrasts. There was a Central Banker, the then Governor, no less, Arjuna Mahendran, who was in the eye of the bond storm. There is an indirect connection to the Central Bank now, through the current Finance Secretary, S.R. Attygalle, who is also a former Deputy Governor of the Central Bank, and who has had an interesting career path since then. He was one of the principal public service beneficiaries of the Sirisena-coup government that lasted from October 31 to December 18 in the year of constitutional grace – 2018. President Sirisena appointed Mr. Attygalle as Secretary Treasury displacing Dr. R.H.S. Samaratunga. When the Supreme Court pulled the plug on Sirisena’s childish coup, Attygalle had to give way to Samaratunga. But he was back within a year, and his was one of the first senior appointments by Gotabaya Rajapaksa when he became President in November 2019. Wheels within wheels? It is not only politicians who are caught in the web of unholy alliances, but high-post public servants are also not spared from them. 

Back to sugar scam, Mr. Attygalle tried to make the far fetched argument to the Finance Committee that the government did not actually lose any money because of the reduction of import duty on sugar from 50 rupees to 25 cents per kilogram, because the government had not collected any money to lose! But that does not explain how the government set it up so beautifully that the state would not collect any money that should normally have flowed to its coffers. Here is the chronology from what has been quite well reported on the matter. In May 2020, the government raised the special commodity levy (SCL) from Rs 33 to Rs 50 per kilo – with all the good intentions of lowering imports, saving foreign exchange, boosting local production, and, lo and behold, fighting diabetes, obesity, and other sugar ailments. In less than five months, on October 13, the SCL was slashed from Rs 50 per kilo to, not Rs 33 but Rs 0.25, twenty five cents per kilo. The import floodgates were opened.

Between October 14 and February 20,  320,627MT (metric tonnes) of sugar was imported in four months, about 50 to 60% of annual sugar imports between 550,000 to 650,000MT. On November 10, under panic in the face of rising sugar prices and unable to control the flood of imports through licensing and permits, the government imposed maximum retail price (MRP) limits ranging between Rs 80 and Rs 90 per kilo for wholesale and retail sales of bulk and packeted sugar. But the price limits didn’t work either. Sugar prices were between Rs 118 and Rs 125 per kilo during the four month interval. The government forced Lanka Sathosa, the national retailer to sell at the maximum retail price after buying at much higher prices in the wholesale market. In the upshot, the helpless consumers were gouged, nobody knows how many diabetes patients benefited, and the government lost doubly in collections, at the customs gate and at the national retail counter. Yet it was no loss, by Finance Ministry accounting, because there was no money to lose. Remember Greek Bonds?

From Perpetual to Pyramidal

For whose benefit was this sham? The Finance Ministry has reportedly admitted that six major sugar importers potentially “earned a kind of additional profits.” Leading the pack was Pyramid Wilmar Limited (PWL). An acknowledged giant in global sugar trade, PWL accounted for 40% of the sugar rush and reportedly diverted a shipment meant for another destination to sail to Colombo to take advantage of the slash in Sri Lanka’s import duty. It was not just another shipment that arrived on short notice but, as the Sunday Times reported last week, the largest sugar cargo to dock in Colombo in 30 years, with 26,000MT of sugar in 1,000 containers. PWL was also well positioned to benefit from the slashed duty, because unlike other importers, it was eligible to pay the 25 cents (instead of Rs 50) per kilo duty not only on new imports but also on old stocks held in its bonded warehouse. 

It is not only sugar. The same sugar daddy is said to have had a trial run earlier with coconut oil. Except it was no trial run because the swindle was even bigger – Rs. 20 billion, according to reports citing SJB MP Patali Champika Ranawaka. To sugar and coconut oil – add rice, the nation’s staple, and turmeric, the popular Covid-19 neutraliser, and Sri Lanka has the textbook example of what Prof. WD Lakshman, the current Central Bank governor, has described as the government’s “alternative way” of managing the economy.

To elaborate, about a month ago , around February 12, Governor Lakshman was taking to task  the “doom and gloom” critics of the government for their failure to appreciate “the government’s determination to move away from the, so far, heavy dependence on imports for foodstuffs.” He called it a “ really significant long term policy approach despite in the short run there is an adverse impact in the prices.” He referred to the import ban on turmeric, the immediate price increase, and the eventual stabilization (apparently). “But now nobody is talking about turmeric,” he said. No Sir, now everyone is talking about sugar! 

And rice too! There is new confusion in the government about the current adequacy of rice/paddy stocks. On Friday, The Island editorial highlighted the confusion within the government whether there is or there isn’t a need to import rice. 100,000 MT of rice should be imported according to some government Ministers, but Basil Rajapaksa, the non-cabinet Task Force Minister has been assuring that there is plenty of paddy in the country. Hoarding is certainly the curse, but isn’t there anyone in the government who knows whether there is enough rice in the country or if it should be imported? As government priorities go, Dr. Tissa Vitarana issued this caution in his weekly Sunday Island political statement: “Hunger needs to be overcome before highways and high life!”

Talking about high life and politics, the political connections of Pyramid Wilmar Limited in Sri Lanka are not unlike those of Perpetual Treasuries Limited that was the central entity in the earlier bond scam. Media reports say that the local agent of Pyramid Wilmar is Sajaad Mohammaed Mowzoon, who is also the proprietor of Shangri-La Hotel. It is well known that it was at Shangri-La that Gotabaya Rajapaksa launched his saubhagya project under the auspices of Viyath Maga. Mr. Mawzoon is also reported to be having business connections to the Adani Group, India’s mover and shaker in port development business among other portfolios. The Adani group has been making waves between the East and the West Container Terminals at the Colombo harbour, and now we hear more than rumours of a potential business partnership between two powerful political benefactors in India and Sri Lanka.

And where high life wrongfully pursued will take you became evident in the Colombo High Court last week, with the indictment of former Finance Minister Ravi Karunanayake and eleven others in connection with the 2016 Central Bank bond auctions. The Court also ordered to remand the accused who showed up till March 23, when the case will be taken up again. Those who stand accused deserve their day in court and to have what they say heard. But indictments in Sri Lanka are not what they used to be before the turn of the century. There is more public cynicism about indictments today than there is respect for them, for their impartiality and consistency. Even so, the indictments served last week are still a reminder that what is sauce for one political goose today can be sauce another goose tomorrow. In the absence of serious political alternatives, the least that can be hoped for is that the system is not allowed to be totally overwhelmed by corruption and abuse of power to a point of no return in the foreseeable future.      

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Latest comments

  • 3
    1

    Rajan says: “On October 13, the commodity levy was slashed from Rs 50 . . . to twenty five cents per kilo. The import floodgates were opened. Between October 14 and February 20 (a huge amount) of sugar was imported ……. On November 10, under panic in the face of RISING sugar prices and unable to control the flood of imports …”

    He needs to explain why massive, nearly duty free imports, caused prices to rise. That there was a flood of imports is of course easy to understand.

  • 11
    5

    Rajan, I wonder how on earth our citizenry expects one Rajapaksa to be different from other when there is clear evidence from past when they were together. Looks like the family has a plan and the rest has no clue. One Rajapaksa replaced by another is akin to robber breaking into the same bank multiple times in different identities. In that cast do we blame the robber or the bank or both ???

  • 10
    5

    There is nothing new in family play book except people are enjoying getting screwed. First term was all about cut backs from infrastructure deals which have now dried up, hard to come ,resistance and scrutiny by other countries current pandemic and bankruptcy ,high level of suspiciousness within and outside. Where as food imports are a necessity. The scam will not end here because Lanka continue importing due to scarcity and bankruptcy. So the family too has decided to look elsewhere
    Rajapaksas are masters in exploiting any adversity for financial gains. Whether it is natural disaster, fighting a war, easter, food scarcity, migrants returning, covid management, where possible they will exploit.

  • 8
    6

    First came the saviour and the messiah and then came the sibling hailed as strong man/ super man, iron man just a few among many titles, but the man himself preferred to be
    called as Mr.Sircular, and guess what he is just another SUGAR DADDY. Our citizenry is now focusing on catchy titles for the next in line , from their beloved family.

  • 4
    3

    All this because the 2015 to 2019 regime blundered. You only get one chance.

    UNP should not have confronted Sirisena. Instead they should have stayed as one team and punished the Rajafucksas.

    Although UNP, JVP, SLMC, ACMC and TNA came together in January 2015 and defeated Rajapaksas, by August 2015 they had once again gone back into their own separate racist holes. This helped Rajapaksas.

    You cannot beat Rajapaksas in their own game of racism.

    Unless UNP, SJB,JVP, SLMC,ACMC and TNA shed their racism, Rajapaksas are going to divide and rule everyone.

    • 2
      1

      Gatam,
      “Unless UNP, SJB,JVP, SLMC,ACMC and TNA shed their racism, ………*
      Coming from you, that’s really something.

      • 0
        0

        OC
        You know that his finger on the keyboard is not regulated by the computer upstairs.
        The thumb count is what matters, which way is immaterial.

  • 1
    0

    I had my Sunday belly laugh. Rajan’s cynical humor will be the death of me. Hopefully next Sunday I’ll have the courage to read him again.

    • 1
      2

      S
      Will you be alive next Sunday

  • 0
    0

    Will you be alive prof know it all , aka SJ. CHILDISH.

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