Thursday, March 17, 2016

Sri Lanka people face Rs8.7bn bill over latest Lak Sathosa scandal

ECONOMYNEXT - In the latest case of mis-management at Lak Sathosa, a trading agency run by the elected rulers, is facing an 8.7 billion rupee shortfall on a 14 billion rupee loan to import a stock of rice which is now rotting away.
Lanka Sathosa had imported 257,857 metric tonnes with of rice on a 14.078 billion bank loan. Up to now 17 billion rupees had been spent on the stock so far including for transport and warehousing, the cabinet of ministers had been informed.
Only 5,742 million rupees of the loan had been repaid. The state information office did not say which bank had been defaulted, but usually it is usually from state banks that state enterprises borrow and default.
"It has also being found that by the sale of the remaining stock of rice it is not possible to cover the remaining loan amount, to cover the day to day expenses of the Lanka Sathosa Institution, and to cover the required capital expenditure," the statement.
The cabinet of ministers had decided to use people's money from the Treasury "to repay the remaining amount of the bank loan" and also cover "emergency capital expenditure requirements."
Sathosa is a darling of Sri Lanka's elected ruling class, and Sri Lanka's Janatha Vimukthi Peramuna in particular blocked the privatization of its predecessor Sathosa also known as CWE after it collapsed under bad loans by 2000.
At the time then trade minister Ravi Karunanayake settled most of its loans without using people's taxes and was in the process of privatizing the retail operation when the Marxist Janatha Vimukthi Peramuna blocked the move.
The firm was later closed and then re-started under the Rajapaksa administration by then trade minister Bandula Gunewardene with people's money and is now again a permanent burden on the people.
Lak Sathosa also does not pay value added tax, in another privilege ministers had given to the agency controlled by them.There was no mention of who was held accountable for the losses.
But retail chains owned by private citizens contributed to state coffers through VAT. 

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