PCol wants AG to find out why BOI failed to monitor Mihin Lanka

by Rathindra Kuruwita

Justice Gamini Rohan Amarasekera of the Presidential Commission of Inquiry (PCoI) on irregularities at SriLankan Airlines, SriLankan Catering and Mihin Lanka, yesterday, instructed the Attorney General’s Department officials to find out whether the Investment Monitoring Unit of the BoI hadn’t monitored continuous violations of BoI agreement by Mihin Lanka due to any pressure.

Earlier, the overnight witness Gamini Jayathilake, Director, Investments at BoI, told the PCoI that Mihin Lanka continued to enjoy tax concessions, due to its agreement with the BoI, without fulfilling the conditions of the agreement.

The BoI’s monitoring unit had not looked into those infringements.

"Usually, we don’t scrap our agreements with companies if they continue to function," he told the PCoI. However, Justice Amarasekera observed that he had seen the BoI strip companies of tax concession privileges when they failed to fulfill their obligations. "We sometimes do that under BoI instructions," Jayathilake said.

He said Mihin Lanka had received tax concessions worth Rs. 385.3 million between September 2012 and January 2018. SriLankan had received tax concessions worth Rs. 561 billion in the same period. SriLankan Catering had received concessions worth Rs. 5 billion.

Jayathilake also said on Monday that BoI had placed several conditions on Mihin Lanka for it to receive income tax concessions. One of the conditions was that the company should invest USD 100 million in its operations within two years. It was expected to make 70% of its income from foreign currency as the company had suggested that foreign travellers would also use the airline and that there would be a viable cargo operation.

However, on February 26, 2009, two years and four months later, CEO of Mihin Lanka Kapila Chandrasena wrote to BoI and sought permission to amend the agreement it had entered into with the BoI to receive continuous tax concessions. In his letter, he sought permission to change the clause which stated that the company must invest USD 100 million into its operations within two years to USD 50 million in five years. He also wanted the income from foreign currency to be reduced to 40% from 70%. Although the BoI has sent a letter to Chandrasena asking for reasons, the airline has not hitherto responded.

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