Features

SCAM OR INCOMPETENCE?

Published

5 years ago

2021/03/21

By Sanjeewa Jayaweera

The latest controversy to stoke much discussion in both the political arena and the public domain is the purported “sugar scam.” Politicians from both the JVP and SJB have been vociferous in their condemnation, claiming that reducing the Special Commodity Levy (SCL) on sugar was done to benefit a particular trader and that the loss to the state is more than Rs. 15 billion; indeed a substantial amount of money.

In the absence of verifiable data of the trader concerned reflecting his previous sugar import pattern, it is impossible to venture an opinion on the deal – whether it is a scam or a case of serious misjudgment by those vested with the authority to change the SCL on sugar.

What I do know is that politicians do not always tell the whole truth. It does not matter which party is in the opposition or government. In this day and age of electronic and social media, if you tell a lie often enough, it become the truth. Most people will not try to sift the rhetoric from the facts and arrive at a fact-based conclusion.

There is an absence of independent information in our country that the public can access to either confirm or reject a supposition propagated by interested parties. In certain countries, anybody could easily access or obtain records of the monthly quantity of sugar (or any other commodity) imported and by whom. I do not see any issue of confidentiality or trade secrets being compromised by making such information public. In such a scenario, a few independent individuals could confirm to the public whether the trader concerned had increased his import volumes substantially in anticipation of the decrease in the SCL. He could have stored the sugar in a bonded warehouse and cleared the stocks after the SCL was reduced. In that case, we can conclude that the trader had insider information and was a significant beneficiary of the cess reduction. That could indeed be deemed to be a fraud or a scam.

I find that in the last few months, there have been instances of opposition MP’s and others leading the public astray with their comments. The JVP was at the forefront of the campaign that forced the government to cancel the East Container Terminal (ECT) award at the Colombo Port to an Indian, Japanese and Sri Lankan consortium. They, together with trade unions and a section of the Buddhist clergy, claimed that the government was selling off national assets to foreigners.

Despite the investment proposal being a 35-year lease on a build operate transfer (BOT) basis, the ‘sell-off’ allegation was freely made. There is a significant difference between a sale and a lease. In a previous articles, captioned “Why the Government should have honoured the ECT agreement”, published in this newspaper, I set out why I believe the ECT campaign was disingenuous and counterproductive.

Just yesterday (Wednesday), I watched a clip of a JVP MP saying that the government claim that but for the reduction in the SCL to 25 cents, the current retail price of sugar would be about Rs. 170 per kg. This is absolute nonsense. He claimed that the landed cost of sugar in March 2021 was about Rs. 85 per kg and if the previous SCL at Rs. 50 per kg was maintained, then the maximum price should be Rs. 135 per kg and not Rs. 170 per kg. After a pause, he conceded that maybe the importer could keep five rupees per kg as his profit/cost and as such, the maximum price of sugar would be Rs. 140 per kg.

I do not doubt that the MP is unaware of the commercial aspects of a trading transaction. For the benefit of laymen, let me elaborate. Once the sugar is landed, the importer will incur additional costs such as storage, transport and working capital costs and, of course, then keep a profit. It is thereafter sold to a wholesaler who has his costs and profit margin, and after that the retailer who too has his own costs and profit. So, to assume only an additional five rupees per kg post the landed cost is incurred is not accurate and is misleading. Assuming a minimum margin of 5% is kept at each link in this chain, just five rupees per kg over the landed cost and SCL is totally inadequate.

A few weeks ago, the leading spokesman on Economic matters of the SJB, on a television talk show named a leading supermarket chain and claimed that despite the gazetted price of samba rice being Rs. 98 per kg, this particular chain was selling at Rs. 135 per kg. I saw the live program and was shocked. Having worked for the owners of this chain for over two decades, I knew they would not engage in such an act. I contacted some of my former colleagues and checked the claim. I was told the story was wholly untrue. They did not sell samba, and the price quoted by the MP was for keera samba. I encouraged my former colleagues to sue the MP because, in my view, their brand name was tarnished by a wild and incorrect statement. Usually politicians and scribes desist from naming names and say “a well-known supermarket chain etc..” But in this instance the chain was named for whatever reason And an MP who should known better, given his education and stature, made a baseless allegation that has been subsequently retracted.

Before my retirement, I worked as the Chief Financial Officer of a leading carbonated soft drinks manufacturer where sugar was the main raw material . Therefore, I was involved in the decision-making process of procurement and, though not an expert, have a fair idea of how the world sugar market works. We used to purchase a higher grade known as ICUMSA 45, whilst what is sold in the retail market is ICUMSA 150. We used to purchase our sugar primarily through international traders and the price was based on the London futures market. Our contracts were for several months to ensure price stability. However, even then, the SCL was the uncontrollable element.

As I remember, the SCL was reviewed every three months and was either increased, decreased, or maintained as before. The logic was that when the world price of sugar was increasing, the government would reduce the SCL, and when world prices were coming down, the government would increase the SCL. The intention was to maintain a stable retail price.

This policy has its disadvantages in that when world prices reduce, the consumer does not get the benefit. The other side of the coin is that when world prices increase, the consumer is part-protected – a case of “you can’t have your cake and eat it.” A former colleague maintained a 10-year record of SCL revisions and world prices at the time. In most instances, the logic I explained above was followed, but there are a few instances when the reverse did happen!

This same logic is applied to petroleum prices too. When the world oil prices plummeted during the initial wave of Covid-19, the consumer did not benefit. But he’s now being protected as prices rise. This, I think, is not a sound economic policy and is partly the reason why our country is in an economic and financial mess.

I understand that when the government decided to reduce or eliminate the SCL on sugar, the country’s sugar stocks were relatively high. It seems that most traders had purchased excess inventories sufficient for as many as three months from India, the primary supplier of sugar to Sri Lanka. This happened because India usually suspends its export quotas for about three months from the end of September for whatever reason.

So, when the government did decide to reduce the SCL to just 25 cents, the traders were unable to extend the benefit to the consumers immediately as they had significant stocks in hand on which SCL of Rs. 50 per kg had been paid. Obviously, we cannot expect traders to incur a loss by selling below cost. In this scenario, what happens is that there is a shortage in the market with importers, wholesalers and retailers holding stocks.

Sugar was sold at the retail price of Rs. 100 per kg in January 2020. The price increased after April 2020 and with sugar retailed between Rs 130 and Rs. 145 per kg just prior to the reduction of the SCL. In the immediate aftermath, the gazetted price of Rs. 85 per kg was held for a short time only by the privately-owned supermarkets and Sathosa. Supermarkets need to adhere to price controls as they are easily raided and need to avoid negative publicity. However, they will only sell a minimal quantity as losses cannot be borne indefinitely. Invariably, scarcity results and the authorities quietly allow retailers to sell at a higher price. This is when the opposition MP’s shout saying that sugar is not sold at the government mandated price.

I understand that various officials from the Department of Trade, Tariff and Investment Policy, Committee on Cost of Living and the Treasury are involved in the decision-making process when deciding on the merits or otherwise of the revised SCL. They are expected to consider factors such as movement in world prices, impact on government revenue, stocks in hand and cost of living.

In this instance, the authorities do not seem to have done their due diligence in ascertaining the availability of sugar stocks in the market. Had they done so, they would have realized that reducing the SCL on sugar would not benefit the consumer immediately. Substantial stocks cleared at SLC of Rs. 50 per kg was available in the country.

The question is whether the due process was followed, and if not, was it incompetence or ignored to benefit a few? In the absence of verifiable data, I cannot comment. Only an independent commission of inquiry can do so, although we know these are a dime a dozen and nothing much results.

A justifiable question to ask the authorities is why the SCL was not reduced to say Rs. 25 per kg? By reducing it to 25 cents the authorities have nothing to offer the consumer at present when the price of sugar in the world market is increasing. For the record, in July 2016 the Yahapalana government reduced the SCL to 25 cents from Rs. 30 per kg as the sugar prices in the world market increased significantly.

Having worked in the private sector for 25 years, I know successive governments advised by public servants have introduced various economic proposals without thinking through the consequences.

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Features

US’ drastic aid cut to UN poses moral challenge to world

Published

13 hours ago

2026/01/1

Thilina Walpola

An UN humanitarian mission in the Gaza. [File: Ashraf Amra/Anadolu Agency]

‘Adapt, shrink or die’ – thus runs the warning issued by the Trump administration to UN humanitarian agencies with brute insensitivity in the wake of its recent decision to drastically reduce to $2bn its humanitarian aid to the UN system. This is a substantial climb down from the $17bn the US usually provided to the UN for its humanitarian operations.

Considering that the US has hitherto been the UN’s biggest aid provider, it need hardly be said that the US decision would pose a daunting challenge to the UN’s humanitarian operations around the world. This would indeed mean that, among other things, people living in poverty and stifling material hardships, in particularly the Southern hemisphere, could dramatically increase. Coming on top of the US decision to bring to an end USAID operations, the poor of the world could be said to have been left to their devices as a consequence of these morally insensitive policy rethinks of the Trump administration.

Earlier, the UN had warned that it would be compelled to reduce its aid programs in the face of ‘the deepest funding cuts ever.’ In fact the UN is on record as requesting the world for $23bn for its 2026 aid operations.

If this UN appeal happens to go unheeded, the possibilities are that the UN would not be in a position to uphold the status it has hitherto held as the world’s foremost humanitarian aid provider. It would not be incorrect to state that a substantial part of the rationale for the UN’s existence could come in for questioning if its humanitarian identity is thus eroded.

Inherent in these developments is a challenge for those sections of the international community that wish to stand up and be counted as humanists and the ‘Conscience of the World.’ A responsibility is cast on them to not only keep the UN system going but to also ensure its increased efficiency as a humanitarian aid provider to particularly the poorest of the poor.

It is unfortunate that the US is increasingly opting for a position of international isolation. Such a policy position was adopted by it in the decades leading to World War Two and the consequences for the world as a result for this policy posture were most disquieting. For instance, it opened the door to the flourishing of dictatorial regimes in the West, such as that led by Adolph Hitler in Germany, which nearly paved the way for the subjugation of a good part of Europe by the Nazis.

If the US had not intervened militarily in the war on the side of the Allies, the West would have faced the distressing prospect of coming under the sway of the Nazis and as a result earned indefinite political and military repression. By entering World War Two the US helped to ward off these bleak outcomes and indeed helped the major democracies of Western Europe to hold their own and thrive against fascism and dictatorial rule.

Republican administrations in the US in particular have not proved the greatest defenders of democratic rule the world over, but by helping to keep the international power balance in favour of democracy and fundamental human rights they could keep under a tight leash fascism and linked anti-democratic forces even in contemporary times. Russia’s invasion and continued occupation of parts of Ukraine reminds us starkly that the democracy versus fascism battle is far from over.

Right now, the US needs to remain on the side of the rest of the West very firmly, lest fascism enjoys another unfettered lease of life through the absence of countervailing and substantial military and political power.

However, by reducing its financial support for the UN and backing away from sustaining its humanitarian programs the world over the US could be laying the ground work for an aggravation of poverty in the South in particular and its accompaniments, such as, political repression, runaway social discontent and anarchy.

What should not go unnoticed by the US is the fact that peace and social stability in the South and the flourishing of the same conditions in the global North are symbiotically linked, although not so apparent at first blush. For instance, if illegal migration from the South to the US is a major problem for the US today, it is because poor countries are not receiving development assistance from the UN system to the required degree. Such deprivation on the part of the South leads to aggravating social discontent in the latter and consequences such as illegal migratory movements from South to North.

Accordingly, it will be in the North’s best interests to ensure that the South is not deprived of sustained development assistance since the latter is an essential condition for social contentment and stable governance, which factors in turn would guard against the emergence of phenomena such as illegal migration.

Meanwhile, democratic sections of the rest of the world in particular need to consider it a matter of conscience to ensure the sustenance and flourishing of the UN system. To be sure, the UN system is considerably flawed but at present it could be called the most equitable and fair among international development organizations and the most far-flung one. Without it world poverty would have proved unmanageable along with the ills that come along with it.

Dehumanizing poverty is an indictment on humanity. It stands to reason that the world community should rally round the UN and ensure its survival lest the abomination which is poverty flourishes. In this undertaking the world needs to stand united. Ambiguities on this score could be self-defeating for the world community.

For example, all groupings of countries that could demonstrate economic muscle need to figure prominently in this initiative. One such grouping is BRICS. Inasmuch as the US and the West should shrug aside Realpolitik considerations in this enterprise, the same goes for organizations such as BRICS.

The arrival at the above international consensus would be greatly facilitated by stepped up dialogue among states on the continued importance of the UN system. Fresh efforts to speed-up UN reform would prove major catalysts in bringing about these positive changes as well. Also requiring to be shunned is the blind pursuit of narrow national interests.

Features

Egg white scene …

Published

13 hours ago

2026/01/1

Thilina Walpola

Hi! Great to be back after my Christmas break.

Thought of starting this week with egg white.

Yes, eggs are brimming with nutrients beneficial for your overall health and wellness, but did you know that eggs, especially the whites, are excellent for your complexion?

OK, if you have no idea about how to use egg whites for your face, read on.

Egg White, Lemon, Honey:

Separate the yolk from the egg white and add about a teaspoon of freshly squeezed lemon juice and about one and a half teaspoons of organic honey. Whisk all the ingredients together until they are mixed well.

Apply this mixture to your face and allow it to rest for about 15 minutes before cleansing your face with a gentle face wash.

Don’t forget to apply your favourite moisturiser, after using this face mask, to help seal in all the goodness.

Egg White, Avocado:

In a clean mixing bowl, start by mashing the avocado, until it turns into a soft, lump-free paste, and then add the whites of one egg, a teaspoon of yoghurt and mix everything together until it looks like a creamy paste.

Apply this mixture all over your face and neck area, and leave it on for about 20 to 30 minutes before washing it off with cold water and a gentle face wash.

Egg White, Cucumber, Yoghurt:

In a bowl, add one egg white, one teaspoon each of yoghurt, fresh cucumber juice and organic honey. Mix all the ingredients together until it forms a thick paste.

Apply this paste all over your face and neck area and leave it on for at least 20 minutes and then gently rinse off this face mask with lukewarm water and immediately follow it up with a gentle and nourishing moisturiser.

Egg White, Aloe Vera, Castor Oil:

To the egg white, add about a teaspoon each of aloe vera gel and castor oil and then mix all the ingredients together and apply it all over your face and neck area in a thin, even layer.

Leave it on for about 20 minutes and wash it off with a gentle face wash and some cold water. Follow it up with your favourite moisturiser.

Features

Confusion cropping up with Ne-Yo in the spotlight

Published

13 hours ago

2026/01/1

Thilina Walpola

Ne-Yo: His management should clarify the last-minute cancellation

Superlatives galore were used, especially on social media, to highlight R&B singer Ne-Yo’s trip to Sri Lanka: Global superstar Ne-Yo to perform live in Colombo this December; Ne-Yo concert puts Sri Lanka back on the global entertainment map; A global music sensation is coming to Sri Lanka … and there were lots more!

At an official press conference, held at a five-star venue, in Colombo, it was indicated that the gathering marked a defining moment for Sri Lanka’s entertainment industry as international R&B powerhouse and three-time Grammy Award winner Ne-Yo prepares to take the stage in Colombo this December.

What’s more, the occasion was graced by the presence of Sunil Kumara Gamage, Minister of Sports & Youth Affairs of Sri Lanka, and Professor Ruwan Ranasinghe, Deputy Minister of Tourism, alongside distinguished dignitaries, sponsors, and members of the media.

Shah Rukh Khan: Disappointed his fans in Sri Lanka

According to reports, the concert had received the official endorsement of the Sri Lanka Tourism Promotion Bureau, recognising it as a flagship initiative in developing the country’s concert economy by attracting fans, and media, from all over South Asia.

Nick Carter: His concert, too, was cancelled due to “Unforeseen circumstances

However, I had that strange feeling that this concert would not become a reality, keeping in mind what happened to Nick Carter’s Colombo concert – cancelled at the very last moment.

Carter issued a video message announcing he had to return to the USA due to “unforeseen circumstances” and a “family emergency”.

Though “unforeseen circumstances” was the official reason provided by Carter and the local organisers, there was speculation that low ticket sales may also have been a factor in the cancellation.

Well, “Unforeseen Circumstances” has cropped up again!

In a brief statement, via social media, the organisers of the Ne-Yo concert said the decision was taken due to “unforeseen circumstances and factors beyond their control.”

Ne-Yo, too, subsequently made an announcement, citing “Unforeseen circumstances.”

The public has a right to know what these “unforeseen circumstances” are, and who is to be blamed – the organisers or Ne-Yo!

Ne-Yo’s management certainly need to come out with the truth.

However, those who are aware of some of the happenings in the setup here put it down to poor ticket sales, mentioning that the tickets for the concert, and a meet-and-greet event, were exorbitantly high, considering that Ne-Yo is not a current mega star.

We also had a cancellation coming our way from Shah Rukh Khan, who was scheduled to visit Sri Lanka for the City of Dreams resort launch, and then this was received: “Unfortunately due to unforeseen personal reasons beyond his control, Mr. Khan is no longer able to attend.”

Referring to this kind of mess up, a leading showbiz personality said that it will only make people reluctant to buy their tickets, online.

“Tickets will go mostly at the gate and it will be very bad for the industry,” he added.