By Saman Indrajith

The State Timber Corporation earned an operating profit of Rs. 1.4 billion in 2021, but transferred only Rs. 100 million to the Treasury. This came to light when the Committee on Public Enterprises (COPE) questioned a high-ranking state official recently.

COPE Chairman Prof. Charitha Herath said that the annual revenue earned by state institutions should be received by the State Treasury.

The COPE Chairman said state institutions should be prepared to send a significant portion of their earnings to the Treasury.

The Chairman said so when the officials of the State Timber Corporation was summoned before COPE recently to examine the Auditor General’s Reports for 2019 and 2020 and to evaluate their performance.

The COPE noted that the Forest Department had granted approval to the State Timber Corporation on 30 June 2020 for the removal of 28,958 pine trees from the Hein Ford Estate in Weligampola, Kandy but the trees had not yet been removed. Member of the Committee Mahindananda Aluthgamage, Member of Parliament said the State Timber Corporation could have earned a hugh profit if it has carried out that task

It was also revealed that the Committee on Public Enterprises on 10 October 2012 had directed that action be taken to amend the Corporation Act to empower the State Timber Corporation to issue a certificate for imported timber, but that had not been done. Officials of the Timber Corporation said a board paper had been submitted for this purpose. The COPE also drew attention to the delays in the process from 2012 to date.

The COPE inquired into a write off of Rs. 14.4 million worth of debt by the Corporation without the approval of the Treasury. The officials said that the decision had been taken by the then Acting Board of Directors in 2007 with the approval of the Corporate Audit and Management Committee. The COPE Chairman said that since the Secretary to the Treasury was in charge of the Consolidated Fund for Public Debt, if debts are written off, the Chief Accounting Officer should inform the Secretary to the Treasury and obtain permission.

The COPE said that in 2012, it had directed that the loss making Kaldemulla Furniture Factory should be turned into a profitable venture, but there had been no improvement.

The COPE Chairman stated that the furniture outlets owned by the Corporation as a whole had incurred huge losses. The Auditor General stated that the waste of large quantities of timber in the production of furniture had been observed as a reason for these losses and that byproducts of discarded timber could help reduce this loss to some extent. That was due to the lack of employees with proper knowledge of furniture manufacturing and the need to compete with the private sector in the market, the officials of the Timber Corporation said.

The COPE Chairman instructed the Secretary to the Ministry to send a report within one month on the future course of action to be taken in consultation with relevant officials.

The COPE also noted that two advisors and a driver had been recruited for the Chairman of the Corporation in contravention of the circular. The recruits were paid an allowance of Rs. 2,850 per day for 270 days, a sum of Rs. 769,500, from 12 February to 3 September 2019. Although the approval of the General Treasury had been sought for this purpose, it was not received and the COPE Chairman directed the Secretary to the Ministry to take legal action against the relevant Chairperson.

The COPE noted that the corporation had incurred a loss of Rs. 982,473 after reducing the price of items valued at Rs. 1,690,183 by more than 50 percent to Rs. 707,710 and the General Manager of the Corporation stated that this decision had been taken due to the fact that the furniture was in a defective condition after being kept for too long without disposal. The Chairman said that if such concessions could be justified, a Board Memorandum should be submitted and the Auditor General’s Department should be informed.

The COPE meeting was attended by Members of Parliament Mahindananda Aluthgamage, Jagath Pushpakumara, Harsha de Silva, Eran Wickramaratne, Indika Anuruddha, Sagara Kariyawasam, Madhura Withanage as well as the Secretary to the Ministry of Wildlife and Forest Conservation and officials of the State Timber Corporation.