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Counterfeit liquor bottle stickers: Excise boss responds

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Excise Commissioner General MJ Gunasiri says that there is no other industry which can match the magnitude of frauds and corruption as the liquor industry.

“There are reasons for that. For example, the actual cost of a bottle of liquor priced at Rs 2,500 is around Rs 600-700. The balance is taxes payable to the government. Imagine the profit of a liquor producer if he could sell his product for the present market price without paying the due taxes.

“Every single bottle priced at Rs 2,500 would fetch over Rs 1,800 to that producer. There had been a time when the liquor producers were selling their products through the networks of bars and restaurants without paying taxes. They bribed excise officers who maintained that network.

“Former Finance Minister Mangala Samaraweera wanted to dismantle this network and get the due tax revenue to the Treasury. For that purpose, he introduced the fool-proof sticker project which was given cabinet approval in 2017. It was implemented in 2019 but the stickers could be affixed only on foreign liquor bottles owing to various obstacles thrown by excise officers and businessmen. The project was fully implemented starting from Jan 3, this year.

Gunasiri said there was a history of liquor producers cheating the government since colonial times. “Tax evading in this manner is a centuries old problem as State Finance Minister Ranjith Siyambalapitiya recently said at the Annual General Meeting of the Sri Lanka Excise Officers’ Association, in Colombo.

“The minister explained how the century-old practice of tax evasion by liquor producers by submitting false figures continued. Do not mix-up this untaxed liquor production with distilling moonshine by villagers in shrub jungles and near streams.

“The untaxed liquor production is done by rich businessmen in three-piece suits. They have liquor producing licences and submit false figures. They pay taxes only for the figures they maintain in their books and thereby cheat tax collectors. They produce much more liquor than the amounts permitted by the permits they hold.

“This is a century-old problem. The British, who controlled the Maritime Provinces, received around 7.6 percent of their total revenue from excise taxes and duties. In 1810, the British government had received revenue of 268,700 Rix-dollars from the Maritime Provinces under their control. Of that amount, 20,500 Rix-dollars were from excise taxes.

“The actual excise revenue should be more than this, as per the then Revenue Commissioner. The then British Revenue Commissioner too had stated that local liquor producers produced much more than the amount they stated in their books and cheated the government. It is with this century-old problem that we are fighting,” Gunasiri said.

Asked to comment on the recent allegations on supposedly fool-proof stickers, he said: There are 25 distilleries in the country and of them two produces beer while the rest produces hard liquor. Among these companies the large-scale producers such as DCSL and Ceylon Brewery produces around 40,000- 60,000 bottles per hour. There were no machines to fix stickers on bottles at such speed. Later we imported machines for that purpose but because of COVID-19 lockdowns and Aragalaya disruptions it took time to install them.

Asked to comment on allegations against employing Madras Security Printers Pvt Ltd (MSP) which is said to be an internationally blacklisted company, Gunasiri said that the Excise Department did not have a role in selecting the company to print stickers. “It is primarily the task of the Finance Ministry who calls for tenders and selects the company. The Excise Department is only the implementing agency.

“MSP is said to have submitted the lowest bid. It had been selected after two tender called in 2017. As per the contract with the ministry, MSP has to supply 1,000 stickers for UDS 5.59. I assumed duties on Dec 15, 2020 and I checked the allegations.. The black-listed allegation was found fake by the Finance Ministry as documents to prove that had been submitted through the Indian High Commission.

“A black listed company is not entitled to compete for a tender. When MSP was selected several parties had gone before court challenging the award. Later the plaintiffs themselves withdrew their action as they could not prove it.”

Commenting on recent allegations made in Parliament and elsewhere against excise officers working hand-in-glove with producers to fix counterfeit stickers on liquor bottles, Gunasiri said that there had been instances that may give credibility to such allegations.

“Many distilleries had been amassing enormous undue profit by using artificial toddy or ethanol to produce liquor and then selling them through their own liquor shops. This surely had been done with the connivance of the excise officers. There are 1,689 excise officers in the department and I do not think that anyone could give a blanket certificate that all those officers are not corrupt.

“In the same way none could say that there is no way of introducing counterfeit stickers. I can vouch that 98 percent of stickers and digital codes on the liquor bottles are genuine and consumers could buy them without fear. I leave a margin of two percent for any possibility for wrong doings.

“I state that with the present system, we have ensured 98 percent of due excise revenue is now collected. For this year the target set for us is Rs.180 billion. We have been able to collect Rs 150 billion. During this period from Jan 03, this year to now the production has increased by 11 percent and excise revenue by 19 percent. As at now, QR codes could be checked by any consumer by using a QR code scanning app.

“This is a task which is easier said than done. At the time I assumed duties in 2020, the excise revenue was at Rs 121 billion. In 2015, the revenue was at Rs 115 billion. It shows that during the five year period from 2015 to 2020, the revenue had increased only by six billion rupees. I increased the revenue by Rs. 19 billion to total Rs 140 billion in 2021.

“The task was not easy because I stopped issuing ethanol to many suspected buyers who got ethanol in the guise of producing sanitizers, surgical spirit and incense sticks and later sold stocks to liquor manufacturers. There was huge opposition. I was threatened with death. Yet we worked with determination to dismantle the networks of ethanol importers, liquor producers, those who produce ethanol from artificial toddy, distributors, middlemen, corrupt officers and sellers.”

Asked to comment on consumers failing to read the QR Code on stickers affixed on bottles, the Commissioner said that a sticker has three features, namely, overt, covert and forensic. “We introduced this project of fixing the stickers without the required equipment because the political leadership was insisting on implementing it.

“At the start some codes could not be entered into our system. There had been instances of finding it difficult to read them through QR scanning apps in mobile phones. Now this technical glitch has been sorted out. Any consumer who has a problem can contact us and complain so that we could follow-up.

“There are 58 excise units deployed for this purpose with sophisticated equipment and they are able to check and take action. There are allegations by various parties. We did not have complaints from the large scale liquor producers. At the moment the DCSL produces 55 percent of liquor, beer producers 26 percent, and three other companies 10 percent while the rest of producers amount to only seven percent.

“The biggest opposition came from that seven per cent. It is they who are actually responsible for the media and political interest with regard to this issue,” the Commissioner General said.

“We are entrusted with three main tasks – to earn revenue for the government, to prevent the improper use of illegal liquor, dangerous drugs and psychotropic substance abuse and to regulate the tobacco and liquor manufacturing industry. The excise revenue surpasses 11 percent of public revenue. In regulatory functions we still operate understaffed. It needs around 1,600 excise officers and we have a shortage of around 325 officers,” he said.



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Trump’s tariffs, AKD’s gazette and Sri Lanka’s diplomatic slumber

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“We are rather respectable in Colombo. We go to bed fairly early, and we remain there till morning. “

According to Sri Lanka’s diplomatic folklore, the late S.W. R. D. Bandaranaike uttered these words while explaining the reasons for Sri Lanka’s abstention on the UN resolution condemning the Soviet invasion of Hungary. Apparently, SWRD’s foreign ministry officials were asleep at home when the diplomatic cable seeking instructions was received from New York. In those days, there were no cell phones, Internet, or even fax or telex machines. The diplomatic cables were sent through post offices. Decoding them was a slow and time-consuming process. Thus, the government could not provide appropriate instructions to our mission in New York in time, and the Sri Lankan delegation abstained on that sensitive UN vote.

Sri Lanka’s Absence from Section 301 Consultations

But then, how does one explain Sri Lanka’s absence from the crucial bilateral consultation held in Washington by the Office of the United States Trade Representative (USTR) during March-April on “Forced Labour” under the Section 301 of the US Trade Act of 1974? Didn’t our foreign and trade ministries send appropriate instructions to Washington in time? Even if the instructions from the foreign ministry were transmitted to our embassy in Washington by pigeon carriers, there was enough time for Sri Lanka to participate in those meetings.

In March, the USTR initiated these 301 investigations on 60 trading partners, and invited all of them for confidential consultations. Out of the 60, 46 participated in these consultations. Sri Lanka was not one of them. Other countries that didn’t participate in these consultations included China, Russia, and Venezuela! In addition to that, the Section 301 Committee conducted a public hearing with interested parties on April 28 and 29. Washington-based diplomats, representatives from few trade ministries as well as representatives from many foreign trade associations and chambers participated in these hearings. Sri Lanka was once again conspicuously absent.

As a result, when the USTR published the proposed forced labour tariffs on June 2nd, Sri Lanka ended up with a 12.5% duty. Pakistani and Indonesian diplomats participated in these consultations and took appropriate follow-up measures, and managed to enter the 10% duty category. As even a threat of a modest tariff hike could disrupt supply chains and reduce competitiveness, particularly in an industry such as garments, I discussed this issue on 15 June and underscored the importance of Sri Lanka’s participation at the next hearing, which was scheduled to be held from July 7th .

Awakening from Diplomatic Slumber and AKD’s Gazette

Fortunately, Sri Lanka finally awoke from weeks of diplomatic slumber, and Ambassador Mahinda Samarasinghe participated in the public hearing on 9 July, and promised, “…. · We have agreed to the text in our negotiations with the USTR on forced labour, …. The gazette as we speak is being printed and I’m getting the gazette tomorrow morning, and the gazette will be shared with USTR as I get it“.

As promised, President Anura Kumara Dissanayake issued a gazette on 10 July banning the imports of goods produced by forced labour. These new regulations are very similar to what Pakistan and Indonesia enacted in April, after their consultations with USTR in March. Why couldn’t we do it in April? Why did we wait till the very last minute?

Challenges ahead

“War is too important to be left to generals alone,” is a famous saying attributed to former French Premier Georges Clemenceau. Similarly, monitoring our main markets is too important to be left to diplomats alone. The United States is the largest single-country market for Sri Lanka. Therefore, Sri Lankan trade chambers and associations should become more proactive in these markets and participate in these events. For example, the chairman of the Pakistani apparel exporters association participated in the April hearings. Similarly, representatives from the Indian Agricultural and Processed Food Products Export Development Authority, the Federation of Indian Chambers of Commerce and Industry, the Confederation of Indian Industry, and Reliance Industries also participated in July hearings. At an event where each speaker is given only five minutes (strictly enforced), having a number of speakers from a country is an advantage. The presence of industry representatives in these kinds of events also help them understand the market dynamics and the future challenges. This is important, particularly because there will be many more challenges with Trump’s tariffs.

With the gazette issued on 10 July, Sri Lanka has imposed a prohibition on the importation of goods produced with forced labour. Now, the challenge will be to effectively enforce the prohibition. And what are the goods produced with forced labour? The USTR list only focuses on aluminum, cotton, electronics, lithium-ion batteries, rice, and tobacco. However, according to the U.S. Department of Labour, the list is much longer. Hence, this list may change continuously during the next two years and tariffs may fluctuate once again.

So, this is definitely not the time to slumber.

(The writer, a retired public servant, can be reached at senadhiragomi@gmail.com)

by Gomi Senadhira ✍️

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Tales of Mystery and Suspense 10 Casino for Sale

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After the overwhelming grotesquerie of J K Rowling’s latest Cormoran Strike novel (written, I should have noted, as the others were, under the pseudonym Robert Galbraith), I thought I should return to the world of fun, and also a much shorter description since this thriller moves quickly without the layers of detail that Rowling engages in.

I then move to the second comic thriller by Caryl Brahms and S J Simon. This, their second story to feature Vladimir Stroganoff and Adam Quill, was Casino for Sale, as lunatic a romp as the first, though without the emphasis on the ballet that characterized A Bullet in the Ballet.

This one begins with the impresario Stroganoff buying a casino cheap from Baron Sam de Rabinovich, only to find that it was a rundown place, not the grand casino of La Bazouche, a resort on the Frenc+h Riviera, as he had initially thought. The grand one belonged to Lord Buttonhooke, and Stroganoff could  not compete, until he thought of bringing the Ballet Stroganoff to the casino – which of course leads to Buttonhooke deciding to have ballet performances in his Casino too.

Stroganoff invites Quill to visit him, which Quill decides to do since he has left Scotland Yard, having come into a legacy. No one believes this, and he has to face questions as to what he did to have been sacked, with sympathy for having been found out.

Caryl and Simon

The day he arrives in La Bazouche there is a murder, of a vitriolic critic called Citrolo, in Stroganoff’s office. He had been going to write a damning review of the opening night of the ballet and Stroganoff, when he realizes Citrolo cannot be swayed, drugs him and dictates the review himself to the papers. He leaves Citrolo sleeping and finds him shot the next morning, whereupon he decides to muddy the waters and leave a suicide note and lots of other murder weapons. So much overkill, as it were, of course ensures that he is arrested.

But the excitable French detective who makes the arrest follows up his suggestion that Buttonhooke was also involved, and so the two casino owners find themselves in cells next door to each other, with the detective Gustave quite happy to provide creature comforts for a fee.

Quill decides he must investigate, and finds Gustave most cooperative, since he has a laid back attitude to work. So it is Quill that finds a notebook which makes it clear Citrolo is an accomplished blackmailer, and that there are lots of possible murderers, including Stroganoff’s croupier, who was crooked, Rabinovich, who was now working for Buttonhooke, a confidence trickster called Kurt Kukumber, whose prospectus for a dud gold mine was found in the office and Prince Alexis Artishok who was engaged in a deal to buy diamonds from the ballerina Dyra Dyrakova.

Stroganoff had been trying to get Dyrakova to dance for him, but having done so previously she had refused. But then to Stroganoff’s chagrin she agreed to dance for Buttonhooke. The clearly crooked Artishok had told Buttonhooke’s mistress Sadie Souse, who was not very bright, that Dyrakova possessed diamonds she was willing to sell cheap, and Sadie was determined to have them.

Quill meanwhile finds out that there was a secret passage to Stroganoff’s office, the obvious solution to what had begun as a locked room mystery, and that this was known by almost everyone apart from Stroganoff himself. And then Rabinovich is murdered, just after Gustave had released his two original suspects, leading him to blame Quill for having insisted on that and thus allowing them to kill again.

Soon afterwards Dyrakova arrives, and the town is full of posters announcing that she will appear in the casinos, elaborate posters for either one, since Stroganoff is determined that she will dance for him, and if she does not come willingly, he has devised a scheme to make her do so unwillingly. So, though Buttonhooke has her taken off to his yacht immediately she arrives at the station, Quill along with Arenskaya gets her into a launch and to Stroganoff’s casino, where she performs to tumultuous applause, not knowing for whom she is dancing.

When Quill asked her about the diamonds, she said she had sold them long ago, and that gave Quill the solution to the mystery. Rabinovich had known about this, and Artishok had killed him to prevent Sadie learning it from him, he had killed Citrolo who had recognized him for an accomplished card sharper, not a Russian prince at all. But before he is arrested, he gets away in a boat, and the police launch that pursues him is on the point of catching him up when it runs out of petrol.

Again, lots of excitement, and entertaining references  – Gustave grows marrows – and if not quite as brilliant as its predecessor, Casino was certainly a delightful read.

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The challenge of being positive about SAARC

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The RCSS forum addressed by SAARC Secretary General Ambassador Md. Golam Sarwar in progress. (Pic courtesy RCSS)

It was a few years back that a former President of Sri Lanka took it on himself to pronounce SAARC ‘dead’. Since then there have been other sections of Sri Lankan opinion that have joined the critics of SAARC and taken the solemn stance that SAARC has indeed died what may be called a natural death.

Their fatalism is understandable. SAARC has failed to meet at heads of government or state level for the past several years to take the SAARC process notably forward. Regional cooperation has more or less been only an appealing idea. No substantive concrete projects have taken off to make the idea a hard reality. ‘Inner paralysis’ seems to be SAARC’s lot. Hence the fatalism in these circles.

However, being one of the worst cash-strapped regions of the world and a teemingly populated one with people virtually left to their devices, what choices do the ‘SAARC Eight’ have other than to try their best to band together and continue with their cooperation efforts, however small they may be?

There is no escaping the mounting debt trap for many of these countries and bankrupt Sri Lanka is a glaring example, but ‘throwing in the towel’ and abandoning themselves entirely to the diktats of the strongest economies and their agencies will prove a ‘living death’ for many countries in the SAARC fold.

The gains may be meagre but giving-up on SAARC cooperation in full would prove self-defeating for the organization and South Asia. Right now, the collective intention ought to be to salvage what the region could from the tenuous cooperative efforts. Moreover, such initiatives could go some distance to generate a degree of goodwill among the Eight and help in sustaining a dialogue process.

Given this backdrop it proved ‘a stich in time’ for the Regional Centre for Strategic Studies (RCSS), Colombo, to recently host the SAARC Secretary General Ambassador Md. Golam Sarwar to a round table discussion on the unifying potential of SAARC and its future possibilities, besides other related issue areas.

Held on June 24th and moderated by RCSS Executive Director and former ambassador Ravinatha Aryasinha, the forum brought together a vibrant, wide ranging audience comprising academicians, diplomats, senior public servants, civil society activists and many others. Following the presentation by Ambassador Golam Sarwar titled, ‘Reigniting SAARC: Achievements, Challenges and the Way Ahead’, a lively Q&A followed.

The above forum could be described as an act of lighting the proverbial ‘candle’ rather than ‘cursing the darkness.’ It surely is a ‘darkness’ that could be seen as daunting considering that the region’s pivotal powers, India and Pakistan, are failing to act in a spirit of accord but are engaged in bitter finger-pointing on a number of questions of vital importance to SAARC.

On the other hand, what is the rest of the region doing to bring the above sides together? It is disappointing that to date the rest of SAARC has failed to launch a major diplomatic drive to bring peace between the feuding regional heavyweights. It needs to act without delay and establish its earnestness and this effort would need to prove SAARC’s staying power in the unfolding months and even years.

In assessing SAARC’s seeming failure local opinion in particular has failed to factor in what could be described as weak leadership. Since Sheikh Mujibur Rahman of Bangladesh, the founding father of SAARC, the region has failed to produce a visionary leader who could advance the SAARC cause with charisma and drive.

Among other reasons, weak leadership accounts considerably for the faltering and stuttering status, as it were, of SAARC. Badly needed are leaders who could go the extra mile, think less of narrow national interests and work diligently towards the collective well being of the region but SAARC’s millions of ordinary people have been made to wait in vain for leaders of such stature. Instead, they have been burdened with politicians who seem to be relishing the apparently moribund state of SAARC.

Looking back, it could be said that it was the dynamic leadership factor that led to the launching of the Non-Aligned Movement and for its sustenance for a few decades. True, it could be seen in some quarters that NAM is no more, but as in the case of SAARC, the former too has been unfortunate to be burdened over the years with politicians who lack the vision and drive to unflaggingly advance the fortunes of the South. NAM and SAARC lack the dynamism and vision of leaders of the stature of Jawaharlal Nehru, for example, to give them the required guidance and intellectual depth.

The reasons are complex for there not being among us currently political leaders with the vision and the steadfast commitment to advance the legitimate interests of the South. However, it could be stated with conviction that the majority of Southern leaders have too easily caved in to the demands of the global North and its financial agencies.

These leaders have failed to see, for instance, that the largely market economy oriented Northern governments would not view with favour a centrist economic model that attaches priority to the interests of the dis-empowered publics of the South. This realization ought to have dawned on the current government in Sri Lanka, for instance, some while ago but it has no choice but to abide by IMF dictates since economic survival at present is unthinkable without the latter’s succour.

Accordingly for SAARC this should be the time for some soul-searching. Priority needs to be attached to ending the feuding between India and Pakistan since at present the material fortunes of the region hinge largely on these regional giants giving peaceful relations among them a try. This is no easy challenge to meet but some daring, visionary diplomacy needs to take hold among the rest of SAARC.

There is some sense in SAARC bringing the peoples of the region together through programs that address their best collective interests. A meeting of minds among SAARC nations could enable SAARC and its agencies to build a region-wide people’s movement for progressive political and economic change that could in turn lead to the region’s political leaders sensitizing themselves more to the neglected needs of their publics.

However, the time is ‘now’ for the initiation of these progressive changes and the voice of SAARC well wishers would need to drown out those of their critics.

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