By Saman Indrajiith

The Frontline Socialist Party, on Tuesday, said that amending of laws in favour of forex racketeers by the Yahapalana government in 2017 was one of the main causes of the prevailing forex shortage crisis.

Addressing the media at the party head office in Nugegoda, FSP Education Secretary, Pubudu Jagoda, said that the then Prime Minister Wickremesinghe had got the Exchange Control Act amended. “Since 1953, we have had the Exchange Control Act which prevented questionable outflows of forex. Wickremesinghe brought in a new law under the name Foreign Exchange Act, in 2017, replacing the former legislation. He said the reason for doing away with the Exchange Control Act of 1953 was to liberalise the foreign exchange flow. However, the new law proved detrimental to this country’s interests. Around 30 forex fraudsters were released from the cases against them. The new law has led to the present foreign exchange crisis.

“As per the previous legislation, exporters required to bring home an equivalent, or more, of foreign exchange of the worth of their exports via the banking system. The violation of the law was a criminal offence. The offences, under the former legislation, were non bailable offences. As per the provisions of the Exchange Control Act, the property of the offender was to be confiscated. At the time the new law was introduced, there were around 30 cases pending before our courts against alleged violators of the former Act. Among those were close associates of Wickremesinghe and some members of the Rajapaksa family.

“It is usual when a new Act is introduced, replacing the former Act, mention has to be made with regard to the procedure to be adapted for the cases pending before the courts for offences committed under the previous Act. The new Foreign Exchange Act, introduced by Wickremesinghe, converted the criminal offence into a civil offence. It relegated the forex offences under the new act to the jurisdiction to Magistrates’ Courts from High Courts and also provided for bail to be granted by a Magistrate. With regard to the mandatory confiscation of property and earnings of forex crimes, the new Act placed it under the discretion of the judge. As per the provisions of the new Act, those pending cases came to an end. The provisions of the new Act called for a fresh filing of the cases within a period of three months. There were no cases filed for the same offences and all those who had been charged under the former Act were allowed to get away.

The new Act, which came into force in 2017, was favourable to forex racketeers and enabled many unscrupulous exports to park their dollars overseas, contributing to the present crisis.