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Gunaruwan: ACSA, SOFA, MCC could be part of US Indo-Pacific strategy



US leaves Lanka out of MCC

By Shamindra Ferdinando

The much-touted Millennium Challenge Corporation Compact (MCCC) would have undermined Sri Lanka’s status as a sovereign country, Prof. Lalithasiri Gunaruwan said yesterday (17).

Prof. Gunaruwan, an economist, who headed a four-member committee that examined the controversial agreement was responding to the US decision to terminate the offer of USD 480 mn (Rs 89 bn) development assistance against the backdrop of Sri Lanka declining the grant.

The Colombo University don whose four-member committee strongly objected to the agreement as it is, told The Island that the compact posed a threat to Sri Lanka.

He said that he wasn’t aware of negotiations between the two parties on the basis of their report handed over to President Gotabaya Rajapaksa on Feb 17, 2020 at the Presidential Secretariat.

The team consisted of Prof. Gunaruwan (Chairman), one-time Transport Secretary Dr. D. S. Jayaweera, Justice Nihal Jayawardena, PC, and architect Nalaka Jayaweera.

Responding to another query, Prof. Gunaruwan said his committee had recommended remedial measures following an in-depth study of the agreement. He acknowledged that the committee couldn’t ascertain the position taken by the Attorney General in that regard.

The Attorney General’s position has not been made public yet.

In response to The Island query as regards Sri Lanka being denied funding, the US embassy has sent us the following statement: “On December 15, the Millennium Challenge Corporation (MCC) board decided to discontinue the proposed Rs. 89 billion MCC development assistance grant to Sri Lanka due to lack of partner country engagement. The Rs. 89 billion approved for Sri Lanka will be made available to other eligible partner countries in need of grant funding to pursue their economic development priorities, reduce poverty, and grow their economies.

“Country ownership, transparency, and accountability for grant results are fundamental to MCC’s development model. MCC has successfully partnered with nearly 30 countries worldwide on 38 grant agreements, totaling nearly $13.5 billion. These grants have lifted millions of people from poverty by catalyzing local and domestic investment.

“The United States remains a friend and partner to Sri Lanka and will continue to assist Sri Lanka in responding to COVID and building its economy.”

Subsequently, The Island sought an explanation from the US mission with regard to the previous US embassy announcements pertaining to the funding made available to Sri Lanka to the tune of USD 10 mn on two occasions.

The US embassy spokesperson said the MCC grant monies had never been transferred to or spent by Sri Lanka in terms of the then proposed USD 480 mn funding. The official said that funds amounting to USD 10 mn for what the embassy called preparatory activities had been cancelled. The official said: “The government of Sri Lanka first submitted a proposal for MCC grant funding under former President Mahinda Rajapaksa in 2005. All activities in the most recent proposed grant were requested by Sri Lankan Government line ministries and departments, and the programme was negotiated in good faith after extensive consultations with Government officials, the private sector, and civil society. The MCC grant would have been the largest in Sri Lanka’s history and would have benefited more than 11 million Sri Lankans.”

During the previous administration, the US announced the disbursement of USD 7.4 mn (Rs. 1.1 bn) on July 27, 2017 and USD 2.6 mn (Rs.413) in June 13, 2018 grants for preparatory work namely (i) to develop a compact, including identification and analyzing of specific projects and (ii) to finalize compact development. The US embassy stated funds allocated to the tune of USD 10 mn were in addition to the total MCC compact funding amount.

Prof. Gunaruwan’s report has said that in spite of the US Compact being categorised as a development project, it could pose a threat along with ACSA (Acquisition and Cross Servicing Agreement) and SOFA (Status of Forces Agreement). The UNP-led government finalised ACSA in the first week of August 2017. President Maithripala Sirisena, in his capacity as the Defence Minister authorised the signing of the agreement. The US agreements dominated both 2019 presidential and 2020 parliamentary polls. The report says the three agreements could be part of the overall US Indo-Pacific strategy.

Well-informed sources said that the four-member committee had found fault with a decision to allow all procurement and related matters to take place. That decision clashed with a specific provision in the 19th Amendment, sources said. However, the 20th Amendment enacted by the incumbent government had done away with that provision, sources said.


President to honour senior journalist Edmond Ranasinghe tomorrow




The tribute ceremony for senior journalist Edmund Ranasinghe, the founding editor and editorial director of the ‘Divaina’ newspaper and one of Sri Lanka’s most esteemed journalists, is scheduled for tomorrow (03rd October) at 3:00 pm at the Presidential Secretariat. President Ranil Wickremesinghe will preside over this event, which marks the initiation of a program conceptualized by the President to honour senior journalists who have made significant contributions to journalism in the country.

In appreciation of Mr. Ranasinghe’s seven decades of dedicated work in the media, a book titled ‘Edmond’s Newspaper Revolution,’ compiled by the 93-year-old journalist himself, will be published.

The keynote speech at this tribute ceremony will be delivered by Mr. Upali Tennakoon, the former Editor-In-Chief of the Island and Rivira newspapers, currently residing in the United States of America.

Mr. Edmond Ranasinghe embarked on his media career as a journalist at the Lake House, ‘Daily News’ newspaper in 1952. In 1973, while serving as the News Editor and holding the title of Deputy Editor, he resigned from his position in protest of the government’s takeover of the Lake House.

In 1977, Mr. Ranasinghe was reappointed as the Editor of ‘Dinamina’ by invitation from Lake House and later he also took on the role of Editor at Silumina.

In 1981, he became the founding Editor of the ‘Divaina’ newspaper, revolutionizing journalism in Sri Lanka and elevating it to unprecedented popularity in a short span of time. In 2016, at the age of 86, Mr. Ranasinghe once again assumed the role of Editor at ‘Silumina,’ further showcasing his enduring commitment to journalism.

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Navy deploy flood relief teams in Matara district




The Sri Lanka Navy has deployed relief teams to assist people affected by the flooding in the Akuressa, Athuraliya, Thawalama, and Kamburupitiya areas of Matara district, caused by the overflowing of the Nilwala river and Kiramba-Ara,

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Corrupt elements use Parliament, Finance Ministry to evade taxes



Economic Oversight Committee Chief makes shocking allegation

Complicity of official owning Las Vegas house exposed

by Shamindra Ferdinando

Chairman of the Sectoral Oversight Committee on National Economic and Physical Plans Mahindananda Aluthgamage, MP, yesterday (01), said influential corrupt elements within the state revenue collection apparatus had with the help of the Finance Ministry brought in amendments to relevant laws to stifle the revenue collection process. Their actions had taken a heavy toll on the state coffers.

The government had created a system that allowed four appeals against Inland Revenue Department tax estimates, MP Aluthgamage explained, alleging that interested parties abused the parliamentary process.

The former Minister said so in response to the queries raised by The Island about his recent declaration at the Presidential Media Centre (PMC) that a special unit was required to monitor Inland Revenue, Customs and Excise Departments.

Asked whether he had sought to highlight the failure on the part of parliamentary watchdog committees, the COPE (Committee on Public Enterprises), the COPF (Committee on Public Finance) and the COPA (Committee on Public Accounts), relevant ministerial consultative committees as well as the Auditor General to carry out their duties and functions properly, Aluthgamage said the fact that as much as Rs. 904 bn had not been collected as taxes over the past 15 years proved that the existing systems were flawed.

MP Aluthgamage said: “In fact, the government, at the expense of the national economy created a system for the benefit of tax dodgers. Parliament is responsible for this situation. Four appeals are not allowed in any part of the world. But the Finance Ministry and Parliament created systems that can be manipulated because the corrupt elements receive the backing of the powers that be.”

Responding to another question, MP Aluthgamage said those who had been tasked with revenue collection seemed to have been hand in glove with tax dodgers.

Aluthgamage said his committee had recently requested President Ranil Wickremesinghe, who also holds the Finance portfolio, to reduce the number of tax appeals from four to two.

MP Aluthgamage said that he had realised the urgent need for a fresh and thorough inquiry into state finance following the declaration of bankruptcy in May 2022 and the ouster of President Gotabaya Rajapaksa two months later.

The former Minister said that he wouldn’t hesitate to admit that corrupt systems remained in place regardless of the change of government in July last year. “A few months ago, a person known to me was asked to pay Rs 100 mn as tax. He got in touch with a senior revenue official, paid him Rs 10 mn and got the matter settled. When I brought this to the notice of the relevant department head, the official concerned simply said that particular officer often did so.

“Obviously regardless of the change of government and the fact that the country is begging for IMF assistance, corruption is rampant,” MP Aluthgamage said, noting that though the country was bankrupt and experienced continuing turmoil the vast majority of those who were tasked with revenue collection lived cushy lives. The Oversight Committee Chairman disclosed that one of the key Inland Revenue officials owned properties in Las Vegas, whereas another top official had walked free after being caught with heroin.

Alleging that some of those holding key positions in the revenue collection set-up collaborated with tax dodgers, the MP said that similarly the Excise Department and liquor manufacturers perpetrated massive tax frauds. Responding to another query, MP Aluthgamage emphasised that actually the increase in the price of liquor had helped certain liquor manufacturers.

Appreciating the interventions made by MP Patali Champika Ranawaka to pressure the Excise Department to do its job, MP Aluthgamage said that routine checks had revealed the widespread use of fake security tax stamps affixed to bottles of liquor countrywide. The Excise Department bosses should be held accountable for this situation as liquor manufacturers could not engage in such massive frauds without the blessings of the department.

Referring to a delay in agreement with the IMF over the releasing of the second tranche of USD 2.9 bn Extended Fund Facility (EFF), MP Aluthgamage said that the flaws in the revenue collection process, too, had contributed to the situation. The MP alleged the Inland Revenue, Customs and Excise Departments continued to undermine the revenue collection. “They always come up with lame excuses to thwart efforts to streamline tax collection,” he said.

Alleging that frauds involving the Excise Department and liquor manufacturers caused 40 percent loss in revenue, MP Aluthgamage alleged that a significant amount of that money ended up with Excise Department personnel at all levels. “This is the sad truth,” the ex-Minister said.

According to him, the Inland Revenue, Customs and Excise were required to collect Rs. 1,667 bn, Rs 1,217 bn and Rs 217 bn, respectively, this year.  But so far this year, they had collected only Rs 956 bn, Rs 578 bn and Rs 109 bn, respectively, MP Aluthgamage said.

MP Aluthgamage said that he had been targeted by Inland Revenue after he raised the issues at hand publicly. “I was investigated,” the MP said, adding his efforts couldn’t be derailed by such efforts.

MP Aluthgamage said that he had urged President Wickremesinghe to take remedial measures as soon as possible. “Our continuous failure to act even after the declaration of bankruptcy is unacceptable.”

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