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Sri Lanka big business reaps huge profits during pandemic

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By Saman Gunadasa

Sri Lanka’s nine top companies amassed 364 billion rupees ($US1.8 billion) in earnings between April and June, collectively pocketing 21 billion rupees profit in the first quarter of their financial year.

This amount is only a fraction of the wealth secured by the super-rich and also seen in rising profits for the banks and other big companies so far this year.

In the first three months of 2021, listed companies on the Colombo Stock Market recorded 189 percent growth increase compared to the same period last year, with the largest earnings made by companies involved in finance, exports, logistics, liquor, health and stock trading.

Companies allowed to keep operating during the COVID-19 pandemic were some of the highest profit makers, in stark contrast to the devastating economic impact on workers, small entrepreneurs, self-employed and the poor who suffered sharp losses of income and jobs. As of yesterday, COVID-19 has taken the lives of more than 9,000 people in Sri Lanka with total infections climbing to over 425,000.

Among the top nine earners was Expolanka, a major logistics company with branches in 20 countries. It had a turnover of 95 billion rupees and 6.3 billion rupees net profit in the quarter.

In second place was LOLC, a leader in leasing, hire purchase, insurance and other financial activities. It earned 55 billion rupees with a 4 billion rupees net profit. Last year, LOLC pocketed 53 billion rupees after tax profit, the highest ever recorded by a Sri Lankan company. Its owner, Ishara Nanayakkara is one of the country’s top billionaires.

Hayleys and Vallibel One, a finance house owned by Dammika Perera, Sri Lanka’s richest individual, earned almost 90 billion rupees with combined net profit of 6.4 billion rupees in the April to June quarter.

The Hayleys conglomerate is involved in import-export industries related to rubber production and plantations with over 30,000 employees. Last year it generated 242 billion rupees in revenue and 14 billion rupees net profit, the highest ever during the company’s 143 years of existence.

John Keells, another top business firm, earned 38 billion rupees with 1.2 billion rupees net profit in the quarter. Tourism was the only component of the company impacted by the pandemic.

In addition to the top nine conglomerates, NDB, the country’s fourth largest private commercial bank, reported a net interest income of 5 billion rupees—a 15 percent increase from April to June compared to the same time last year. Sampath Bank reported a 34 percent rise in net interest income to 10.8 billion rupees in the same quarter.

Billionaire Dammika Perera was featured in the media last week, arrogantly declaring that Sri Lanka should not be locked down under any circumstances.

 “A government cannot run the country in a complete lockdown, can it?” he said, adding that without “dollar income via exports,” it could not import petrol, medicine, milk powder and other necessities. Perera said nothing about the massive export profits being amassed by his companies and other businesses.

Over the past month Sri Lankan President Gotabhaya Rajapakse, speaking on behalf of big business, opposed any lockdown amid rising COVID-19 infections and deaths and urgent calls of independent health experts for stringent health measures.

Limited lockdown restrictions reluctantly imposed on August 20 by Rajapakse, still allow big business to keep operating as essential services. Health experts have voiced their concerns about effectiveness of the government’s restrictions.

Last year President Rajapakse ordered the Central Bank to provide massive concessionary funds—a total of 230 billion rupees—to big businesses. Other financial facilities and more tax concessions were also handed out. Most corporate taxes, for example, were reduced to 14 and 18 percent, the lowest rates in South Asia.

Last December, Rajapakse told a Ceylon Chamber of Commerce conference that investors should “take up the opportunities” provided by the coronavirus pandemic.

Early last year the government, backed by the trade unions, gave businesses the right to retrench workers arbitrarily, ignoring the country’s existing, but limited, labour laws. Under the banner of dealing with the pandemic, employers were also allowed to impose wage cuts, increase workloads and slash working conditions.

Announcing his limited lockdown measures on August 20, Rajapakse called on the population to be prepared to make “more sacrifices.” Government ministers are already campaigning for the salaries of about 1.4 million of state sector workers to be cut by 50 percent.

Last week, the cabinet of ministers announced that they would donate a month’s salary to the COVID-19 Health Care and Security Fund. The “donation,” which has been embraced by government and opposition Samagi Jana Balavegaya MPs, is a media stunt by the ministers who receive more in perks than their monthly salaries. It is a public relations exercise in preparation for the slashing of state employees’ salaries.

The government has said it would provide 2,000 rupees for low-income families to cover the two-week lockdown. This is not even enough for one meal a day during the lockdown.

While big business is thriving, working people are being impacted by increasing prices for essential items. Inflation rates have been climbing since January and, on a year-on-year basis, were 6.1 percent in June and 6.8 percent in July. Food inflation was 11 percent in July, with non-food items 3.2 percent.

The Rajapakse government, which confronts falling foreign reserves—it only has enough for two months of imports—has banned the import of many essential food items and other goods.

Sri Lanka, according to a recent global survey by the Institute of Development Studies , is fourth in a list of countries—after Syria, Nigeria and Ethiopia—where basic food is the least affordable.

Last week, Health minister, Keheliya Rambukwella issued a gazette announcing a maximum price for 60 essential medical drugs. Ceylon Private Pharmacy Owners ’ Association president Chandika Gankanda, however, told the media that the gazette was used to increase the price of many drugs by 9 percent. The drugs listed in the gazette include painkillers given for those infected with COVID-19 or suffering with diabetes and high blood pressure.

Mired in huge foreign debts and falling export income, the Rajapakse regime has turned to the International Monetary Fund (IMF) and received a loan of about $800 million under the bank’s $650 billion program for member states.

Ajit Nivard Cabraal, the state minister for money and capital markets, jubilantly declared last week, that “the inflows we predicted are coming one by one,” adding that a $300 million loan was also being provided by China.

The IMF has insisted that any country receiving its loans must implement “restructuring programs” to overcome its economic difficulties. In other words, these loans will be paid for by even more ruthless austerity attacks on the working class and the poor by the Rajapakse government.



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Dispute over cobalt-rich seabed: FSP alleges India exploiting hapless Lanka

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Pubudu Jagoda

… Indian HC denies dispute

By Shamindra Ferdinando

Top spokesperson for Jana Aragala Sandhanaya, Pubudu Jagoda, yesterday (12) said that India was brazenly exploiting the continuing political and economic crisis here to secure rights to explore a cobalt-rich underwater mountain in the Indian Ocean, situated in an area staked by Sri Lanka in terms of Article 76 of the United Nations Convention on the Law of the Sea (UNCLOS).

Jagoda, who also represents the Peratugaami Pakshaya (Frontline Socialist Party), a breakaway faction of the JVP, said so when The Island sought further clarification after he discussed the developing situation with India, in an interview with Asoka Dias on Sirasa ‘Pathikada.’ telecast earlier in the day.

Jagoda told The Island that the unprecedented Indian move on Afanasy Nikitin seamount that lies entirely within an area, also claimed by Sri Lanka way back in 2009 as being within the boundaries of its continental shelf, should be a warning to both the government and the Opposition.

The former JVPer declared that Jana Aragala Sandhanaya would take up this issue vigorously in the run-up to the forthcoming presidential election. Jagoda emphasized that India took advantage of hapless Sri Lanka while frequently uttering like a mantra its self-proclaimed Neighbourhood First Policy and Security and Growth for All in the Region (SAGAR). The Peratagaamis-led grouping recently pledged to contest both the Presidential and Parliamentary polls.

While asserting that political parties represented in Parliament, along with the government, lacked the courage to take up this issue with India, Jagoda therefore urged the Wickremesinghe-Rajapaksa government to deal with it diplomatically at the highest level.

The Indian High Commission spokesperson said there was no dispute and asked The Island to refer to a statement dated July 08, 2024 issued by Sri Lanka Ministry of Foreign Affairs.

Appearing on ‘Pathikada’, Jagoda questioned the failure on the part of the government to respond to the Indian move much earlier.

Pointing out that India sought the intervention of Kingston Jamaica-based International Seabed Authority (ISA) to secure approval for exploration of cobalt-rich ferromanganese crusts located at the Afanasy Nikitin seamount thereby undermined Sri Lanka’s efforts to win recognition of the outer limits of its continental shelf, Jagoda said that India seemed to be resorting once again to bullying tactics.

War-winning President Mahinda Rajapaksa, who always jealously guarded the country’s interests, made Sri Lanka’s claim on May 08, 2009, as ground forces were engaged in the last phase of operations on the Vanni east front. The war was brought to a successful conclusion 10 days later.

Jagoda explained how India unfairly pressured Sri Lanka over Chinese research ship visits, finally leading to the government to declare a ban on such stays during whole of this year. The FSP spokesman also expressed concerns over the Katchatheevu issue, massive Indian poaching and the recent death of a Special Boat Squadron (SBS) member as a result of aggressive maneuvers resorted to by an intercepted trawler off Kankesanthurai.

Jagoda alleged that poaching on such a scale couldn’t take place without India’s tacit approval. “They have a much bigger Navy and significant Coast Guard assets therefore there cannot be any excuse for not being able to effectively hinder crossing of the Indo-Lanka maritime boundary at will by their poachers,” Jagoda said. Declaring that destructive bottom trawling had been banned in Indian waters though the invading Indian fishing fleet freely adopted the highly harmful method in our waters, Jagoda alleged that New Delhi conveniently turned a blind eye to what was going on in the neighbour’s waters.

Referring to the dispute over the Indian claim contrary to that of Sri Lanka, the FSPer said the Indian media coverage of the issue indicated that they intended to go ahead with the exploration of the cobalt rich region. Reference was made to India reaching agreement with Taiwan to undertake the exploration amidst rising tensions between China and India.

Acknowledging that the two issues – Sri Lanka’s submission made in terms of UNCLOS in 2009 and India’s appeal to ISA this year – were before the UN as declared by Sri Lanka Foreign Ministry, Jagoda said that the government should discuss the contentious matters with India without further delay.

Jagoda said that no political party represented in Parliament so far commented on the developing situation.

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Another FR petition to stay Presidential Poll at 11th hour

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Another fundamental rights petition was filed in the Supreme Court yesterday (12), requesting the court to prevent the Election Commission from declaring the next presidential election.The petitioner, a lawyer by profession, has argued that the 19th Amendment to the Constitution, which reduced the President’s tenure to five years from six, was not passed properly.

He has argued that the 19A must be approved by the people at a referendum and holding a presidential election, as per the aforementioned amendment, is a violation of the Constitution.

The members of the Elections Commission, the Secretary General of the Parliament and the AG were named as respondents.

The petition says that the 19th Amendment strips the President of the power to dissolve Parliament a year after it was elected. The Supreme Court at that time said the provision had to be approved by the people at a referendum for it to become law. A referendum was never held, and therefore 19A could not be considered law.

The petitioner has said the Elections Commission is planning to hold a presidential election this year based on 19A and that it is unconstitutional to hold the election until 19A is subjected to a referendum.

The petitioner has asked the Supreme Court to declare the holding a presidential election, five years into the term of the President, unconstitutional. He also urged the court to instruct the Secretary General of Parliament to subject 19A to a referendum.

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COPF uncovers major failings in online visa procurement process

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Harsha de Silva

The Committee on Public Finance (COPF), chaired by Dr. Harsha de Silva, released a critical report revealing major discrepancies in the procurement process and agreement with a Consortium, comprising GBS Technology Services, IVS Global-FZCO, and VF Worldwide Holdings Ltd.

Issuing a press release, MP de Silva said the Committee’s findings highlight significant concerns and recommend urgent corrective actions.

The COPF found that the company got the deal through an uncompetitive Procurement Process

“The Consortium was appointed without a competitive bidding process, preventing the Department of Immigration and Emigration (DOIE) from securing the best value for money.

“Proposals were submitted before finalising the System Specification Requirement (SSR), raising concerns on procedural integrity.

“Critical Issues Identified:

Unclear Fee Structure: Lack of transparency in fee components, including discrepancies in service fees and convenience fees.

“Data Breach and Termination: A significant data breach was reported by a major travel vlogger in May 2024 potentially triggering a termination clause.

“Conflicting Exclusivity: The exclusivity granted to the Consortium contradicts the presence of existing service providers and the recommendation by the evaluation committee.

“Uninvested Funds: The USD 200 million investment promised to Cabinet remains uninvested and not mentioned anywhere in the agreement.

“Terminated Service Provider: Mobitel, the previous ETA service provider since 2012, submitted multiple proposals for system improvements and a comprehensive proposal for new services was overlooked.

“Recommendations:

Comprehensive Forensic Audit: The COPF recommends that the Auditor General undertake a comprehensive forensic audit of the entire procurement process. This audit should be completed at the earliest opportunity to serve as the foundation for necessary actions, which could include abrogating or amending the Consortium Outsourcing Agreement.

“Data Protection Measures: The COPF urges the Ministry of Public Security (MOPS), DOIE, and the Sri Lankan Data Protection Authority to review the KPMG report and take immediate and decisive actions to ensure the complete security and protection of all data handled through the ETA application process.

“Dr. Harsha de Silva, Chairman of COPF, stated, “The absence of a competitive bidding process in the procurement of online visa services has likely resulted in an agreement that does not provide the best value for money. Our findings call for immediate action by the Auditor General to address these critical issues and ensure transparency and accountability, which could even mean abrogation of this agreement.”

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