By Nirmala Kannangara
Shashi Weerawansa
Astonishing revelations have come to light as to how former Chairman of the Board of Investment (BOI), Dhammika Perera had approved an application made by Ranasinghe Randunu Mudiyanselage Sheerja Udayanthi alias Shashi Weerawansa, wife of UPFA MP Wimal Weerawansa, to set up a project under the export oriented category to export waste fabric. According to BoI documents, Weerawansa had been given approval to the request on the same day the application was submitted.
The application to set up the proposed project had been submitted to the BOI on February 18, 2009 to which the former Chairman had granted quick approval. It is also interesting to note as to how the Board approval had also been granted for the said project on the same day although the BOI sources, who wished to remain anonymous, said that the Board approval is given only after an agreement is signed and not before.
“Once an application is received, the site application is forwarded to the Environmental and Engineering Units for their perusal and recommendations before the BOI approval is given. This procedure it takes time. But in this instance it is very clear as to why Dhammika Perera and the then Board of Directors gave their respective approvals the same day – because the applicant’s husband Wimal Weerawansa was a powerful minister in the former Rajapaksa government,” sources alleged.
The BOI had entered into an agreement with Randunu Fabrics of No. 617, Walgama, Malwana, Biyagama on April 23, 2009 under Section 17 of the BOI Law No. 4 of 1978 subject to BOI terms and conditions. The project was to invest US$ 250,000 or its equivalent in Sri Lankan rupees, which was Rs. 28.5 million, within a period of two years from the date of the Agreement.
The agreement BOI came
into with Randunu Fabrics and Sri Lanka Customs letter authorizing the Customs officers to seize uncustomed goods and documents at Randunu Fabrics
Violated conditions
According to the Agreement, the enterprise (Randunu Fabrics) shall conduct the business at the approved premises and shall not conduct the business in any other place without prior written approval of the Board and no other businesses shall be conducted at the land and has to export the entirety of the output from the enterprise. Having agreed to the conditions laid down by the BOI, Shashi Weerawansa has allegedly violated conditions in the Agreement. However, the BOI has failed to take any action against the investor.
The Sunday Leader is in possession of the summary report of purchase and exports of Randunu Fabrics from July 1, 2009 to March 31, 2015 which shows how much waste fabric (off cuts) Weerawansas’ had purchased and how much they had exported.
According to the summary report, Randunu Fabrics had purchased 6.879 million kg of off cuts during the said period from BOI enterprises while another 2.613 million kilos had been purchased from other places, amounting to 9.492 million kilos in total. Although, according to Clause 7 (ii) of the agreement they entered into with the BOI, the enterprise shall export the entirety of what they purchase. But the summary report data shows that from July 2009 to March 2015, Randunu Fabrics had exported only 8.636 million kilos. Questions remain on what happened to the remaining 700,386 kilos?
“This shows that Randunu Fabrics had sold the off cuts they had obtained to the local market defrauding Customs duty,” sources claimed.
This newspaper meanwhile has a letter the Deputy Director of Customs had sent to Deputy Superintendents of Customs D. A. D. T. D. Pragnaratne and W. M. P. Amaranayake and Assistant Superintendent of Customs I. U. S. Jayaratne giving authority to enter and search Randunu Fabrics and to seize any uncustomed goods and documents relative to any offence under the Customs Ordinance. The letter dated June 8, 2015 states as thus: “Having reasonable grounds to suspect that there are uncustomed goods and goods of the importations of which are restricted under Schedule ‘B’ of the Customs Ordinance (Chapter 235) at No. 617, Walgama, Malwana, I hereby authorize you, under Section 128 of the Customs Ordinance (Chapter 235) as amended by the Customs Act No. 25 of 1958, to enter and search the above premises and if necessary to break open any place or storage which you may consider reasonably necessary for the purpose of exercising the powers granted under Sub Section 1 (a). I also authorize you, under Sub Section 1 (a) to seize such goods and documents relative to any offence under the Customs Ordinance”.
Meanwhile, a higher official at Sri Lanka Customs, on conditions of anonymity, said that an investigation was initiated by the Customs but there is a plan to sweep it under the carpet. “There is a plan as such. If this party has not exported all what they have purchased, then what has happened to the rest? If the difference is still with the investor, the Customs Department has to forfeit the entire stock and if it is missing, the investor has to pay three times of the total value of that stock as a penalty under Section 50 ‘A’ of the Customs Ordinance,” he said.
Political Project
Meanwhile, according to BOI sources, the BOI is an institution that works to attract large scale investors to the country. “This is the first time we have ever heard the BOI granting BOI status to a negligible company whose investment is a mere US $ 250,000 or Sri Lankan Rs. 28.5 million. This can be described as a ‘political’ project and a private deal between the Rajapaksa government and Weerawansas,” sources said.
Sources further said that if BOI status was given to such a project that does not bring any expected foreign exchange to the country, small eateries would also be able to apply for BOI status as they employ more workers than that of Randunu Fabrics.
“According to what we have gathered, this project has employed less than 40. From purchasing the off cuts from apparel companies, what are the value additions they are doing before exporting the cut pieces? The BOI has signed the agreement with this investor under Section 17 of the BOI Act. All agreements signed under this Section get duty free concessions. Compared to the agreements the BOI signs, this is a negligible investment with less than 40 employees and no value addition to the final product,” sources claimed.
Although Randunu Fabrics had to invest US$ 250,000 within a period of two years from the date of the agreement, records show that they have invested only US$ 5,637 as at March 31, 2011.
According to sources, a member of the Institute of Chartered Accountants of Sri Lanka has to submit duly audited accounts of the project to the BOI to show how much the enterprise had invested in the project.
As per the guidelines, audited financial reports of Randunu Fabrics had been submitted to the BOI to show their share capital for the year 2010. According to the audited financial reports, the project’s share capital for 2010 was Rs.11 million and loan capital was Rs.17.1 million which is Rs.28.1 million in total.
“In 2011, Randunu Fabrics had not shown any share capital or loan capital details but for 2012 the audited financial report shows that Randunu Fabric’s share capital was Rs.11.4 million while its loan capital remains as same as year 2010 figure – Rs.17.1 million, which is Rs.28.5 million in total. Comparing to the 2010 statistics, to show that they have fulfilled their total investment of Rs. 28.5 million (US $ 250,000) Randunu Fabrics had increased its share capital from Rs.11 million to Rs.11.4 million in year 2012,” sources added.
Although the audited report shows as thus, the BOI sources allege that the given details were mere figures but not proper data.
“We have seen how such local projects pay money to Charted Accountants and get reports ‘made’ to suit their requirements to submit it to the BOI to show that they have invested the promised amount for the project. But in reality, it is not the truth but merely to mislead the BOI. Although Weerawansas have shown these figures to the BOI, let the present BOI management hold an inquiry and get the supportive documents from the Chartered Accountant and check whether the financial details they have submitted are true or false.
Let this case be handed over to the Criminal Investigation Department (CID) or the Financial Crimes Investigation Division (FCID) to check how Weerawansas have cheated the BOI,” sources claimed.
Sources meanwhile pointed at what the Management of Randunu Fabrics had told to BOI officials recently that their factory was completely destroyed by a fire in 2013 and that all their documents too got burnt.
“Had this factory been destroyed by a fire and all their documents too got destroyed, they would have informed it to the BOI. In order to hide all their financial documents and other transaction details, they may have fabricated a story.
If their factory was destroyed, we have to find out whether the machineries they were using for the business too have been destroyed. If a physical test is carried out we can find the truth to this claim,” sources added.
Meanwhile, it is also revealed as to how the approved project location at No. 617, Walgama, Malwana, Biyagama is not used for the approved activity but for their office and to store the fabric. The factory is located at No. 519/7, Walgama Road, Malwana which is not the approved site in the agreement. The machineries used for the project too are installed here.
Although the approved business is not operated in the permitted location, another business – a travelling, clearing and forwarding company has been set up at No. 617, Walgama, Malwana, Biyagama which is a gross violation of the agreement the investor had entered into with the BOI.
“The project has to be functioned in the approved site but not any other premises. According to Clause 4 (b) of the agreement, the enterprise shall conduct the business at the land and shall not conduct the business any other place without the prior written approval of the Board and no other business shall conduct on the approved premises.
If the project was not functioning at the approved premises why didn’t the Engineering Department officers brought this notice to the then Management? Was it because they were scared to take any action against the ‘powerful’ Weerawansas?” sources queried. It has also come to light how the investors, without informing and obtaining BOI approval, had sent waste of the off cuts to another company to be destroyed. “This is yet another violation the investors have committed. According to Clause 13 (i) ‘any default and/ or failure of the Enterprise in performing or complying with any duty or obligation imposed on the Enterprise by this agreement or any failure to comply with any representation, undertaking or commitment referred to in Clause 1 of this agreement the Board may by notice in writing, immediately withdraw and/ or cancel all rights, privileges and benefits conferred in terms of this agreement in total or in part, effective from the date as may be specified by the Board’.
Although the investors had violated the agreement from its inception, what made the former Chairman, Boards of Directors and even the responsible officials to take action against the project and cancel the license?” sources queried.
When contacted Chairman BOI, Attorney-at-law Upul Jayasuriya, confirmed that Randunu Fabrics has violated the BOI agreement from its inception and added that the investigation was carried out on a complaint received by the State Minister.
“Last week the BOI suspended the project operation with immediate effect until pending explanation is called for to make a final decision. Apart from this we are going to hand over this to the CID and to Sri Lanka Customs for further action,” Jayasuriya said.
No Responce
Railing to get a contact number for Shashi Weerawansa, a text message was sent to her husband, UPFA MP Wimal Weerawansa seeking a comment from him and a contact number for his wife for The Sunday Leader to get a comment for the story. As all attempts taken were unsuccessful, The Sunday Leader spoke to Weerawansa’s Coordinating Secretary Anuruddha Bandara to get a contact number for Shashi Weerawansa. However, Bandara refused to give any number or to pass the message to Shashi Weerawansa claiming that she is not speaking to any media following unjustifiable harassment she had to undergo over the past few months that the Weerawansas did not want to speak to The Sunday Leader for writing negative articles about them.