ECONOMYNEXT – State owned enterprise Lak Sathosa, which is propped up at a cost to the people with Treasury support has bought and stored 32 million kilos of rice which were no longer fit for human consumption, a media report said.
Sri Lanka’s The Sunday Times newspaper said the President Commission inquiring into serious acts of fraud had discovered the deteriorating rice stocks at warehouses in Veyangoda, a container yards in Wellampitiya, Wattala, in the Port and at Sathosa’s McCallum stores.
Laksathosa is a re-incarnation of Sathosa, a firm which collapsed in the late 1990s under 8 billion rupees in debt and an administration in 2001 tried to privatize it but was opposed by the Marxist Janatha Vimukthi Peramuna.
Though the company was closed and workers compensated, the elected ruling class started a network of shops again under the name LakSathosa.
In June Trade Minister Rishard Bathiudeen said he found that the SOEs accounts had not been audited since 2012 and requested 7.5 billion rupees from the Treasury to keep it going.
The firm owned 10 billion rupees to banks and 3.0 billion rupees to suppliers at the time.
In December, Bathiudeen told parliament another billion rupees in people’s money will be given for the company to expand its network this year.
Critics say by opposing privatization and building SOEs the elected ruling class can get rich dividends.
The elected ruling class had managed to build a public opinion that state enterprises are engaging in a ‘public service’ while serving themselves, they say.
The elected ruling class can stuff SOE’s with their henchmen and appoint advisors and directors to take money out. Ministers also routinely use SOEs under them to purchase and maintain extra vehicles for their use.
Financial regulations covering SOEs are also less tight than government departments giving more room for procurement fraud.
The Sunday Times report did not say how much money had been paid for the rice but at about 60 rupees a kilo would put the cost of the stock at around 2.0 billion rupees.
The newspaper said investigators were probing whether there was procurement fraud and who got commissions from the deal.
The stock are expected to be sold as chicken feed, the report said.