As white on Rice
Posted on July 24th, 2017

Upali Cooray Former General Manager of SATHOSA

When you hear someone say it’s like white on rice, what they mean is that the situation is as close as anything can be. In other words, you’ve got it covered the way rice is covered in white.

The controversial purchase of MIG Jets by the Sri Lanka Government from the Government of Ukraine is one instance where what was said to be a government to government (G to G) contract was not so, but a third party named Belimissa holdings, a company based in U.K has played a vital role.   It is alleged funds were transferred through this third party.

A similar mal – practice is being enacted by the yahapalana government on the pretext of importing rice.

According to local media, Sri Lanka government has picked three countries to obtain 200,000 MT of rice immediately to meet the shortfall in the domestic market. The Minister of Industry and Commerce said, a four man team of officials already is in Pakistan to pick rice varieties for the domestic rice market. On July 12, the team will head to Myanmar from Islamabad to test Burmese rice varieties for the Sri Lanka market.

Yala season’s failure and the floods created this rice shortage. We have picked Myanmar, Pakistan and India and the country that did not get in was Indonesia said Minister of Industry and Commerce Rishad Bathiudeen. The team, after checking both Pakistani and Myanmar markets, will decide whether to choose Pakistan or Myanmar (or both) to purchase the 100,000 MT rice. Whether it is finally supplied by one or both countries, the purchase shall be at Government to Government basis. (G to G)

G to G purchases are a usual ruse adopted by racketeers to dupe the people. The buying prices are loaded with commissions. The contract is signed by officials of the buying and selling parties but the Letter of credit is made transferable. The selling government agency then handover the transferable LC to a third party who is a private trader who is the actual shipper.

While acknowledging that there is going to be a shortage of rice, total lack of transparency in the procurement method makes it shady.

The government procurement procedures are very explicit and do not allow any body to have his own way. The Minister of Commerce is well known for having his own rules “the Kabaragoya (water monitor) becomes Thalagoya (Bengal monitor) when he determines to do something on his own way. This Sinhala proverb explains how an inedible water monitor turns to an edible Bengal monitor for someone who wants to consume the animal.

The government procurement procedure does not permit purchases even from a foreign government agency ignoring the laid down procedure. There cannot be any deviation from the clearly spelt out rules and regulations. The bidder has to furnish a bid bond to ensure maintenance of the bid. The successful bidder then has to furnish a performance bond once the offer is accepted. The shipping terms and conditions such as the specifications of the product and packing are among many other terms and conditions. These conditions have to be complied even by foreign governments’ agencies.

Leaving aside the premium grade, the number one grade specifications are as follows

Moisture  14 %

Foreign matter. 0..05. %

Admixture 2.0. %

Damaged grains 1.0. %

Broken grains  20%

Paddy seeds 10

The usual procedure is for the seller or buyer to appoint a cargo surveyor at the port of loading. In most instances the cargo surveyor is bought over by the seller and certificate of conformity is issued. These certificates issued by unscrupulous surveyors have no value. This is where the seller makes mega bucks which are shared with other connivers.  Imagine 20% broken grains in a shipment of 100000 tons which is 20000 tons.  If the seller fraudulently in connivance with the surveyor makes it 30% Viz. 30000 tons. All other specifications can be manipulated in this manner. There are two solutions for this problem. Send officers with proven integrity to the port of leading for inspecting whether the cargo is according to given specifications.  Any laymen with education can do this. It is not rocket science. The second solution is to buy the rice on what is known as DP (documents on payment). According to this method the buyer does not pay until the cargo arrives at the port of discharge. The buyer has the right to refuse accepting the cargo if it is found to be not according to specifications.

The other question is the availability of storage and scientific stock management.  The Paddy marketing Board and the Food Commissioner had adequate space for storage in the past. These stores have been used for other purposes or abandoned. I hope orders have been placed to ensure shipments of around 10000 tons per shipment to arrive once a fortnight in scattered small lots. The white raw rice is more susceptible to insect attack than Nadu rice. The quantity of rice being imported may become inconsumable in few months if kept lying in stores. Then it will be sold to a distillery or as animal feed. This vicious cycle has to be broken somehow.

One need not teach the President of Sri Lanka about rice or Paddy, as he is from a farming family in Polonnaruwa and his brother is a leading miller in the country. These millers now give emphasis to up – market rice such as Samba.,Keeri Samba and Supiri Kerri Samba. I suspect that the President’s announcement of rice imports could be a strategy to get the hoarders to release their hidden stocks. Well and good.

While the President may have made his announcement with all good intentions, the task of implementing has gone to an already stained hand. Let’s wish that the announcement to import rice is only a strategy to get the hoarders to release their stocks,

Upali Cooray

Former General Manager of SATHOSA

One Response to “As white on Rice”

  1. NAK Says:

    Mr.Cooray’s revelations regarding the import of rice is all well and good. But I am baffled at the his comparison with the purchase of MIG’s from Ukrain.

    First,Mr.Gotabhaya Rajapakse has never been a tainted person like the subject minister in this rice deal.

    Second,Mig deal was on a loan basis while this rice deal, as Mr Cooray himself implies is a cash deal.

    If you buy any vehicle on a lease or finance basis either the buyer or the seller arranges for financial facility and if it happens be the seller then the buyer will have to pay to the institution that the seller tells you to. Simple as that and that’s exactly the situation with Belimissa Holdings.

    Ukrinmash,the Ukranian company which sold the Migs have made it a condition of sale that payments are to made to the financiers.

    Third,If there was a grain of truth in that allegation this ‘Jadapalanaya’ would have jumped on it by now. Now they are changing the charge from time to time with the investigation going nowhere.

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