Sugath Kulatunga

Now, ex-Finance Minister BR has also threatened to bring in new regulations against exporters who default on repatriation of the full amount of export proceeds. Here again, the proposal is confined to exports only and confined to getting back the full amount of the export value as declared. It is not about trade mis-invoicing.  Was he as Minister of Finance not aware of this scam? The extent of this global crime was brought to the notice of the public by Global Financial Integrity (GFI) as far back as 2008. UNCTAD published a report in 2019 giving a methodology for detecting mis-invoicing. UNCTAD reports are circulated to all member states. Even if the GFI findings were not readily available the UNCTAD report would have been seen by at least the bureaucracy involved in finance and trade. It definitely would have been available in the citadel of knowledge the Central Bank.

It is encouraging that the government has at least late in the day decided to bring in new laws/regulations to stop this dollar leakage. During the last few months, the government has brought in dozens of new laws and amendments to existing ones. The government has also spent substantial time and effort to bring the 21st Amendment to the Constitution with the intention of fostering a political solution to the economic crisis. Meanwhile, the government has been soft peddling this issue and was happy to declare the country as bankrupt and begging the IMF for a paltry 3.9 billion USD and has not taken an earnest effort to stop this leak and recover as much of the lost revenue. The annual loss of revenue from trade misinvoicing only is estimated at over USD 10 billion.

This scandalous state of affairs has prevailed for a long time and some estimates indicate that the total loss over time may be more than the total foreign debt of the country. This could not have happened unless there was collusion between authorities and traders. Late Elmo de Silva in his autobiography names his previous Customs Department as one of the primary delinquents of corruption. One wonders to what extent it had spread to financial institutions and other government agencies. One might conclude that the chief delinquent is the government which has followed the maxim of the three wise monkeys.

MP Wimal Weerawansa has pointed out that legal action cannot be taken on errant traders as the legal provision enabling such action was removed in 1917 by the then Minister of Finance. If that is so the solution is to restore the previous provision which only requires a simple resolution in Parliament. If it had been done with a gazette notice a fresh gazette is all that is required.