e-Con e-News

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‘Before you study the economics, study the economists!’

e-Con e-News 16-22 February 2025

The deadly, malignant role played by England’s Ceylon Tobacco Co (CTC) in Sri Lanka is a story yet to be told, and the media sure ain’t gonna tell it. The media’s function in Sri Lanka is to create diversionary dramas that take us away from the manoeuvrings of huge multinational corporations (MNCs) – with budgets larger than countries. The media have to churn out soap operas (for they own the soap, too), that have absolutely no impact on – nor offer insight into – transforming the merchant-run plantation economy that dominates the country. Then again, why should they bother? The media, too – at least the variety mislabelled as ‘free’ and ‘independent’ and ‘national’ – is controlled by these very MNCs. 

     This week’s ee begins a glimpse into CTC, owned by British American Tobacco (BAT), which operates an over-100-year monopoly. The media & those thinktanks that love to whinge & whine about the economy – that love to go on about free trade, etc – dare not approach, let alone touch CTC. How CTC not only deprives the country of revenues but also spreads cancers to both smokers & the peasants that grow their tobacco, leaving the state with a huge health bill!

     The news this week was dominated by the farce of a boxed-in 2025 budget, ‘formulated to augment state revenues within limited fiscal space’.  Imposed by the IMF’s ‘parameters’, the ‘appropriations’ are being accompanied by screeching hallelujahs in high notes (‘positive’, ‘bold’); by bass demurrals in low notes from the merchants (‘the proof of the [English] pudding is in the eating’). Meanwhile, chattering ‘renewable’ green monkeys trip the national grid. And fearsome falsettos crescendo about murder most foul in a courtroom where justice is otherwise meted out (with a little help from USAID, see ee Random Notes). 

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In Sri Lanka too, the true history of the media

and its oligarchic owners is yet to be written…

(see ee Focus)

Not a day – nay, a minute – goes by without some negative media reference to China – the People’s Republic, that is – and its ‘conniving’ Communist Party. This week we heard again in the supposedly nationalist Island newspaper from ‘a PhD candidate of political science at Wayne State University, USA’, one ‘Mitchell Gallagher’. This ‘doctor in training’, ominously intones – ‘As Africa toes Chinese line’:

‘Yet as CGTN Africa & Xinhua become entrenched in African media

ecosystems… Will Africa’s journalists & press be able to uphold

their impartiality & retain intellectual independence? As China

continues to make strategic inroads in Africa, it’s a fair question.’

(Island, 21/02/25, see ee Media)

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Really! In Sri Lanka, 90% of all foreign news, even about countries right next door, has to come from the English King’s BBC, etc. Talk about trenches! This constant demonization by the ‘global’ north’s media of a rising Asian country blathers on, despite revelations of how ‘USAID spent $7.9mn to train Sri Lankan media’. This ee Focus therefore reproduces Shiran Illanperuma’s foray into ‘How Chinese Capacity Building & USAID Slush Funds Reveal Ideological Biases of Our Media’, and offers startling revelations about China’s media.

    And as for USAID, while the media focuses on their more wild & weird ways, they yet lament that ‘poor’ countries will now suffer minus the USA’s weaponized philanthropy. This ee Focus therefore peeks also into their more pernicious role in Sri Lanka, with the CTC, the US NGO Care International & the local Ministry of Health (!!!) pushing US soya beans: Charles Abeysekera’s ‘A Transnational in Peasant Agriculture: the Case of the Ceylon Tobacco Company’ (1985) looks at how the monopoly of CTC in the manufactures & sale of cigarettes continues undisturbed. CTC impoverishes Sri Lankan farmers and holds them hostage to their financing & inputs. Meanwhile, CTC, which plays tax-collector for the state, has ‘brought no foreign capital into its operations in Sri Lanka’ since at least 1932, and ‘all capital increases since then have been derived from accrued earnings in Sri Lanka’! FDI, anyone!

     Abeysekera also exposes how CTC uses third countries – where they do not have industrial operations – as channels to transfer ‘inputs’ (cigarette papers!) from countries where they do have industrial operations, to Sri Lanka, to inflate prices & avoid paying taxes. Even more interesting is the role played by numerous accounting firms in the game of transfer pricing, an act which would surely burn a hole in the widespread huffing and puffing about local ‘corruption’. He quotes an UNCTAD report of 1978: 

‘One of the salient features of TNC operations… is the absence

of rigorous public accountability of their corporate practices.

Discourse & analysis is all the more vital since economic

intelligence of such relevance is invariably shrouded in secrecy,

strikingly so in respect to transfer pricing techniques. This is

particularly evident in the Developing countries where knowledge

of the financial marketing & output decisions of the TNCs’ global

decision making power is confined to rudimentary data eg, the

conventional corporate balance sheet which is largely stripped of

any content. Data concealment is assisted by the giant accounting

firms acting in alliance with corporate power.’ (see ee Focus)

While recognizing the straitjacket the government must operate within, the Sri Lanka Administrative Service Association (SASA) praised the budget, and the government’s commitment to curbing ‘tax evasion by implementing digital financial transaction systems’. But what of the massive evasions of CTC, Unilever, Exxon and other multinationals? Indeed, we look forward to a government that can also ensure investment in modern industry, but this can only be enabled by controlling these MNCs, their accounting firms and their ‘chambers’ of merchants, that get away with a more pernicious form of robbery and murder in the country.

     The Frontline Socialist Party (FSP), which is deployed by the media to hit the government with Left hooks, recalls Margaret Thatcher saying her greatest accomplishment was ‘Tony Blair & Blairism’. The decades-long effort to tame the JVP through mass murder and now sweet lullabies, recalls SBD de Silva’s cautioning about how ‘merchant interests’ have resisted the progressive policies of governments with ‘boundless ingenuity’. Hence one of the SJB’s leading merchant triplets, Kabir ‘Kanay’ Hashim, has offered to cut off his ear, Van Gogh style, if the government actually establishes a development bank, as promised in the budget. Meanwhile, the government has also promised an ‘Industrial Zone dedicated for Chemical Manufacturing’ in its budget: 

     We have noted over the last few months benign and intriguing references to the Institute of Chemistry Ceylon, holding a Christmas Party (toasting themselves with lots of local chemicals no doubt), and then recently hosting a ‘Global Women’s Breakfast 2025’ with the US-based International Union of Pure & Applied Chemistry. England’s Royal Society of Chemistry also had their ‘delegates’ visit the Institute of Chemistry Ceylon. We wonder why? England’s CTC & Unilever & ICI’s CIC are among the biggest importers of chemicals into the country. eewill also look into CTC’s umbilical links to gaseous Exxon and Deloitte.

     ee Readers may recall our recent references to Germany’s dye industry, which during their First World War quickly turned their dye factories in making ‘high explosives & noxious gases’, and another ee Focus on US-occupied Korea’s Heavy-Chemical Industrial (HCI) policies, which shifted Korean manufacturing into ‘more advanced markets’. Unilever et al would not be amused…

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CTC and their English twin Unilever operate in Sri Lanka through 100s of ‘independent’ front companies, and we therefore found it intriguing this week that Unilever launched a ‘Rs3.8mn malt drink & food manufacturing plant’, claiming it is their ‘largest investment in South Asia’. Hindustan Lever anyone? ‘Industry & Entrepreneurship Development Minister Sunil Handunnetti calls the ‘investment’, ‘a testament on confidence on the Sri Lankan economy by a leading multinational such as Unilever’. Apparently, it was ‘built using state-of-the-art technology’, ‘with local engineering.’ There is no mention of where and how the raw materials, including chemicals and machinery and parts, have been and will be made. Which again makes us invoke VS Naipaul’s classic novel The Mimic Men (1967):

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‘Industrialization, in territories like ours, seems to be a process of

filling imported tubes & tins with various imported substances.

Whenever we went beyond this, we were likely to get into trouble…’

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Contents:

The Secret Evasions of England’s Ceylon Tobacco Company in Sri Lanka