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Handunnetti reveals rice racket

The Committee on Public Enterprises (COPE) would present a special report to Parliament after obtaining a full report from the Auditor General on the massive scam related to rice importation in 2014/2015, COPE Chairman and JVP MP Sunil Handunnetti told Parliament yesterday.

Participating in the third reading debate on budget 2017 under the expenditure heads of the Ministry of Industry and Commerce, Handunnetti said Lanka Sathosa had purchased only 46,698 MT locally produced rice in 2014 and 2015, but it had imported 275,693 MT of rice.

He said Rs 18,597 million had been spent on importing these rice stocks. That figure included the amount spent on imported rice, demurrage charges at the Port, state and private warehouse charges, insurance cost and legal expenses, he said.

The farmers were staging street protests, unable to dispose of their produce, Handunnetti said. The government at that time was boasting of self-sufficiency in rice and that it had stopped rice importation. The local farmers’ paddy was not purchased as the warehouses were full. The former ruler boasted that he hailed from a farming family, Handunnetti said.

He said the loss the government had incurred by selling those imported rice stocks below cost amounted to Rs. 2,359 million. "The financial loss of this scam is no less than that of much talked about the Central Bank Bond sales." 

Handunnetti, revealing full details of the rice importation scam said, the Cabinet approval had been obtained on July 31, 2014 to import 50,000 MT of rice in several lots with each being 5,000 MT. However, the entire stock had been ordered at once on September 14, 2014 from Indian United Foods Company at a cost of Rs. 2,843 million, he said.

"Then another stock of 100,000 MT costing Rs 5,913 was ordered from an Indian company ‘ACP Industries’ on October 17. We would like to question the connection of former Economic Affairs Minister Basil Rajapaksa with this company. This is a chemical manufacturing company. This purchase did not have the Cabinet approval. The tender procedure had not been followed. Lanka Sathosa was informed of the move only after the order was made. Fifty four container stocks of rice imported by this company are still there in warehouses."

Handunnetti said former Minister Johnston Fernando had imported another stock of 60,000 MT of rice costing Rs 3,714 million without Cabinet approval on November 28, 2014 when the Presidential Election was nearby. Yet, another stock of 25,000 MT was imported from Bangladesh under an exchange programme between the two countries.

"These stocks of rice were imported using Letter of Credits issued by the People’s Bank and BoC. This is also public money. Some of these loans are not settled even as of now," he said.
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