Justice Minister: SL has lost billions of dollars due to lax controls since 2017

By Saman Indrajith

Justice Minister Dr. Wijeyadasa Rajapakshe told Parliament yesterday that over 53.5 billion US dollars that should have been received by the country for its exports for the past 12 years had been held in foreign countries. “This has been revealed by the recent Global Integrity Report by the US. This has happened by the time of assuming of duties by the incumbent Governor of the Central Bank. I have information that after assuming duties he had called on top 100 exporters and asked for details and reports of their volumes of export and incomes. Only 57 exporters responded and of them too the majority have provided the Central Bank with false information or concealed the true figures. This is a serious issue because our outstanding loans for that year amounted to about USD 41 billion. The amount being held in foreign countries as payments for exports due to this country was USD 53.5 billion,” the Minister said.

Minister Rajapakshe said that the unfortunate situation had been created by the fraudulent exporters making use of the loopholes in the foreign exchange law. “Prior to 2017, we had the Exchange Control Act, which had strict provisions and regulations controlling the outflows and inflows of foreign exchange. Even during the times of the Sirimavo Bandaranaike government a special Foreign Exchange Commission was set up to investigate the errant businessmen who resorted to misinvoicing. I can recall how some businessmen who were found guilty were imprisoned. Some died in the prisons. In 2017, the Foreign Exchange Act was

introduced. It relaxed many strict rules and punishments or did away with some of them. Making use of these holes of the regulatory net, many exporters have shifted export proceeds overseas. We either need to amend these laws or to bring in new laws to prevent this because this is one of the main reasons for the economic crisis we are facing today,” the Minister said, adding that all other countries had strict rules preventing mis-invoicing. “We have informed the Finance Ministry of this need,” he said.

SJB MP Champika Ranawaka said that the amount of money lost by Sri Lanka annually was equal to its balance of payments deficit. “This is done by both exporters and importers. This misinvoicing could either be overinvoicing or underinvoicing. The amount that we lose annually is over 20 percent of our total foreign trade,” Ranawaka said.