Recover Proceeds Of Crime To Fund Cash Transfers To The Poor

By Chandra Jayaratne –APRIL 10, 2022

Chandra Jayaratne

Dear Mr. President Gotabaya Rajapaksa,

Establish Your Integrity and Commitment to Good Governance at this time of Serious Economic Crisis: Recover Proceeds of Crime & Use Such Funds to Provide Relief to Poor & Vulnerable Citizen Segments

Your attention is drawn to the several submissions addressed by the writer, appealing to you and your lead executives in charge of effective law enforcement, seeking timely strategic action to contain serious economic crimes, which continues to drain the economy of valuable state resources and state revenues.

The most recent submissions related to the need to focus attention in controlling the annual illicit financial flows of Sri Lanka, estimated between 3-4 billion US Dollars per annum, based on 2021 estimates[1]. Global Financial Integrity Report titled “Illicit Financial Flows from Developing Countries: 2004-2013 by Dev Kar and Joseph Spanjers – December 2015”, estimates the average annual Illicit Financial Flows of Sri Lanka, in respect the 10 year period 2004-2013 at USD 1,997 million per annum[2].

Your attention is also drawn to the Sunday Times article by Namini Wijedasa[3], noted below titled “Excessive sugar imports caused dollar drain, consumers did not receive benefit of tax cuts: Pyramid Wilmar’s multibillion sugar scam exposed by National Audit Office”. This article notes: “Pyramid Wilmar (Pvt) Ltd–the private company accused of profiteering from the Government’s massive sugar tax cut–imported 1,222 percent more sugar than usual between October 2020 and February 2021, but did not pass the advantage to consumers, the National Audit Office (NAO) states. The NAO calls on the Government to recover its lost revenue by correctly identifying the companies that had benefited from not transferring the tax cut to the people”.

The aforementioned National Audit Office report should be the starting point for you and the current regime, to establish your integrity and commitment to good governance at this time of serious economic crisis; and to recover any embedded proceeds of crime and to use such funds to provide relief to poor and vulnerable citizen segments. You now have the option to order the authorities to actively seek options to recover any unfair, unreasonable and unacceptable gains made using the reported scam, for example by examining options for direct recovery under any law or by an indirect recovery action, with the latter possibly evidenced by establishing purported linkage by any private business entity via an act of corruption of any public servant, willfully and with knowledge, causing the reported wrongful and unlawful loss to the government with or without any wrongful or unlawful benefit, favour or advantage to any person.

You and your government have at last admitted the perilous state of the macro-economy, which is now so much closer to Sri Lanka being classified as a failed state; and have publicly appealed for political parties and societal support to initiate planned national strategic action, which must be taken without delay. Your government’s new team in charge of economic strategy development has canvassed the support of all segments of society to initiate corrective action; and warned that the consequences could impact severely on the public and that the citizens in the national interest must bear any such pain and difficulties caused to lifestyles and livelihoods, until the national turnaround is achieved in the future.

The proposed strategic action is being implemented very much later than it should have been initiated; and had it been implemented on a timely basis, the consequential pain on citizens and business would have been very much lesser than that likely in the near term future. It is very much regretted that the essential corrective action steps, so effectively articulated for over one and half years by leading economists and knowledgeable citizens, signaling an impending serious economic crisis, were so blatantly ignored by you, your government and your lead economic management team. As a consequence business and citizens are now required to bear the consequences of past mismanagement by many regimes, including your regime, where the expected pain will be hard to bear, when it impacts in full on the small and medium businesses and especially the poor and vulnerable citizen segments.

It is therefore incumbent upon the government, to even partly alleviate and offset the pain and suffering of businesses and citizens by making concessions to those who are likely to be seriously impacted and recompense those citizens who will find it difficult to manage their lifestyles and livelihoods; and to further arrange an effective and correctly targeted cash transfer system using technology similar to that leveraged in India under the “Aadhaar Scheme”.

It is recognized that the state will need to introduce severe restraints on fiscal spending, imposing cuts on defense, other non essential spends and defer discretionary capital spends; introduce taxation reforms with measures to raise state revenue, leveraging non regressive tax options to the extent possible. The other available option is to address with commitment the need to limit to a minimum the illicit financial flow and eliminate all serious economic crimes and recover proceeds of crime and use the same to fund the costs of concession to the severely impacted segments.

As an initial step to give positive signals to the citizens who are presently impacted by the economic crisis and those citizens required to bear the pain and suffering upon the implementation of the planned corrective actions aimed at stabilizing the economy, you are requested to establish integrity and commitment of yourself, your government and leaders in governance by taking the undernoted transparent action urgently, to optimize the recovery of proceeds of crime, illicit financial flows, stolen state assets and willfully evaded state revenues:

1) Publicly announce a policy that that the government will establish with necessary law reforms independent legal structures, systems, coordination and oversight mechanisms to actively with commitment to optimize the recovery of proceeds of crime, illicit financial flows, stolen state assets and willfully evaded state revenues, applying professional best practices, competent personnel and seeking support of local independent and international agencies;

2) Pending 1 above instruct the Inspector General of Police, the Attorney General, the Auditor General, The Director Financial Intelligence Unit, the Director General of the Bribery Commission, the Commissioner General of Inland Revenue, the Director General of Customs and Excise Commissioner, individually and where necessary collectively, to Investigate with independence all known, reported or suspected cases including international and local investigative exposes (eg. Panama/ Mauritius/ Pandora/Paradise Papers) for recovery of proceeds of crime, illicit financial flows, stolen state assets and willfully evaded state revenues; and to ensure strict compliance with all related international conventions and agreements, including commitments made by Sri Lanka following the Anti Corruption Summit in UK and its follow up meetings. Here all investigations previously initiated by any units referred to above (including the now defunct Financial Crimes Investigation Division and the Special Presidential Task Force for Recovery of Stolen State Assets) with options for recoveries which remains completed with no action finalization, all partly completed investigations and recorded suspicious transaction reports not proceeded with, should be reopened and actively investigated for recovery of proceeds of crime options.

3) Take early steps to enact the Proceeds of Crime Act, duly developed and approved by all stakeholders in 2019; but not submitted to the Cabinet for approval by the last regime in governance

4) Seek best available local and international technical and network assistance as well as training and infrastructure support for effective and independent investigation, prosecution and recovery action in terms of the Sri Lankan legal framework to be strengthened by the proposed Proceeds of Crime Act.

5) The new structure to be established for the suggested recovery process to be staffed by competent, experienced and international systems exposed personnel, knowledgeable in serious financial and related crime investigations, money laundering, tracking/tracing and analyzing financial transactions/data/electronic and telecommunications data, international data base surfing, use of sophisticated IT based analytical tools and investigating changes in net assets, developing specific charge sheets for violations of the law and assembling evidence professionally for prosecution etc. ( including the recall of all such experienced personnel transferred out or early retired from their areas of expertise following your assumption of office)

As a caring and concerned citizen always placing the interests of the state as a high priority, I earnestly look to your change management leadership action following this submission.

Yours Sincerely,

Chandra Jayaratne

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