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| Sunday, 4 December 2005 |
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Features |  |
| News Business Features Editorial
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Money laundering and the LTTE Bull's Eye by a Special Defence Correspondent With the Central Bank bomb explosion, the commercial hub of Colombo - Fort was declared a high security zone thereby reducing its old busy streets to a No-entry zone. The area was further deserted when public transport in the commercial hub was diverted and the major government and commercial institutions were shifted from Fort. Though people are allowed to walk, those who are irked by the frequent security frisking would show reluctance to visit Fort even today.
Security checks are no matter to these customers as the sentries at road barriers neither suspect them nor interrogate them about the foreign currency in their possession. In this manner, those who may abhor terrorism have been perhaps accidentally supporting the LTTE cause. Secret activities The secret activities have been running without any hindrance for decades as no authority could find any clue to prove that some of these money exchange parlours have been middlemen for the LTTE to swap their tax money for dollar notes. The main perpetrators of this modus operandi are a few Colombo based LTTE sympathisers owning established export import business ventures. Having introduced the network to some of their enterprising close associates in the city some years ago, the middlemen received local money from the Vanni through similar unsuspecting means and they used such money to buy foreign currency from the money exchange centres. This foreign exchange is later sent to Vanni in lieu. The foreign currency obtained is believed to be distributed among relevant persons in Colombo or abroad to be used in procuring weapons and other requirements for the group. This is how the LTTE converts into dollars or sterling pounds millions of local money that they collect as tax and ransom from the residents in their area and from others who use their territories for trade or other purposes. It is believed that this money laundering amounts to millions of rupees and the tax that the LTTE collects from the users of A9 alone adds up to Rs.60 million a month. The main agents involved in export import business would easily get the cover up of their bank accounts and authority of the Controller of Foreign Exchange of the Central Bank to cope with this money laundering business for the LTTE. The money exchange agents operate in the guise of doing various small businesses such as jewellery, tea, spice and crafts, but if one observes their routine of business, their turnover is negligible. Black money market While this black money market was thriving since mid '80s depriving the tax revenue to the government coffers, a group of lobbyists backed by influential politicians were able to push the Government to authorize these operators as money exchangers a few years ago. Many of these money exchangers have Central Bank permits to do business but there is no authority appointed to monitor whether they abuse the permits and engage in the same old money laundering business with the LTTE. Therefore, it is high time the Central Bank studied this matter in depth and took action to stop this menace while allowing the authentic agents to continue with the business. If you stroll along in these narrow lanes in Fort and Pettah during busy hours, you could see the touts trying to lure you to places promising you with higher rates for your foreign currency than the rates offered by commercial banks. Nobody suspects any hidden hand. Even those engaged in this money market notice the invisible hand behind this operation. If enquired the operators sometimes would say that the money they collected would be used to buy goods from the duty free shops or sell back to the Central Bank which is not the true story. Any person with a knowledge of money circulation coming across this exchange drama would get the impression that another banking network other than the one controlled by the Central Bank is functioning in this country. It seems so organized and linked to different places and different persons. The behaviour of many of those engaged in the operation gives the impression that they are efficient and trained. One phone call to somebody at another end somewhere would settle a transaction of any amount of money. One would wonder how smart they are in their trade. But nobody would take any interest to inquire where all this money circulates. It is not still late for authorities concerned to act cautiously to combat any illegal activities in this trade and to stop unsuspecting people playing into the hands of the LTTE. It is a significant feature in this trade that most of the operators and their helpers are Tamil speaking people. Among other customers are those hurrying to the airport or others with busy schedules who have no time to go through typical banking constraints such as filling forms, presenting documentary proof and killing time at bank counters. Collateral This collateral has inevitably pushed these customers to seek the services of private money exchange dealers. Certain small time businessmen engaged in the tourism industry such as small hoteliers, craft sellers, tourist guides etc. are also regular customers of these places as they want to avoid paying income tax. After the CFA and the reopening of the A9, the LTTE has collected huge sums of money as tax and ransom from businessmen who travelled through their areas. Though the LTTE boasts about their own banking system, one would be puzzled to know how an isolated organisation such as the LTTE give value to their currency without legal financial connection to the outside world. So the LTTE apparently uses various links to get their tax money converted into foreign exchange through this network of money exchange dealers. The LTTE having got its international fund raising machine impaired due to the global heat against terrorism, the organization has intensified its local tax machine within their stronghold in Vanni as well as Government controlled areas after the 9/11 attack. The following list of items (See Box) that the LTTE has forced the people to pay as tax would prove their tax structure is more inhumane than the kind of body tax that had burdened the poor during the colonial era in this country. Even children's dreams were denied as the LTTE taxes 10 percent on toys. The LTTE during the period of the CFA since its inception on February 22, 2002 has collected over Rs.14.5 billion as tax from residents in the LTTE held areas, traders and other visitors to the Vanni, according to intelligence sources. This excludes the money they gathered as ransom from various individuals and parties. Jaffna Lorry Owners' Association, which handles the major transport between Jaffna and other commercial cities, is compelled to pay Rs.1.4 million a month as tax to the LTTE while an A9 road user is charged Rs.300 per journey. *** This is the LTTE tariff: Annual lorry registration fee - Rs.6,500.00 light vehicle - Rs.5000.00 bullock cart - Rs.500 a month. cattle - Rs.200.00 per head. multi day fishing boat - Rs.40,000.00 per year. fish auctioneer Rs.10,000 per year. persons with relatives in Middle East Rs.100 others in Europe Rs.200.00 a month. sundry traders Rs.500.00 ordinary family Rs.100.00 a month. rich family Rs.10,000.00 per month. farmer tax on chillies Rs.10.00 on vegetable Rs.1.00 dried fish Rs.10.00 fish Rs.3.00 per kilo. Tax on tobacco Rs.1500 per bundle. overseas returnee should pay Rs.500 per visit. tractor owner Rs.15,000.00 per year. tax on vegetable and other seeds 05 percent. fertiliser tax 10 percent. A sarong, any variety of shampoo, soap, tooth brush and tooth paste and hair creams is taxed 10 percent. Textiles and toys 10 percent. stationery, galvanized sheets, silver articles, furniture, decorating items etc. 20 percent, any electrical item 25 percent. lubricants and kerosene 10 percent. milk food from 5 to10 percent. consumer items including boxes of matches taxed at twenty five cents to Rs.25.00 tax for a load of sand Rs.100.00 |
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| Produced by Lake House |
Amidst such an incongruous environment, a particular business, viz.,
money exchange has been thriving in certain isolated cubicles located in
some neglected buildings inside streets of Fort todate. People who want to
exchange foreign currency at higher rates, especially those who have
returned from the Middle East have become regular customers of these money
transaction centers operating briskly during the day. 
