Cement VAT scam: Ministerial probe sheds more light

by Prasad Gunewardene

Industries Minister Kumara Welgama appointed a top level ministerial committee last Monday to probe the cement VAT scam that was exposed in the Sunday Observer last week.

Minister Welgama told the Sunday Observer that Mahaweli Lafarge Cement,International Cement Traders Ltd (ICT), Zeeniya Traders Ltd and Fadee Cement were being probed over this scandal where the state had suffered a VAT loss of Rs.14 million during the first half of this year.

The committee probing the scandal had been informed by the Registrar of Companies on Wednesday that no company called Fadee Cement Ltd had been registered with them.Following this disclosure by the Registrar of Companies, the ministry has now asked Rex Hatherley, Managing Director, Lafarge Mahaweli Cement as to how he sold cement worth Rs. 100 million at Rs. 6,500 per MT(below the landed cost) to Fadee Cement Ltd incurring a loss of nearly Rs.25 million to the company which also affected the Sri Lanka Cement Corporation, which holds 10 per cent of shares at Lafarge.

Meanwhile, Chairman of the Sri Lanka Cement Corporation, Lalinda Liyanage who was summoned by Minister Welgama on Wednesday has stated that the Corporation had not sub contracted, purchased nor even heard of a company named Fadee Cement Ltd.

The committee appointed by the minister has questioned International Cement Traders Ltd,as to how they purchased 12,750 MT from a company named Zeeniya Traders at a cost of Rs.102 million being fully aware that Zeeniya Traders had not purchased bulk cement from Lafarge Mahaweli and also reportedly claiming Rs.13 million as VAT forwarding bogus invoices obtained from Zeeniya Traders.

While the Sri Lanka Standards Institution (SLSI) has intimated that it had no knowledge of ICT purchasing cement from Lafarge Mahaweli through a company named Fadee Cement, the estimated loss the government had suffered is Rs.100 million on this scandal involving Lafarge Mahaweli, ICT, Zeeniya Traders and Fadee Cement.