Cement VAT scam probe goes to Paris

The Ministry of Industries probing the Rs.14 million VAT scam in the cement industry involving Mahaweli Lafarge Cement Company, of which the government holds ten per cent shares has urged the Sri Lanka Standards Institution(SLSI) to investigate how International Cement Traders Ltd purchased 12,750 metric Tons of cement imported by Lafarge Mahaweli Cement from Malaysia were sold in bulk and bag form to customers as cement imported from India with the SLSI quality assurance on the invoices.

Leading construction companies who had purchased cement from ICT during the past eight months have expressed serious concern to Industries Minister, Kumara Welgama and are awaiting the quality assurance from the SLSI with regard to their purchases.

These companies are contemplating legal action against ICT and SLSI for negligence that had allowed such companies to operate in this manner enjoying benefits from the state as a BOI company earning undue profits. Minister Welgama appointed a high-powered committee to probe the scam following a request by Lafarge Cement, Managing Director, Rex Hatherley who had requested the minister to clear his company,ICT and Zeeniya Traders on the reported VAT scam.

Meanwhile, Minister Welgama has apprised the Mahaweli Lafarge Cement Company head office in Paris on the ongoing findings of the probe as the government of Sri Lanka has lost millions of rupees due to irregularities of Mahaweli Lafarge in Colombo and has pointed out that the resident visa of Hatherley was issued on the recommendation of his ministry.

The Minister has informed Paris that the Sri Lanka Cement Corporation and Lanka Cement Ltd, the two state owned institutions have been badly affected as Lafarge Mahaweli has not issued bulk cement to these institutions for unkown reasons.

ICT says...

Reference the news story-”Cement Mafia VAT scam bared” in the Sunday Observer of August 20, Nabil Francis, Managing Director, International Cement Traders(ICT) in a letter states that ICT is not involved in a VAT scam and has claimed certain VAT components were legitimately obtained against VAT invoices. He said the news story concerning ICT is false, inaccurate and malicious and that the ICT has conducted business legally in complying with all rules and regulations at all times.

Our Staff Reporter states -”The ICT has claimed Rs. 14 million as VAT from the Inland Revenue Department by producing VAT invoices issued by Zeeniya Traders (Pvt) Ltd, Colombo 14. Zeeniya Traders had never bought cement from Mahaweli Lafarge Cement Company to sell and the ICT is fully aware of this fact. The ICT bought cement from Fadee Cement Ltd, a company never registered with the Registrar of Companies nor has VAT registration. Since ICT could not obtain Vat invoices from Fadee Cement, ICT forwarded VAT invoices supplied to it from Zeeniya Traders to claim VAT.

We are in possession of all detailed cement purchases by Fadee Cement on behalf of ICT from Mahaweli Lafarge and the detailed collection schedule of such cement by ICT vehicles from Lafarge Silos and the same being sold to customers by ICT with invoices issued by ICT stating the country of origin of such cement was India.