The Hon. Mujibur Rahman

¶ 01 Mr. Chairman, under the Committee Stage of the Appropriation Bill 2025 for today, Wednesday 19.03.2025, I move, in accordance with tradition, that under Heads 116, 295, and 297 to 302 relating to the Ministry and its Departments and Institutions, Rs. 10 be cut from all recurrent and capital expenditure programmes.

¶ 02 Thank you for the opportunity to speak on the Head of the Ministry of Trade, Commerce, Food Security and Co-operative Development. This is a very important Head. During the previous Government, many transactions under the purview of this Ministry were repeatedly raised in this House. We lodged complaints with the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) and with the CID regarding numerous irregular transactions.

¶ 03 Historically, this Ministry has been repeatedly accused of large-scale fraud and corruption. Perhaps that is why the President entrusted the Ministry to Hon. Wasantha Samarasinghe, a person who led an anti-corruption movement, with a mandate to clean it up. Minister, you therefore have a serious responsibility to investigate and act swiftly, especially regarding fraud and corruption in Sathosa.

¶ 04 During the presidential campaign, your side made pledges to ease the cost of living, including removing the 18% VAT on essential goods from the first Budget after assuming power. However, in this Budget, VAT on many essentials remains, including on school supplies. The President also spoke of removing the Rs. 50 fuel levy on petrol and diesel; yet, there has been no relief in fuel prices, even though global crude prices declined, and the formula has not delivered any reduction.

¶ 05 When there were issues with rice supply, you imported rice and imposed a high duty of Rs. 65 per kilogram — unprecedented on an essential good. For rice imported at around Rs. 220 per kg, a Rs. 65 tax is roughly a third of the price. While imposing that tax on the public, the Government also facilitated large rice millers to sell at their preferred prices. Despite rhetoric about ending the rice “mafia,” policies ended up empowering it. Furthermore, to appease millers, the President allowed a Rs. 10 per kg increase in the controlled retail price.

¶ 06 Prices of consumer goods keep rising. From 1st April, milk powder prices are to go up by Rs. 50 per 400g pack. People are under severe strain.

¶ 07 According to the National Consumer Price Index, a family of four spent Rs. 43,391 in December 2019. In 2025, it is Rs. 104,851 per month — an increase of about Rs. 60,000; 39% on food and 60% on non-food. The Colombo CPI indicates a monthly expenditure for a family of four of Rs. 79,923 in 2019 and Rs. 176,409 by February 2025. Only 26% of spending is on food, and 73% on non-food such as education, transport, electricity, water, telecom, and medicines. People therefore reduce food intake, resorting to cheaper street and junk foods, which will drive future health problems and costs.

¶ 08 Health Ministry data show for under-5 children: stunting was 9.28% (2022) rising to 10.38% (2023); wasting 10.18% (2022) to 10.8% (2023); underweight 15.38% (2022) to 17.18% (2023). Likely worse in 2024. Families cannot cut essential non-food bills; they cut meals from three to two to one, worsening nutrition. Hence the need to remove VAT on essentials and reduce prices.

¶ 09 On Sathosa: it has long been embroiled in allegations of corruption. It was given to the current Minister, a former anti-corruption campaigner, but serious issues persist.

¶ 10 Example: “Goraline Impex” tender for rice on 24.12.2024. Before opening the tender, rice was procured. The Acting CEO (Mr. Malage), who is also Deputy General Manager (Internal Audit), allegedly directed the Tender Committee to skip the tender and buy that stock. The Head of Logistics, Mr. Sanjeewa, who alerted Government Audit, was transferred. An audit inquiry is reportedly ongoing. The Acting CEO has been in position since December 2024 while simultaneously holding DGM (Internal Audit) — a conflict. On 21.01.2025, 11,500 kg of rice were procured; Quality Controller reported by SMS that the stock failed quality, yet it was still sold through Sathosa outlets.

¶ 11 Further, coconut oil transport has been awarded without tender to a favoured party; egg supply too, without tender, on the Acting CEO’s decision.

¶ 12 A system audit tender called on 28.02.2025 was first awarded to a company, then cancelled claiming the file went missing. A fresh tender was then given to Ernst & Young, associated with the President’s adviser, Mr. Duminda Hulugalla. This must be investigated: how did the original tender file go missing?

¶ 13 On outlets: a new Sathosa outlet is to be opened about 100 metres from an existing one in Deniyaya with a monthly rent of Rs. 400,000. The DGM (Procurement) who opposed the proposal has been sent home with charges. There are reports of harassment of officers; if so, action should be taken.

¶ 14 The Acting CEO, Mr. Dunston Loku Malage, reportedly attempted to register a company of his own to supply to Sathosa — a blatant conflict of interest. When opposed, officers were charged and removed. Many key DGM positions (Procurement, Purchasing, Operations, HR) are vacant; Finance is part-time; Marketing is leaving. The Acting CEO effectively controls six areas while also serving as DGM (Internal Audit), which the Auditor-General has previously said is impermissible dual holding of posts. Despite Board and Ministry presence, no corrective action is visible.

¶ 15 An Audit and Management Committee meeting on 18.12.2024 led to a decision on 28.12.2024 that the Internal Audit Division is managed by an audit manager and that a CEO and a Deputy General Manager should be recruited promptly. Yet no CEO has been appointed for months, centralising power in one acting official.

¶ 16 On remuneration, acting allowance should be capped at 25% of basic pay, yet the Acting CEO has reportedly obtained additional amounts via Board papers: Rs. 37,500 extra on acting allowance, Rs. 50,000 extra as performance allowance, and Rs. 25,000 as professional allowance — totalling Rs. 491,750 per month, exceeding norms. Treasury-nominated directors sit on the Board but have not stopped this.

¶ 17 The Commissioner of Labour (Investigations) on 10th February instructed payment of Rs. 64,530,254.40 as gratuity to around 250 employees, but payment has been withheld. These are long-serving staff in hardship; gratuity must be paid.

¶ 18 Sathosa purchases Rs. 3–4 billion worth of goods monthly. Procurement must be transparent. Tender procedures are being bypassed; suppliers with failed quality have been blacklisted only now, but past issues persist. We hear that a Rs. 5,000 relief pack is to be provided from April 1st. What is the preparedness? Have tenders been called and goods sourced? Also, imported rice through STC has quality issues reported by Quality Controllers. Such rice must not be included in the relief pack. Low-income customers rely on Sathosa; quality must not be compromised.

¶ 19 To the Ministry Secretary, Board members, and Treasury representatives: do not permit politicised appointees to play with public funds.

¶ 20 Mr. Chairman, my time is over? I will conclude briefly. I request three more minutes.