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Foolproof alcohol sticker resurfaces

13 Feb 2021

  • Govt. still on board with crooked Indian company

  The implementation of a foolproof sticker on alcohol bottles and cans, which about two years ago made leading alcohol companies to threaten the former Government with closing down operations if implemented, has resurfaced this year, The Sunday Morning Business learns. The foolproof sticker is a requirement initially introduced by the then Ministry of Finance and the Department of Excise a few years ago to curb the mushrooming illicit liquor producers in the market and to reduce the loss in state revenue caused by it. Nevertheless, it has been repeatedly postponed by the then Government due to opposition from local alcohol manufacturers. on 1 January this year, in a letter to the Treasury, which was seen by The Sunday Morning Business, Excise Commissioner M.J. Gunasiri had stated that as per the Excise Notification No. 01/2021, the implementation of the foolproof sticker could be either in the form of a normal sticker or a digital print. The Department of Excise has provided a grace period until 31 June 2021 for alcohol companies to comply with the ban. Speaking to us, Deputy Excise Commissioner Kapila Kumarasinghe stated that it is mandatory for alcohol manufacturers to comply with the requirement. He added that taking into consideration the grievances raised by the industry previously on pasting a “mundane” sticker on their “appealing” packaging, the Department has also given the option of a digital print. While appreciating the move to provide an alternative option to comply with the requirement, the industry is now concerned about Madras Security Printers (MSP) of India, which is a company with a history of corruption, still remaining as the awardee of the tender for printing these foolproof stickers or digital print. The Sri Lankan Government had repeatedly chosen to continue working with this company, which was initially awarded the tender in 2016 without consulting industry stakeholders. MSP was primarily involved in two scandals in India and Kenya in 2017 and 2018, respectively. MSP was awarded the project initially in 2017 and continues to hold it despite the above scandals coming to light. In its home country of India, MSP was awarded the Aadhaar card project, along with other parties. Aadhaar is a 12-digit unique identification number that can be obtained voluntarily by the residents of India, based on their biometric and demographic data. The number is issued by the Unique Identification Authority of India (UIDAI). Even though the number is given by UIDAI, information collection and biometric capturing are done by enrolment agencies, most of which are private firms hired by the UIDAI. However, in 2017, the UIDAI suspended six enrolment agencies, including MSP, for taking bribes to submit information given by people, although the Aadhaar programme was supposed to be free of cost to the public. MSP is also alleged to have colluded with Kenya Bureau of Standards (KEBS) and in June 2018 counterfeited labels on thousands of bags of sugar in the local market which were completely unfit for human consumption. Soon after the illicit trade came to light, the Consumers Federation of Kenya sought the immediate cancellation of the tender awarded to MSP to produce certification labels and also sacked senior officials of KEBS. However, MSP denied the allegations and noted that the fake stickers had not originated from the company. In addition to this, reliable sources pointed out an incident which took place in 2019, where two imported liquor bottles had stickers with the same pin number, the stickers of which were printed by MSP. Even though the initial announcement to comply with the sticker requirement was made to the industry early 2019, the tender for sticker-printing was initially floated in 2016 and was awarded to MSP. However, due to several shortcomings pointed out by the Procurement Appeal Board at the Presidential Secretariat, the tender was recalled in 2017. It was re-awarded to MSP without industry consultation on both occasions. Interestingly, on both occasions, the Technical Evaluation Committee (TEC) had recommended MSP be awarded the project. MSP, which bid $ 3.19 per 1,000 stickers in the first tender, bid $ 2.80 higher in the second tender, while another bidder proposed $ 4.57 per 1,000 stickers. The second tender was also speculated to have been cancelled due to allegations of a biased tender procedure. A Treasury official told us that while no payments were ever made to MSP, the Government is not in a position to call off the tender as it has been four years since the tender was awarded. Therefore, the Government may be forced to pay a penalty in case of cancellation. The recent letter from the Department of Excise states that according to the agreement Sri Lanka entered into with MSP, the Department of Excise is bound to purchase stickers for a minimum of Rs. 33 million. A sticker is sold for local manufacturers at a price of Rs. 2 per sticker. Industry sources told us that the stickers selected by the Government were just normal paper stickers that could easily be duplicated by anyone, and the glue provided to paste the sticker was also basic glue and certainly is not even worth the Rs. 2.

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