Illegal liquor on the rise with authorities’ blessings: DCSL

Distilleries Company of Sri Lanka (DCSL), Sri Lanka’s largest manufacturer of liquor, has alleged that the illegal production of liquor has risen drastically over the past financial year, with the support of politicians and enforcement authorities.

“When compared with last year we have noted a drastic increase in the illegal production of liquor. We have also observed that a large amount of spirit is being smuggled into the country passing through the customs without payment of taxes by classifying the product as paint removers, thinner and spirit for eau de cologne etc. Such acts are carried out by powerful people belonging to political groups with the connivance of the enforcement authorities,” said DCSL Chairman and Managing Director Harry Jayawardena in the company’s annual report for 2017/18.

He alleged that FL4 Retail Licenses are being operated by officers from the enforcement authority itself by paying “staggering” prices to obtain a license, which deprives a large amount of tax revenue to State Coffers.

“It is disheartening to note that even some officers from the enforcement authority are operating FL4 licenses using other names to find a market for illegal products, and this is very well known to the Excise Department. The fact that these unscrupulous manufacturers are paying such staggering prices to obtain a license itself is proof of the existence of an illegal trade and indicates how corruption has spread like a deadly disease in the industry.”

He said that 6 manufacturers are currently controlling over 225 retail outlets out of approximately 1,000 outlets, or 1/5th of the total licenses, “in the name of their kith & kin”, defrauding the State of billions of rupees whilst “regulators turn a deaf ear and blind eye”.

Jayawardena also accused the competitors of DCSL of producing cheap artificial toddy, unfit for human consumption, claiming that DCSL is the only company that produces 100% natural coconut arrack using 100% pure coconut toddy.

“It is saddening that some of our competitors use artificial toddy to distill spirit thereby bringing various health hazards to innocent consumers. The so called ‘Old Arrack’ in the market is made of artificial toddy and the consumer is unaware of the real situation.”

He lamented the fact that the National Authority on Tobacco & Alcohol (NATA) Act, which forbids the promotion of alcohol, has made it impossible for DCSL to raise awareness about these issues.

“We are unable to make the public aware of this danger due to the restrictions imposed by the NATA Act.”

The Minister of Finance and Mass Media Mangala Samaraweera told parliament last week that the new Excise (Amendment) Bill, which was passed in Parliament last week, would introduce a sticker for every bottle of arrack that was produced legally, to reduce illegally-produced alcohol from contaminating the market while increasing Government revenue through excise duty.

According to the annual report, DCSL paid Rs. 64 billion in taxes during the 2017/18 financial year, and Jayawardena claimed that the constant tax increases had made legally produced arrack too expensive for the general public.

“Such pricing policies are promoting bootleggers and harming innocent consumer’s health, leading to the eventual shortening of many consumers’ lifespan.”

Samaraweera also informed Parliament that Sri Lanka’s alcohol sales had fallen by 11% in the first 6 months of 2018 due to the excise duty, but that the Government expects revenue to increase by between Rs. 20 – 25 billion.