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Land Reform Commission: AG exposes multi-million-rupee losses 

27 Nov 2021

By Maheesha Mudugamuwa The recent financial audits of the Land Reform Commission (LRC) conducted by the Auditor General’s (AG) Department had exposed substantial irregularities that caused the commission multi-million-rupee losses, prompting the Committee on Public Enterprises (COPE) to call for a formal investigation into the allegations. The investigation, which is to be conducted by the Secretary of the Ministry of Lands and Land Development, is expected to be completed and its report handed over to the COPE within one month. The financial audit reports issued by the National Audit Office (NAO) of the AG’s Department for the years 2017, 2018, and 2019 had highlighted irregularities in financial statements, accounting deficiencies, unauthorised transactions, and improper assessments and estimates of the LRC, for which the commission, up to now, had not given solutions, despite it being years since the NAO made these revelations. Audits uncover host of irregularities  Out of the irregularities highlighted in the audits, controversy surrounds the Commission’s failure to properly maintain a complete record of the number of acres of land acquired from the date of its establishment in 1972, including the areas in which each land is situated, from whom it was acquired, details of the current transfer of tenure, and the relevant gazette notifications with the details related to land disposals. This was highlighted in the NAO’s 2019 financial audit. It also revealed that the Commission had failed to disclose details through the relevant documentation. However, the controversy further deepens, as during the audit, the NAO was unable to ascertain the accuracy of the valuations of acquired lands, which amounted to Rs. 676,169,345, as recorded in the financial statements. Also, issues pertaining to land acquisition were also highlighted at a recent parliamentary COPE meeting chaired by Prof. Charitha Herath that was held to examine the AG’s reports for 2017, 2018, and 2019, and the current performance of the LRC. Here, the LRC had highlighted that nearly 200 files pertaining to land acquisition had been lost. During the audit, as highlighted by the NAO in 2019, the LRC management had stated that the reason for the failure to maintain proper records was due to a lack of a properly updated Register of Lands belonging to the Commission, the unavailability of the specific cost of each land in such a register, and the inability to determine the cost of the lands that were sold. In its response, the NAO had recommended maintaining an updated Register of Lands and taking action against the officials responsible for not updating and maintaining the registers. Even though the NAO’s recommendations were given in 2019, it was revealed that the issues were not yet rectified, as similar issues were once again discussed at the recent COPE meeting. Moreover, the COPE Chairman highlighted the importance of maintaining accurate data on these lands, which were the main assets of the LRC. Furthermore, the COPE highlighted that the extent of lands acquired by the LRC established under the Land Reform Act No. 1 of 1972, coupled with a lack of accurate data on said lands that were disposed of by each government, was a serious concern. The Secretary to the Ministry of Lands and Land Development had pointed out that this was due to the lack of proper surveying conducted during the land acquisition and transfer process under various governments. COPE issues recommendations  Pointing out that it was essential that the lands be properly assessed and a document be prepared in this regard, the COPE Chairman instructed the Secretary to the Ministry to prepare an expeditious programme and inform the COPE on the possibility of using modern drone technology for this purpose. The COPE stressed the need to digitise the data on these lands using modern technology as a solution to solving the problems, including the various irregularities identified. The Committee emphasised the need to rectify this situation, as land grabbing by people had become a serious problem. It was also revealed that out of the lands acquired under the Land Reform Act, 260 50-acre lands were unoccupied due to non-submission of plans and declarations. Accordingly, the Committee instructed the Ministry Secretary and the LRC Chairman to establish a special window to intervene and resolve this issue within the next six months. Furthermore, the NAO had highlighted that the Commission had not made arrangements to recover its debt balances, which amounted to Rs. 2,135 million. This amount remained as receivable for a period of 10-30 years from seven state institutions, and Rs. 2.3 million was receivable from eight persons for the leasing of lands over a period of 20 years, as at the end of the year under review. Questionable financial dealings  In another astonishing revelation, the NAO had exposed irregularities in the programme to award one million land deeds conducted under the Sirisena-Wickremesinghe administration. According to the audit report of 2018, it was revealed that even though a sum of Rs. 219 million was estimated for offering 60,000 deeds within a three-year period, by 30 April 2019, the Commission had awarded only 2,712 deeds by spending Rs. 90,915,043. As a result, the estimated cost per deed had gone up nearly tenfold compared to what was initially planned, as the Commission had incurred Rs. 33,523 per deed in contrast to the initial estimate of Rs. 3,650 per deed. In addition, among the irregularities were the issues pertaining to lease rentals, compensations, and surveyor charges. The NAO had highlighted, in its 2019 audit report, that even though the lease rentals receivable with regard to the year under review was Rs. 5,814,278 from 21 lessees, as shown in the lease rental schedule, the lease rentals receivable as at the end of the year under review had been stated as Rs. 14,829,675 in the financial statements. The difference in the amount was not explained in the audit. Furthermore, the amount of compensation paid during the year for the lands acquired by the LRC, which was Rs. 760,309, had been erroneously debited to the Compensation Fund Account as Rs. 1,493,347, and as a result, the Compensation Fund Account was understated by Rs. 733,038 in the financial statements. Similarly, aforesaid compensation payments had also been overstated by Rs. 733,038 in the cashflow statement, the NAO highlighted. Additionally, the amount of Rs. 2,139,169, which was paid for surveying the surroundings of the lands, out of Rs. 28,364,819 paid for the surveyors for 100 plots of land subject to reimbursement at the time of surveying, and regularising the lands of the residents, was included in the Comprehensive Income Statement as an expenditure. As a result, a surplus of that amount was overstated for the year under review. Nevertheless, at the recent COPE meeting, its Chairman Prof. Herath had instructed Ministry of Lands and Land Development Secretary R.A.A.K. Ranawaka to conduct a formal investigation at the ministerial level and submit a full report to the COPE within a month, and to take immediate action to rectify this situation. Attempts made by The Sunday Morning to contact Land Minister S.M. Chandrasena and Secretary Ranawaka were futile.


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