Right to reply: SLAMERP responds to ‘baseless allegations on export proceeds’

• Acknowledges the right to question by activist, regrets their ignorance of the law and the ground facts
• Observes intention is to tarnish the image of the export industry and divert attention without facts in hand but based on a value gap report for 148 countries
• Points out professionalism and decency are to clarify and verify facts before accusing and naming in public to defame organisations and individuals
• Calls on organisation to provide evidence with facts to government, rather than broad based assumptions with big numbers from nongovernmental third parties
• Questions the mob mentality and the attempt to be the judge, the jury, and the verdict on false claims on inconclusive data

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Rohan Masakorala

The Sri Lanka Association of Manufacturers and Exporters of Rubber Products (SLAMERP) refers to an article published in the Daily FT on 23 January 2023, under the heading “Misleading responses by CBSL Governor, JAAF, TEA and Rohan Masakorala on illegal foreign exchange transfers” by an activist representing an organisation

called, “Commercial and Industrial Workers’ Union and United Federation of Labour” where a number of unions’ names and professional organisations are listed as signatories.

SLAMERP Director General Rohan Masakorala responded saying, “We have no issues in raising questions in the interest of the public at these difficult economic times, however as an industry body none of these organisations have had any contact with us to clarify and get our viewpoint and seek opinion before publishing wrong assumptions and unverified and false information in the media on two separate matters. We as SLAMERP only responded to previous media reports and social media tarnishing the industry by mixing up an issue of proceed repatriation and a secondary matter of under/over invoicing. There are many independent international think tanks with publications on this subject, specifically in the USA and EU, in fact there are special intelligence agencies in the USA and EU that provide such information to authorities. Some organisations do not have detailed clarity but broad-based observations. We as SLAMERP have not denied or accepted under or over invoicing. We strongly believe it is a matter for authorities worldwide to investigate which is considered a very difficult task due to complexities of different laws and technological advancements and trading patterns. We are aware that the USA has a transfer pricing act (The US transfer pricing statute is expressed in the Internal Revenue Code at Section (IRC) 482.) The EU too has similar arrangements.

At SLAMERP we are always willing to discuss and support best practices with anyone but not argue to just win! And we do constantly engage government authorities and international organisations as well.”

Maliciousness of the accusers of the article is clear when a group gets together to publish it without any clear evidence against a single export trader but uses a broad-based think tank report of 2019 on global value gaps which has many areas to be verified and also mis-interpreting the CBSL governor on export proceeds. The article makes no attempt to provide any verified facts based on any detailed study, but broad-based numbers are used for assumptions. However, now it is more than clear to us who is behind this mudslinging campaign on our industries as a whole rather than wanting to understand and discuss issues before giving verdicts on all the exporters/importers in the eyes of the public.

The tone and the language of these articles seem to tarnish the image rather than be a genuine and fact-based process. If they had any genuineness, the authors should have had a number of deliberations with the sectors and shared their findings with relevant regulatory bodies. They have had no communication or verification from the industry organisations and as we understand no such deliberations with relevant government, ministries, entities including the CBSL. The ignorance of the Forex Act liberalisation by amending the Act in 1994 (26 year) and reversing part of it by former finance minister Ravi Karunanayake in 2016 (6 years) exposes the bad faith and lack of professionalism. We are of the opinion they should have confronted the same in 1994/2016 rather than citing a 2019 USA document in 2022.

On 24 December 2022 SLAMERP published a 1500-word full page article on the FT on “misleading allegation on export proceeds”, to clarify certain media and social media allegations with our point of view and explain the status on export proceeds. But at that time we were unaware of the real group behind it. (https://www.ft.lk/business/SLAMERP-alleges-media-reports-on-export-industry-repatriation-factually-incorrect-misleading/34-743443).

We as a responsible organisation have not published anything of which we are not aware of, as accusations of under invoicing and over invoicing and transfer pricing must be provided and or proved, rather than hearsay. But the author and its affiliates pretend to know what is going on but have failed to provide the same evidence to the Central Bank of Sri Lanka, Ministry of Finance, Department of Commerce, Inland Revenue Department and Customs Department and the Foreign Ministry to carry out investigations but claiming numbers of a broad-based report. We call upon them to now start providing the evidence, proof, and facts via authorities as we too would like to know the details of any such illegal activity and offenders.

 Cherry picking to create confusion

Interestingly, in the article a single sentence of the SLAMERP DG has been carved out and published out of context to try to justify their poor attempt. This cherry picking is indeed to mislead the public and make the exporters the scapegoat of the current economic disaster rather than the point made by IMF and recognised international organisations who have spelt out the economic mismanagement of regimes that led to the current status. We wonder who they are trying to whitewash? We quote the paragraph of the malicious article below.

Quote: “In this regard Rohan Masakorala, Director General of Sri Lanka Association for Manufacturers and Exporters of Rubber Products, states that no one can blame businesses for shifting capital out according to the law of the land. We thank Masakorala for admitting that businesses have shifted capital abroad -and now it is up to Masakorala to specify the laws of the land that gave the right to transfer capital through trade mis-invoicing and transfer pricing”. End quote

Below are the actual comments made by SLAMERP in our article, Quote: “The law before 2016 gave freedom to exporters to keep money for “investments and business overseas”. It was the government›s policy; how can people question the exporters if some have kept money overseas in the past as per the law of the land? End quote. The author conveniently removed the part Rohan Masakorala said was for” investment and business purposes”. CBSL will/can clarify this position and they later allowed even part of profit repatriation for investment proposal projects under certain strict rules and regulations and with prior approval process. But changes took place in 2016 and now in 2022 to the Act.

SLAMERP also went onto highlight their article which further Quote:

“We have called on the CBSL to actually name and shame if any exporter is not abiding by the laws of the country for months, we have also suggested mechanisms to monitor with customs and banks.”

“There may be a few bad eggs in any industry and we as an industry body have always maintained they have to be taken to task but that doesn’t mean a whole industry should be targeted and tarnished and carpet bombed by the media without fact checking,” – End quote.

For the authors’ convenience the above key references are also left out of public, it is clear to us at SLAMERP that the group is acting in bad faith and lack the knowledge and the understanding of international trade and mechanisms to check malpractice, but instead make accusations without providing strong credible evidence to authorities. At the same time Sri Lankans know our main export markets are the USA and EU who have the strongest technical instruments against anti-dumping laws and border control to stop any illegal practice. We strongly recommend them to get proper advice and investigation done through the respective authorities local and overseas before pointing fingers at everyone in the export business.

We too would like to know the details of the allegedly missing billions of dollars as claimed and to help repatriate the illegally transferred funds and some advice on how to run globally competitive export businesses without bringing in the export proceeds. We also request the authorities to seek information from them as well. We appreciate the governor CBSL explaining on this matter to the Committee on Public Finance (COPF) headed by the parliamentarian Dr. Harsha de Silva this week, and we observed the committee members were satisfied with the explanations. We would seek the governor of CBSL to issue a statement as well as to clarify misleading statements attributed to him.