Abuse of Tax-free Vehicle Permits of MPs for Misappropriation of Public Funds

The Director General

Commission to Investigate Allegations of Bribery and Corruption

36, Malalasekara Mawatha

Colombo 7


26th Aug 2016


Abuse of Tax-free Vehicle Permits of MPs for Misappropriation of Public Funds


This is a formal complaint containing credible evidence of commission of an offence of corruption by the MPs and the Cabinet of Ministers, emanating from the abuse of people’s legislative and executive power for improper purpose of conferring unlawful favours and benefits for themselves, which falls within the provisions of Section 70 of the Bribery Act.


Government’s pledge to fight corruption


  1. I state that at the time of contesting the election to the office of the Executive President held on 08th Jan 2015, the Presidential Candidate, Maithreepala Sirisena, having considered the severe criticism of the corrupt policies adopted by the previous regime, sought a mandate to install a corruption-free government that would respect the rule of law and the Constitution dubbed ‘Yahapalana’ Administration.


  1. I state that accordingly, when the first fiscal policy statement (Budget speech for the year 2015-2016), of the new regime was presented in the Parliament on 20th Nov 2015, by his Minister of Finance, a special reference (reproduced below) was made regarding the heavy losses sustained by the government due to tax free permits granted to all officials (including the MPs) under the previous regime and proposed to abolish such schemes altogether.


‘… Honorable Speaker, the vehicle permit schemes have been politicized and misused and have created a huge revenue loss over Rs. 40 billion a year to the Government. I propose to abolish all the vehicle permits granted under different schemes, including to Parliamentarians. However, I ensure all government officers will be financially compensated for the benefit foregone. Further, all the vehicles purchased to the Government will be subject to all applicable taxes and necessary allocations will be provided in the Budget…’

(A copy of the relevant page of the Parliamentary Hansard dated 20th Nov 2015 marked P1 is attached hereto)

  1. I state that following the said bold policy statement, the Executive President Maithreepala Sirisena, attending the World Anti-Corruption Summit held in London on 12th May 2016, declared his government’s initiative taken for combatting corruption as follows.


‘… Corruption is one of the factors that promote political violence and other forms of human rights abuses. Sri Lanka went through such a stage during the previous administration. The people reacted strongly against corruption by changing the corrupt administration by the power of the ballet in January 2015 at the Presidential election and again at the Parliamentary election in the August 2016…’

‘… The people acting democratically got rid of the corrupt leaders and their supporters. The current national unity government consists of the two major political parties in the parliament under my leadership and the other led by Prime Minister Hon. Ranil Wickermesinghe. We were elected to office on the policy platform of democracy, good governance and rule of law. Therefore, we consider our prime duty to root out of corruption from the country. We have already taken significant measures for this purpose. I am happy to inform this forum that with the introduction of the 19th amendment to the constitution I handed over most of the executive powers to the Parliament except those powers Supreme Court decided cannot be transferred.  However, even under this limited situation as a demonstration of my commitment to transparency, accountability and the rule of law and my firm determination to route out corruption I established an anti-corruption secretariat, a special presidential commission to investigate. I also appointed a commission to investigate allegations of bribery and corruption. The Right to Information Act has been presented to the Parliament and the National Audit Act will be presented to the Parliament shortly. All these institutions are working satisfactorily. A special division within the police titled Financial Crimes Investigation Division (FCID) was established to expedite investigations on major financial crimes. They have been given all necessary facilities to carry out their duties. They have already commenced flings of several major financial charges. We note with appreciation the support and cooperation already extended to Sri Lanka by several countries including UK, USA, India and Switzerland as well as the World Bank to strengthen the investigative agencies regarding the stolen assets. We are in the process of seeking information and assistance to trace them. We are happy that summit proposes to establish an International Anti-Corruption Centre, all of us as leaders need to act collectively to strengthen our own law enforcement agencies to track the corrupt and recover the proceeds of corruption…’

‘… Sri Lanka is fully committed to such firm action …’

(A copy of the statement referred to above published by President’s Media Division on 13th May 2016 marked P2 is attached hereto)

  1. I state that the said statement made by the Executive President was in line with the Fiscal Management (Responsibility) Act No 3 of 2003 (as amended) that clearly sets out the Directing Principles and State Policy, as to how a government shall formulate its Fiscal and Economic Policy, having regard to the financial impact of its decisions on future generations [section 3 (g) of the Act].


  1. I state that financial strategy of the government shall always be based on the ‘principles of responsible fiscal management’ as set out in the said Fiscal Management (Responsibility) Act that has been enacted inter alia to ensure and facilitate public scrutiny of fiscal policy and performance of the government.


(A copy of the relevant provisions referred above in the said Fiscal Management (Responsibility) Act No 3 of 2003 marked P3 is attached hereto)


  1. I state that however, the new Government instead of abandoning the corrupt economic and fiscal polices of the former regime, has now conveniently reverted to follow the same adverse economic polices. One such instance is the resumption of the tax-free car permit scheme enabling all 225 Members of Parliament (MPs) to embezzle public funds by selling such permits in the open market for a huge some of money in the region of 25 million rupees, facilitating the motor car traders to import expensive luxury vehicles (Diesel, Petrol or otherwise) up to the value of US $ 62,500.00 with no engine capacity specified with no tax whatsoever charged.


  1. I state that further to the said ‘adverse administrative and/or executive decision’ taken with no regard to the financial impact of such policy decisions on future generations, the Minister of Finance under the guise of ‘economic development of the country’, gazetted the relevant tax exemption (No 1965/2 of 02 May 2016) under Section 3C of the Excise (Special Provisions) Act, No 08 of 1994 (as amended) for MPs to discharge their office effectively, facilitating the importation of the vehicles absolutely free from any levies.


(A copy of the said Gazette No 1965/2 of 02 May 2016 marked P4 is attached hereto)


  1. I state that the Section 3C (1) of the Excise (Special Provisions) Act, No 8 of 1994 (as amended) referred to above allows the Minister to exempt payment of levies on certain category of goods that shall be specified in the Gazette published; ONLY having regard to the ‘Economic Development of the country’ and subject to such conditions that shall be imposed to arrest any abuse and to protect the government revenue.


(A true copy of the Section 3C (1) of the Excise (Special Provisions) Act, No 8 of 1994 marked P5 is attached hereto)


  1. I state that this provision of law [3C (1) of the Excise (Special Provisions) Act, No 8 of 1994] amply demonstrates that it has been enacted for a purpose, having regard to the immutable Principles of Representative Democracy whilst acknowledging the trust and confidence placed by the people on those holding office in the Legislature and the Executive, and assuring the people of their dignity and well-being of successful generations of the people of Sri Lanka. And in no way does it permit those holding office in the Legislature and Executive to embezzle public funds by fraudulent means.


(A copy of the preamble to the Constitution of the Republic of Sri Lanka marked P6 is attached hereto)


  1. I state that the Section 3C(3) referred to above provides that where any goods specified in any such Order made under subsection 3C(1) by the Minister of Finance, exempting payment of any levy are subsequently sold or disposed of, contrary to the primary objective of issuance of such permits having regard to the ‘Economic Development of the country’ such goods shall be liable to the same Excise Duty, as is payable under the Act on like goods which are subject to Excise Duty and the consignee of such articles shall prior to such sale or disposal, obtain the permission of the Director-General of Excise and pay the Excise Duty.


  1. I state that the Finance Minister has listed motor vehicles as an ‘Exercisable Article’ under the Gazette notification marked P4, but on the permit issued to MPs, the provisions as set out in Section 3C(3) have been deliberately   overlooked and no conditions whatsoever specified, effectively permitting corrupt MPs to sell their permits misappropriating huge sums of government tax revenue for unjust enrichment.   Therefore, I state that the permits for MPs have been issued in clear violation of the primary law and hence void ab initio and no force in law.


  1. I state that the ulterior motive of the issuance of tax-free permits for MPs has been vividly demonstrated by the tax-free permit scheme announced under the circular No 01/2016 of 14th July 2016 to senior officials in the public sector, corporations and other statutory bodies, where it is explicitly provided that no vehicle imported under the said circular shall be transferred for a period of 5 years from the first date of registration of the vehicle.


  1. I state that the tax component of vehicles imported on MP car permits is well over 35 million rupees (charged at the rate of 300%) and thus there is a heavy demand for these permits in the motor vehicle trade, as buyers of these permits are allowed to import any vehicle of their choice, with no restriction on the engine capacity and at the same time with no restriction whatsoever imposed on the sale or transfer of the vehicles. Therefore, I state that right now, these permits are easily fetched at a very high price tag going up to over 25 million rupees or more in the motorcar trade.


  1. I state that the investigations conducted by me into the abuse of these permits revealed that those who are engaged in the motor vehicle import trade have bought a large number of these permits and they have already imported over 35 units of Toyota Land Cruiser Jeeps defrauding the government revenue of over 33.5 million rupees for each vehicle having paid only a Rs 1750/-nominal levy to Customs.


  1. I state that further to the investigation undertaken by me purely in the public interest, I have compiled a list of MPs with full details (including copies of the Declarations produced to Customs by vehicle importers) of the said 35 vehicles imported tax free and produced it to the Commissioner General of Motor Traffic seeking information about the current owners and the previous owners of these vehicles.


(A copy of the communication delivered to Commissioner General of Motor Traffic in this regard dated 08th Aug 2016 marked ‘P7’ is attached hereto)


  1. I state that further to the said request (‘P7’) the information furnished by the Commissioner General of Motor Traffic reveals that some individuals who have purchased these permits have had the vehicles transferred in their names on the same day on which these vehicles were first registered in the name of the MPs. For instance the Toyota Land Cruiser (bearing Chassis No JMTHV05J104193788) imported on the permit issued to Sujeewa Senasinghe MP, defrauding the government revenue of Rs 33,459.250.00 has been transferred to the current owner of the vehicle Ali Akbar Salebhai on the same day (20th July 2016) it was registered with the Department of Motor Traffic.


A copy of the certificate of the said vehicle transfer issued by the Department of Motor Vehicles marked ‘P8’ and Cusdec marked ‘P8a’ is attached hereto.


  1. I state that further to the initiation of the investigation on the abuse of the   permits issued to MPs by me some buyers of such permits have taken some precautionary measures, apparently on the advice of the corrupt MPs who have sold their permits. Now it reveals that the buyers of these permits do not transfer and register these vehicles under their names and instead possess and use such vehicles in the name of the MPs under whose name these vehicles have been imported.


  1. I state that the information obtained from the Commissioner General of Motor Traffic in this regard reveals that the Toyota Land Cruiser Jeep imported on the permit issued to Wimal Weerawansa, MP, defrauding the government revenue of Rs 33,459.250.00 has been registered (CAT9797) with the Department of Motor Traffic on 12th Aug 2016 in the name of the MP and since then it has not been transferred in the name of the person who posses the vehicle and the vehicle is being used in the name of the MP, which is also an offence under the Motor Traffic Act.


(A copy of the certificate of vehicle registration information issued by Commissioner General of Motor Traffic dated 19th Aug 2016, of the vehicle imported on permit issued to MP, Weerawansa, marked ‘P9’ and the Cusdec marked ‘P9a’ is attached hereto)  


  1. I state that in this regard, I have taken necessary steps to notify the Commissioner General of Motor Traffic about the abuse of vehicle registration process by the unscrupulous people, with a request to enforce law against those who possess these vehicles without them being duly registered in their names and to locate and detain such vehicles in the police custody until the persons who possess such vehicles get those vehicles, duly registered under their names, and produce the relevant registration certificates to the Police.


(A copy of the communication sent to Registrar General of Motor Vehicle in this regard dated 24th Aug 2016 marked ‘P10’ is attached hereto)


  1. I state that it is common knowledge that selling of these permits and sharing of the defrauded tax revenue with car importers by corrupt MPs are not only illegal, but morally and ethically wrong, as such actions amount to pure abuse of office of the MP, to favour themselves for unjust enrichment, which is a punishable offence under Section 70 of the Bribery Act.


  1. I state that all the MPs assume office, upon taking and subscribing the oath as set out in the 4th Schedule of the Constitution to uphold the Constitution and the law and, to discharge the duties of the office in accordance with the Constitution and the law, and to be faithful to the Constitution.


(A true copy of the Fourth Schedule of the Constitution referred above marked P11 is attached hereto)

  1. I state that fraudulent actions of the Minister of Finance to re-launch the tax-free car permits for MPs is a vehement infringement of the sovereignty in the people enshrined in Article 3 of the Constitution and their Fundamental Rights duly recognised and protected in Article 12(1) & 12(2) of the Constitution, as the citizens who have elected the Executive President and MPs (including 29 through the National List) have been clearly discriminated by these unlawful, immoral and deceitful actions, where the MPs have been afforded with unfettered privileges to abuse the government revenue whilst the citizenry have been heavily burdened with unbearable taxes imposed on essential commodities including hospital, Electricity, Water, Telephone and other bills.


  1. Therefore, I request the Commission to initiate a credible and independent investigation into this complaint, in terms of Section 4 of the Act No 19 of 1994, dealing with the dishonest elements occupying offices in the Legislature and the Executive appropriately as required by law, restoring some degree of dignity in the offices of the MP and the Cabinet of Ministers of the Republic of Sri Lanka.

Nagananda Kodituwakku

Attorney-at-Law (Sri Lanka) & Solicitor (UK) & Pubic Interest Litigation Activist

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1 Comment

  • Many of the recent increasing corruption scandals since Independence as this reveals is at the most venerated organizations such as Parliament and Justice department have some noteworthy features in common. In most instances, the fraudulent acts involved knowing cooperation among numerous elected representatives who were upstanding community members, representing the country at international functions, charity, and caring leaders on stage—far removed from the prototypical image of a criminal. The involvement of such individuals in corrupt acts, and the persistence of the acts over time, is both disturbing and puzzling. We argue that the above phenomenon can be explained in part by the rationalization tactics used by individuals committing unethical or fraudulent acts using the power given by the people to abuse the giver. No wonder we are becoming a basket country where the people wants to get out or reap the sunshine before the time is over.

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