By Skandha Gunasekara
Despite Minister of Finance Mangala Samaraweera alleging that liquor licenses were issued without his approval and calling for a probe in this regard, a perusal of the Excise Ordinance and other excise notifications reveal that the Commissioner General (CG) of the Excise Department had sole authority to issue liquor licenses.
In a Finance Ministry media communiqué earlier this week, the Minister of Finance claimed that liquor licenses issued during a particular time period was done so without his prior approval.
Accordingly, Samaraweera ordered Excise Department CG H.G. Sumanasinghe to conduct an immediate investigation into how liquor licenses have been issued by the Excise Department without obtaining his approval in 2017 and 2018.
The report on the findings of the investigation is to be submitted within a two-week period.
The communiqué also claims that “the protocol followed so far by the Excise Department when issuing liquor licenses is to obtain the approval of the subject minister or inform the subject minister in that regard. The Excise Department has issued 10 new liquor licenses in 2017 and 74 new liquor licenses in 2018. However, it is reported, as described under the provisions of the Excise Ordinance, that the approval of the subject minister was not obtained nor was he informed of these new issuances. Under the Excise Ordinance, at the discretion of the subject minister, he or she can decide whether to issue, renew, or cancel any liquor license or licenses at any time he or she decides to do so without any explanation”.
The Finance Ministry went on to say that the Excise Department CG had commenced an investigation and would take action against those found to have broken the law.
“Excise CG H.G. Sumanasinghe said that an investigation has already been instituted on the liquor licenses issued without obtaining the approval of the subject minister or without informing him during the years 2017 and 2018. He said that regarding all such licenses issued in these two years, if found to be issued without fulfilling the eligibilities specified under the provisions of the Excise Ordinance or if any corruption has taken place in issuing such licenses, through these investigations, action will be taken to cancel such licenses.”
Excise Department Deputy Commissioner – Crime and Law Enforcement and Media Chief Kapila Kumarasinghe told The Sunday Morning that the CG requested that a senior officer be appointed to conduct the investigations.
“The CG made a request with the Ministry of Finance to appoint a high-ranking official to conduct investigations. The investigations are to be carried out by the Ministry of Finance,” Kumarasinghe said.
However, when The Sunday Morning contacted the information centre at the Ministry of Finance, we were informed that the Excise Department was conducting the investigations.
“As far as I know, the Excise Department has been tasked with conducting investigations. I was told that they had already begun a probe,” Ministry of Finance Director of Information Mohamed Ali Hassan told The Sunday Morning.
Ordinance contrary to claims
Notwithstanding the institutional confusion and passing of the buck, a closer look at the legislation in concern shows several facts contrary to the claims of the Ministry of Finance.
The Excise (Special Provisions) (Amendment) Act, No. 14 of 2009 states that it is the divisional secretary who grants such licenses.
Chapter 4: Manufacture, Possession, Sale – Section 15 states: “Except under the authority and subject to the terms and conditions of a license granted in that behalf by the Divisional Secretariat of the Divisional Secretary’s Division, or under provisions of Section 20 –
a) No excisable article shall be manufactured;
b) No toddy-producing tree shall be tapped;
c) No toddy shall be drawn from any tree;
d) No distillery, brewery, liquor manufactory, or warehouse shall be established or worked;
e) No person shall use, keep, or have in his possession any materials, still, utensils, implement or apparatus whatsoever for the purpose of manufacturing any excisable article other than toddy;
f) No liquor shall be bottled for sale.
Meanwhile, Section 16 stipulates that the Commissioner General of the Excise Department is the sole authority for the establishment and operation of distilleries, breweries, and warehouses.
Section 16 states: (1) The Commissioner General of Excise may –
a) Establish or authorise the establishment of distilleries, breweries, and liquor manufactories in which liquor may be manufactured under a licence granted under Section 15 on such conditions as the Minister deems fit to impose; (b) establish or authorise the establishment of warehouses wherein any excisable article may be deposited and kept without payment of duty; and (c) subject to the provisions of Sections 27 and 28, discontinue any distillery, brewery, liquor manufactory, or warehouse.
(2) No distillery, brewery, liquor manufactory, or warehouse as aforesaid shall be established or worked except by or under the authority of the Commissioner General of Excise.
A look at Excise Notification No. 902 of 2008 also reveals that it is the Commissioner General of the Excise Department who is vested with the power to approve applications for liquor licenses.
Paragraph 2 and 3 of the Notification states:
(2) From and after the date of the coming into operation of all these rules, all persons wishing to obtain a license of whatever category in terms of the Excise Ordinance (Chapter 52) (hereinafter in these rules referred to as “the ordinance”), which are specified in Column I of Schedule I to these rules, shall forward an application to the Commissioner General of Excise in the Application Form specified in Schedule II to these rules.
(3) The Commissioner General shall on receipt of all applications under rule two, and having considered them in the light of the provisions of the Ordinance satisfy himself that they are in conformity to the guidelines and conditions which are specified in Schedule III to these rules. The guidelines and conditions shall be applicable until varied or rescinded, for the issue of all categories of liquor licenses in respect of any financial year commencing from 1 January of any year and ending on 31 December of the relevant year.
Apart from the clear institutional confusion, the question that arises is as to why the Minister was conducting investigations only into a particular time period – 2017 and 2018.
Several attempts by The Sunday Morning to contact the Minister failed.
Despite Minister of Finance Mangala Samaraweera alleging that liquor licenses were issued without his approval and calling for a probe in this regard, a perusal of the Excise Ordinance and other excise notifications reveal that the Commissioner General (CG) of the Excise Department had sole authority to issue liquor licenses.
In a Finance Ministry media communiqué earlier this week, the Minister of Finance claimed that liquor licenses issued during a particular time period was done so without his prior approval.
Accordingly, Samaraweera ordered Excise Department CG H.G. Sumanasinghe to conduct an immediate investigation into how liquor licenses have been issued by the Excise Department without obtaining his approval in 2017 and 2018.
The report on the findings of the investigation is to be submitted within a two-week period.
The communiqué also claims that “the protocol followed so far by the Excise Department when issuing liquor licenses is to obtain the approval of the subject minister or inform the subject minister in that regard. The Excise Department has issued 10 new liquor licenses in 2017 and 74 new liquor licenses in 2018. However, it is reported, as described under the provisions of the Excise Ordinance, that the approval of the subject minister was not obtained nor was he informed of these new issuances. Under the Excise Ordinance, at the discretion of the subject minister, he or she can decide whether to issue, renew, or cancel any liquor license or licenses at any time he or she decides to do so without any explanation”.
The Finance Ministry went on to say that the Excise Department CG had commenced an investigation and would take action against those found to have broken the law.
“Excise CG H.G. Sumanasinghe said that an investigation has already been instituted on the liquor licenses issued without obtaining the approval of the subject minister or without informing him during the years 2017 and 2018. He said that regarding all such licenses issued in these two years, if found to be issued without fulfilling the eligibilities specified under the provisions of the Excise Ordinance or if any corruption has taken place in issuing such licenses, through these investigations, action will be taken to cancel such licenses.”
Excise Department Deputy Commissioner – Crime and Law Enforcement and Media Chief Kapila Kumarasinghe told The Sunday Morning that the CG requested that a senior officer be appointed to conduct the investigations.
“The CG made a request with the Ministry of Finance to appoint a high-ranking official to conduct investigations. The investigations are to be carried out by the Ministry of Finance,” Kumarasinghe said.
However, when The Sunday Morning contacted the information centre at the Ministry of Finance, we were informed that the Excise Department was conducting the investigations.
“As far as I know, the Excise Department has been tasked with conducting investigations. I was told that they had already begun a probe,” Ministry of Finance Director of Information Mohamed Ali Hassan told The Sunday Morning.
Ordinance contrary to claims
Notwithstanding the institutional confusion and passing of the buck, a closer look at the legislation in concern shows several facts contrary to the claims of the Ministry of Finance.
The Excise (Special Provisions) (Amendment) Act, No. 14 of 2009 states that it is the divisional secretary who grants such licenses.
Chapter 4: Manufacture, Possession, Sale – Section 15 states: “Except under the authority and subject to the terms and conditions of a license granted in that behalf by the Divisional Secretariat of the Divisional Secretary’s Division, or under provisions of Section 20 –
a) No excisable article shall be manufactured;
b) No toddy-producing tree shall be tapped;
c) No toddy shall be drawn from any tree;
d) No distillery, brewery, liquor manufactory, or warehouse shall be established or worked;
e) No person shall use, keep, or have in his possession any materials, still, utensils, implement or apparatus whatsoever for the purpose of manufacturing any excisable article other than toddy;
f) No liquor shall be bottled for sale.
Meanwhile, Section 16 stipulates that the Commissioner General of the Excise Department is the sole authority for the establishment and operation of distilleries, breweries, and warehouses.
Section 16 states: (1) The Commissioner General of Excise may –
a) Establish or authorise the establishment of distilleries, breweries, and liquor manufactories in which liquor may be manufactured under a licence granted under Section 15 on such conditions as the Minister deems fit to impose; (b) establish or authorise the establishment of warehouses wherein any excisable article may be deposited and kept without payment of duty; and (c) subject to the provisions of Sections 27 and 28, discontinue any distillery, brewery, liquor manufactory, or warehouse.
(2) No distillery, brewery, liquor manufactory, or warehouse as aforesaid shall be established or worked except by or under the authority of the Commissioner General of Excise.
A look at Excise Notification No. 902 of 2008 also reveals that it is the Commissioner General of the Excise Department who is vested with the power to approve applications for liquor licenses.
Paragraph 2 and 3 of the Notification states:
(2) From and after the date of the coming into operation of all these rules, all persons wishing to obtain a license of whatever category in terms of the Excise Ordinance (Chapter 52) (hereinafter in these rules referred to as “the ordinance”), which are specified in Column I of Schedule I to these rules, shall forward an application to the Commissioner General of Excise in the Application Form specified in Schedule II to these rules.
(3) The Commissioner General shall on receipt of all applications under rule two, and having considered them in the light of the provisions of the Ordinance satisfy himself that they are in conformity to the guidelines and conditions which are specified in Schedule III to these rules. The guidelines and conditions shall be applicable until varied or rescinded, for the issue of all categories of liquor licenses in respect of any financial year commencing from 1 January of any year and ending on 31 December of the relevant year.
Apart from the clear institutional confusion, the question that arises is as to why the Minister was conducting investigations only into a particular time period – 2017 and 2018.
Several attempts by The Sunday Morning to contact the Minister failed.