Employees receiving salaries from the closed factory..!

Sixty-three million rupees in compensation paid..!

No operational activities have taken place at the factory since 1999..!

Financial statements for the financial years from January 2020 to December 2023 are delayed

National Audit Office points out

An audit conducted by the National Audit Office has confirmed that 33 employees of the Kantale Sugar Factory, which was closed in 1994, were paid compensation and were dismissed, amounting to Rs. 6,32,31,678/- in salaries, allowances, overtime, Employees Provident Fund and Employees Trust Fund (EPF/ETF) in the years 2020, 2021, 2022 and 2023 alone.

The audit report further states that although no operational activities have been carried out at the factory since 1999, this money has been paid to 33 employees including the General Manager for the protection of assets and other functions, and that among those employees there are 03 security officers, 15 controllers, 04 drivers, 03 storekeepers, 06 bookkeepers and 02 technical assistants.

This is stated in the audit financial statement related to the audit conducted by the National Audit Office on the activities of the Kantale Sugar Factory for the years 2020, 2021, 2022 and 2023 in accordance with the National Audit Act No. 19 of 2018 and the Finance Act No. 38 of 1971.

The audit report has shown that Rs. 1,48,22,246/- was paid towards salaries, allowances, overtime, Employees' Provident Fund and Employees' Trust (EPF/ETF) in the year 2020, Rs. 1,50,00,761/- in the year 2021, Rs. 1,68,38,619/- in the year 2022 and Rs. 1,65,69,952 in the year 2023 for these 33 employees. The audit report has shown that due to severe inefficiency and irregularities in the administration and operations of the factory, all 1135 employees were paid gratuities and their services were terminated in 1994 and thereafter the factory was closed without any production activity. The audit report indicated that a negative net asset position of Rs. 31,79,245/- was observed as on 31 December 2019 and that although MoUs were signed with 02 private companies to resume production in 2021, the institution remained in an uncertain situation as production activities were not resumed until 31 December 2023.

The audit report also states that the Kantale Sugar Factory, which was established in 1957, had an annual production capacity of 16,300 metric tons of sugar, 9,000 metric tons of molasses and 3.9 million liters of other processed spirits. The audit report states that although 8596 hectares (21233 acres, 2 roods, 30 perches) of land were allocated for the Kantale Sugar Factory through Gazette No. 11212 of 1957, after the closure of the factory, 4887 hectares of that land were allocated for 04 zones by the Ministry of Agriculture and Lands and another 3709 hectares were allocated for the sugar factory and housing complex, the Youth Corps, the refugee camp and the forest. The audit report also states that although it was stated that another 500 acres of this had been allocated to a private and public institution, that information was not submitted for audit.

The audit report further indicated that although the draft financial statements of the Kantale Sugar Factory were to be submitted to the Auditor General within 60 days of the end of the accounting year as stated in the Public Enterprises Circular No. PED/12 dated June 02, 2003 and the Public Enterprises Circular No. 01/2021 dated November 16, 2021, the draft financial statements of the Kantale Sugar Factory were not submitted to the Auditor General until the audited financial statements for the financial year ending January 2020 and December 2023 were issued.

(Jayakantha Liyanage)