Sri Lankan authorities should take effective and immediate action to crack down toddy mafia, instead of continuously turning a blind eye, a top industry official said.

“We could observe that the legal alcohol industry is shrinking due to the increase in the illegal production of liquor. Government taxes were increased on two occasions during the year which led to a further reduction in consumption. Regretfully today the price of legally produced arrack is beyond the reach of the common man and naturally the consumer has to turn to local brew. Such pricing policies are only pushing consumers away from legal products and encouraging and facilitating bootleggers to thrive.”

“At the same time, one could imagine the quantum of tax revenue that is deprived to the State and we do not see any effective actions or systems in place to rectify this situation. We have also observed that a large amount of spirit is being smuggled into the country passing through the normal channels without payment of taxes by classifying the product as paint removers, thinner and spirit for eau de cologne etc, depriving the State of billions of revenue Rupees. Such acts are carried out by powerful persons affiliated to political groups with the connivance of the enforcement authorities who turn a blind eye and a deaf ear,” Chairman of Distilleries Company of Sri Lanka Harry Jayawardena told shareholders in the annual report 2018/19.

Speaking further Jayawardena noted that the traditional toddy industry is gradually becoming an endangered industry due to the rapid increase of illegal and artificial toddy manufacturers, who aid and abate the moonshine business by producing cheap, artificial toddy, unfit for human consumption.

“This artificial toddy is made by mixing various substances such as sugar, yeast, urea, barbed wire and old telephone batteries. This poisonous brew is sold cheaply in the market and many consumers fall prey to this trap as they can’t afford the highly priced, legally produced alcohol. Several fatalities have been reported recently due to the consumption of artificial toddy, yet no authority seems concerned or has made any effort to address this dreadful situation,” Jayawardena added.

Jayawardena also expressed his concern over the use artificial toddy by different manufactures to distill spirit and manufacture arrack thereby bringing various health hazards to innocent consumers.

“An alarming discovery was reported that vinegar made out of poisonous artificial toddy has been sold in the market for many years, falsely claiming that it is distilled from pure Sri Lankan toddy. Non-alcoholic consumers are also exposed to this serious health hazard, as products made using artificial toddy contain high levels of ammonia which is extremely harmful for human consumption and this has now become one of the main causes of chronic kidney deceases. It is surprising as to how the responsible authorities including the ministry of health are not taking effective action to crack down on this toddy mafia, instead continuously turning a blind eye,” Jayawardena added.

Jayawardena also noted that, cogent evidence has surfaced that some unscrupulous manufacturers of alcohol are offering staggering prices to purchase retail licenses with the sole intention of channeling their non-invoiced, tax-unpaid liquor through their outlets and thereby evade a colossal amount of tax revenue due to State Coffers.

“Although the conditions of the Excise Act prohibit a manufacturer from holding any interest in the FL4 license to retail sale of liquor, this condition was relaxed with the emergence of the enactment of Excise Notification 926 which paved the way for manufacturers to buy a FL4 license which could never have been done before. Although we have continuously requested the regulator to rescind the said condition from the excise notification, our requests have fallen on deaf ears to date,” he noted.

Jayawardena further noted that about 225 licenses were in the hands of 6 individuals.

"This issue has reached an unprecedented level, whereby 6 individuals are currently controlling over 250 retail outlets out of approximately 1,000 outlets in the name of their relations, friends and kith & kin, thereby defrauding the State of billions of Rupees whilst the regulators turn a deaf ear and blind eye."

"This is about 1/5th of the distribution channels."

"It is disheartening to note that even some officers from the enforcement authority are operating FL4 licenses using other names to find a market for illegal products, and this is very well known to the Department."

"Very soon the remaining licenses that are available will also be snapped up by the unscrupulous manufacturers to dispose their illegal, imitated products with ease", Jayawardena added.

The full statement conveyed by the chairman is given below.