A recent audit by the National Audit Office has uncovered that 33 employees, who were laid off with compensation after the closure of the Kantale Sugar Factory in 1994, continued to receive salaries, allowances, overtime payments, and contributions to EPF and ETF, amounting to Rs. 632,31,678 between the years 2020 and 2023.
Despite the factory ceasing all operations in 1999, these payments were reportedly made to ensure the protection of assets and other administrative functions. The recipients included the General Manager, along with 03 security officers, 15 controllers, 04 drivers, 03 storekeepers, 06 bookkeepers, and 02 technical assistants.
According to the audit financial statement, prepared under the National Audit Act No. 19 of 2018 and the Finance Act No. 38 of 1971, the breakdown of payments to these employees was as follows: Rs. 148.2 million in 2020, Rs. 150 million in 2021, Rs. 168.3 million in 2022, and Rs. 165.7 million in 2023.
The audit also highlighted severe mismanagement and irregularities in the administration of the factory. The original workforce of 1,135 employees was fully terminated in 1994, with gratuities paid before the factory was shut down indefinitely. As of December 31, 2019, the audit reported a negative net asset position of Rs. 31.79 million. Although two Memorandums of Understanding (MoUs) were signed with private companies in 2021 to restart production, operations have not resumed as of December 31, 2023, leaving the factory in a state of uncertainty.
The Kantale Sugar Factory, established in 1957, once had an annual production capacity of 16,300 metric tons of sugar, 9,000 metric tons of molasses, and 3.9 million liters of processed spirits. The factory was allocated 8,596 hectares of land under Gazette No. 11212 of 1957, but after its closure, 4,887 hectares were reassigned by the Ministry of Agriculture and Lands for various purposes, including youth development, refugee camps, and forestry. Additionally, 3,709 hectares remained designated for the factory, housing complex, and related facilities.
The audit further revealed that 500 acres of land had reportedly been allocated to a private and public institution, yet no supporting documentation was provided for audit verification.
Moreover, the factory’s financial statements were not submitted in compliance with Public Enterprises Circular No. PED/12 of June 02, 2003, and Public Enterprises Circular No. 01/2021 of November 16, 2021. The draft financial statements, required to be submitted within 60 days after the financial year-end, were only finalized in 2023, covering the period from January 2020 to December 2023.
The revelations of the audit raise serious concerns regarding mismanagement, financial accountability, and the prolonged inefficiency surrounding the Kantale Sugar Factory, which has remained non-operational for decades despite attempts to revive it.
