Financial Times

Vet those foreign investors
This country, in its desperate desire for foreign investment, appears to be attracting all sorts of dubious businessmen. It was only last year that a big hue and cry was made over the attempts by pyramid schemes to dupe Sri Lankans into parting with their savings.

A lot of valuable foreign exchange was siphoned off through such schemes as noted by the president herself. The authorities launched a crackdown on such schemes and a campaign to educate the public of its dangers after it was exposed by the media. New laws were brought in to ban pyramid schemes. But until then the companies promoting such schemes were able to operate with impunity. One such company even had the approval of the Board of Investment and made use of that approval as a kind of credential with which to convince the gullible that their operation was a legitimate one.

There is growing public concern about companies with BOI status being engaged in nefarious activities. The most well known are the so-called Chinese medical centres which are a cover for brothels. These businesses freely make use of the BOI-approved label to give themselves legitimacy. It appears that they are abusing a loophole in the law. Such firms are registered with the BOI but are only given a cursory vetting.

A more recent case is that of the Indian company Fair Pharma which is marketing untested or unproven remedies for various ailments. This too is a BOI approved company but its work has now become very controversial after several patients complained its drugs were not effective and the company was found to be violating rules preventing it from advertising its products.

Fair Pharma officials have claimed that its first venture abroad is in Sri Lanka and that it was attracted by BOI tax holidays. It appears that the company is trying to capitalise on the growing trend among consumers, especially those in the West, to turn towards eastern Ayurvedic treatment and herbal drugs as they are dissatisfied with Western drugs. Fair Pharma has even claimed that its drugs cure HIV/ AIDS and helps heart patients avoid by-pass surgery. It operates from an office in the World Trade Centre in Colombo, where the BOI itself is located, and advertises its drugs despite the fact that such advertisements are banned. It also seems to be undeterred by the warnings of the Consumer Affairs Authority and the Ayurvedic Formulary Committee.

Fair Pharma has had problems with the Indian authorities too - a fact that our own authorities, such as the BOI, should have been aware of. In some cases it was even barred from selling drugs, although it is now allowed to manufacture but not advertise its products. The company itself has denied it has problems in India and maintains it has a legal operation there.

Patients who have tried Fair Pharma's cures and found that they do not work have complained to this newspaper after reading about the company. Such firms are playing a dangerous game as they are putting people's lives at risk. Of course, it is also up to patients to be more careful and discerning and not fall for miracle cures promoted by fraudsters out to make a quick buck at the expense of gullible patients.

All this points to the need for tighter vetting of foreign investors and more careful background checks. This raises the question as to how the BOI can strengthen its investigative mechanisms to prevent such frauds or at least to not give such bogus businesses any legitimacy. This is all the more so when the BOI itself is apparently trying to encourage Fair Pharma to export its products which could end up giving the country a bad name.

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