The National Audit Office has recommended recovering the loss to the Government from the payment of USD 6.9 million (approximately Rs 1.4 billion) to Qingdao Seawin Biotech Group Co., Ltd. of China for an unsupplied fertilizer stock from officials responsible for that transaction.
In a Special Audit Report on Procurement of 96,000MT of Organic Fertilizer, issued on August 26, the Audit Office has also recommended taking legal action against the supplier and obtaining compensation for the attempted entry of a stock of unsterilized fertilizer, containing the destructive bacteria i.e. Erwinia and Bacillus, into the country.
The Report, undersigned by Auditor General (AG) W P C Wickramarathne, has recommended blacklisting the supplier’s local agent in Sri Lanka, which has not performed in accordance with the laws and agreements of Sri Lanka. The AG has also recommended legal action against the responsible officials for their failure to en-cash the relevant securities before the expiry date or to extend the tenure of them.
“Although the period of the Letter of Credit and the Performance Bond should be extended and kept valid as per the settlement terms, those documents expired on March 12, 2022 and March 24, 2022 respectively. As a result, the ability to en-cash the money paid on settlement has been lost if the supplier will not provide standardized fertilizers. As a result, the entire amount paid for fertilizers will become a loss to the Government,” the Report said.
The Report stated that the officials of Ceylon Fertilizer Company Limited, Commercial Fertilizer Company Limited, Agriculture State Ministry and Agriculture Ministry had neglected their responsibilities with regard to the above.
It has further recommended legal action against the relevant officials also for the release of funds for the advance payment without any security.
The Report observed that the vital shipping documents related to the transaction were unacceptable. It also stated that changing the name of the ship and turning off the IMO (International Monitoring System) system during the voyage violated the rights of the two fertilizer companies which ordered the stock, and therefore the payment obligation could be challenged.
The Report also highlighted that the Attorney General had proposed to immediately en-cash the performance bond of USD 5 million in the event 75 per cent of the value of the first consignment (USD 6.9 million) is to be released by the People’s bank and the proceedings in the Commercial High Court are to be terminated, but that had not been done.
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