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SL Army got only half the promised sum for scrap metal of Farah III
View(s):A local bidder who won a contract to dismantle Farah III–the Jordanian-registered vessel captured by the LTTE in 2006–for scrap metal paid the Sri Lanka Army just half the promised fee before abandoning the job, the 2016 Annual Report of the Auditor General says. The rusting vessel was anchored off the Mullaitivu coast since the LTTE hijacked and captured it. It was taken over by the Army at the end of the war in 2009. It was subsequently decided to sell it for scrap metal.
Therefore, the Army signed an agreement in September 2013 with “a person” (who is not named) to sell the Farah III shipwreck. The tender was awarded for a price of Rs 80.30 mn. This contractor subsequently paid Rs 47mn for the metal that had been cut out and removed. The job was then abandoned halfway.
“As relevant conditions had not been included in the agreement by taking into consideration the high-cost technical methods needed for cutting the parts (that) remained underwater than the parts that stood above the water of the sunk ship, it paved the way for the buyer to remove those parts that could easily be cut out and to abandoned cutting of parts that he found difficult,” the report continues.
“Due to non-inclusion of an adequate number of conditions in the relevant agreement, the buyer had removed only the metal above the surface of the sea that could be easily removed, and this had paved the way for the buyer to abandon the process of removing the vessel halfway,” the report reiterates.
It was then maintained that leaving the underwater parts of the ship intact would encourage fish breeding, therein resulting in economic benefits. As such, the remaining parts of the vessel now remain in the same position. But while it had been promised that necessary environmental approval would be obtained for this plan from relevant institutions, it had not been done even up to June 30 this year.
Out of the proceeds gained from the sale of vessel, Rs 15 million had been credited to the ‘Api Venuwen Api Fund’ and the remaining sum of Rs 32 million went into the Commander’s Welfare Fund. The latter was then credited to the Government income in November 2016 but only after it was pointed out by the Audit. The money in the Api Venuwen Api Fund has still not be transferred to the Consolidated Fund.
The Constitution states that receipts belonging to the Government should be credited to the Consolidated Fund. But a clause in the agreement between the contractor and the Sri Lanka Army had said monies for the job should be paid through cheques made out to the Commander’s Welfare Fund.
“The condition that a sum of Rs 1mn should be paid for a quantity of 20 tonnes of metal being removed in accordance with the approval of the Commander should have been included in the agreement,” the report said. “However, due to failure in doing so with respect to 225 tonnes of metal, a loss of Rs 22.5mn had occurred.”
Meanwhile, an investigation conducted under Financial Regulation 104 (3) on damages caused by the explosion of the armoury at Salawa Army Camp has revealed the estimated gross loss to be Rs 12,735.45mn or Rs 12.7bn. As the investigations conducted by the Court of Inquiry appointed by the Ministry of Defence to investigate and report this incident were in progress even by 30 April 2017, loss had not been specifically declared, the Auditor General’s Department finds.