Joint audit report focusing on losses in state institutions

By Mimi Alphonsus

Whether purchasing gunny sacks or constructing buildings, public entities are required to follow strict procedures to ensure taxpayer money is not wasted. But recklessness and possibly sinister mismanagement has resulted in a complete loss of almost Rs. 200 million, according to a recently released audit report for the year 2021.

The State Pharmaceutical Manufacturing Company purchased unusable medical raw material, the University of Peradeniya made mathematical errors in the contract for elevator installation, and Litro Gas Lanka cancelled orders without obtaining a refund, to name just a few of the instances contributing to the loss.

The audit report covers 160 entities’ procurements and projects in 2021 with a few long-term ones extending as far back as 2017. The Rs. 200 million sum does not, however, include losses due to violations in the bidding process itself, which was not exactly calculated by the report, but likely amounts to hundreds of millions of rupees. In one case, a vaccination was purchased at 156 times the estimated price because only one company submitted a bid and the State Pharmaceutical Corporation failed to call for another round. In another instance the Gem and Jewellery Authority overpaid Rs. 36 million for rent of a building from the highest rather than lowest bidder. 

Many entities displayed a blatant disregard for accountability by blatantly violating due process. Bid requirements were changed mid-way, fewer people were appointed to technical evaluation committees than required, advance payments were made prematurely, product tests were not conducted and indeed in several instances a bidding process was simply not followed at all. Lakdiva Engineering Company (PVT) Ltd, for example, did not call national bids for the procurement of spare parts for buses and garages amounting to Rs. 571 million.