Audit reveals Rs. 200m loss due to mismanagement in state entities
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 mismanagement have resulted in a loss of almost Rs. 200 million, according to a recently-released audit report for 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, are 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. 200m does not, however, include losses due to violations in the bidding process itself, which was not exactly calculated in the audit, 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 Jewlery Authority overpaid Rs. 36 million for renting a building from the highest rather than lowest bidder.
Many entities displayed a blatant disregard for accountability by 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 worth Rs 571m for buses and garages.
Furthermore, by law, public corporations are required to prepare action plans, corporate plans, progress reports and procurement plans to ensure progress and prevent corruption. Nevertheless, the audit revealed that 21 institutions had not created procurement plans, while 19 had not formulated action plans, and a further 12 did not even have a budget for the audited year.