Corruption fears emerge as Karnataka grapples with coronavirus

Public money, private pockets

The possibility of widespread corruption in state government departments that are involved in the fight against Covid-19 has come as a rude shock to people, who are already in distress due to poor healthcare facilities. DH accessed copies of complaints made to the Public Accounts Committee (PAC) and Anti-Corruption Bureau, allegations made by Opposition leader Siddaramaiah and related documents alleging irregularities in the procurement of essential items such as ventilators, sanitisers and N-95 masks.

Siddaramaiah even alleged that the graft by the state government runs over Rs 2,000 crore. Recently, the Congress launched the ‘Lekka Kodi’ campaign putting pressure on the government to make the expenses public.

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From the purchase of key equipment at inflated prices — even from companies under rate contracts — to mismanaging and escalating the price of food kits and packets supplied to migrant workers and BPL families, various departments seem to have turned a blind eye on irregularities committed.

Exemption under section 4(a) and 4(g) of Karnataka Transparency in Public Procurement Act (See Page 4) appears to have only helped misuse funds meant for health infrastructure.

Even though the increased cost of raw materials following the lockdown caused a temporary spike in prices, documents accessed by DH show that the pandemic was used as a pretext to jack up procurement costs of essential items, sometimes at two to three times the market price.

There are also corruption claims in arranging institutional quarantine centres for the thousands of primary contacts of Covid-19 patients, and returnees from neighbouring states and foreign countries.

Complaints on procurement of medical equipment range from issuing orders to companies not equipped to manufacture these devices, to the huge variation in costs incurred by different departments in procuring the same type of product.

For instance, SM Pharmaceuticals, which had allegedly supplied poor-quality sanitisers prior to the pandemic was given a contract to supply sanitisers again, at almost three times the initial price, documents show.

Though district labs of Kalaburagi and Ramanagara had filed a report in January stating that the sanitisers supplied by SM Pharmaceuticals were ‘not of standard quality’, the same firm won a tender to supply 40,000 units of sanitisers in March.

Karnataka Rashtra Samithi, one of the first organisations to raise the alarm, in its complaint claims that sanitisers were procured from the same firm at three times the unit price of its previous order. However, Karnataka State Drugs, Logistics And Warehousing Society (KDLWS), in its report to the Public Accounts Committee (PAC) recently, said that the order placed with the company for 40,000 units was cancelled, without specifying the reasons. A list of questions sent by DH to SM Pharmaceuticals is yet to elicit any response.

Two other firms supplied sanitisers at a cost of Rs 250 per unit, KDLWS said, citing increased demand and lack of raw materials for the price surge.

Another case came to light recently, after a complaint was filed with authorities about procurement of N-95 masks from a firm, which received an order to supply five lakh masks for medical use on March 21. However, the company received approval for manufacturing NIOSH-approved N-95 masks — vital for healthcare professionals — only on June 7, more than two months later.

The KDLWS also issued a procurement order of 25,000 personal protective equipment (PPE) kits from Bengaluru-based firm aTechTron, at Rs 725 per unit. The company’s website, which says it was launched in 2014, lists services ranging from air purifiers to media management. Rajeev Krishna, co-founder of the firm, said that though they had received the purchase order, they were not able to supply as “specifications of the kits required by the government were not clear.”

Differing rates

There are also complaints of significant variation in rates while procuring essential medical equipment. While the KDLWS procured N-95 masks at Rs 147 a piece, the Medical Education Department spent Rs 295 per mask. Similarly, the complaints state that the KDLWS purchased BiPAPs (non-invasive ventilators) at Rs 1.18 lakh per unit and multi-parameter monitors at Rs 1.67 lakh per unit while the Medical Education Department purchased them at Rs 4.3 lakh per unit and Rs 5.37 lakh per unit respectively.

In a blatant example of inflated procurement prices, the Health Department procured sanitisers at Rs 250 per 500 ml unit and the Social Welfare Department spent Rs 600 per 500 ml unit for its 1,867 hostels in the state. The price quoted to the Social Welfare Department in mid-April, was twice the market price, even during peak demand for sanitisers.

Documents show that Vijayanagar Institute of Medical Sciences (VIMS), Ballari procured 6,300 PPE kits at a cost of Rs 1,200 per unit in July this year. However, such kits were available at a maximum retail price of Rs 550-600 in late June.

Dr B Devananad, Director, VIMS, said that the order to a Bengaluru-based firm was under process and kits were not procured yet. “There were nearly 40-60 people infected at the hospital and supply from the district health department was exhausted. We then took a quotation from three parties to procure PPEs,” he said.

On the cost of PPEs, he said that Indian Council of Medical Research itself had procured kits for Rs 1,350. “Other colleges have procured for even Rs 1,600,” he said, adding that VIMS bought it on a need basis. He said that VIMS had procured PPEs in March and April, when prices were as high as Rs 1,800 to Rs 2,000 per unit.

While purchasing ventilators, KDLWS paid prices ranging from Rs 5.6 lakh to Rs 18.2 lakh per ventilator. Reports have emerged of neighbouring states procuring ventilators at around Rs four lakh per unit, leading the Opposition to question the exorbitant price paid by the state government.

Cases of inflated prices while providing relief to migrant labourers in the form of food packets and ration kits were also highlighted in the complaint. With various district administrations empowered to make arrangements, the extent of irregularities with respect to procurement of food alone is yet to be assessed.

According to sources, the transfer of a top IAS official was triggered by alleged irregularities in handling migrant labour issues during the pandemic.

Speaker’s restrictions

According to proceedings of the PAC meeting, revealed by Opposition leader Siddaramaiah on Twitter, former minister and BJP MLA Murugesh Nirani red-flagged Covid-19 procurement during a PAC meeting recently. This came as an embarrassment to the government. As per the proceedings, Nirani informed PAC to have travelled with an official from Vijayapura who had documents that could prove massive irregularities in Covid-19 procurement.

Nirani subsequently denied making such remarks, saying that he did not know who the officer was.

Legislative Assembly Speaker Vishweshwar Hegde Kageri’s ban on PAC from visiting any Covid-19 care facilities, hours after PAC chairman H K Patil announced that he would visit them, also raised several eye-brows. The order had led to a bitter battle with Patil even mulling a privilege motion against the Speaker.

However, increasing cases in Bengaluru city and voluntary quarantine by several key political leaders due to the pandemic temporarily put to rest any fresh developments regarding the irregularities.

The most recent case of infantile decision making — especially when the state was facing a financial crunch — came when officials decided to rent 10,100 beds and other equipment, for the country’s largest Covid Care Centre at Bangalore International Exhibition Centre. The beds were supposed to be rented at Rs 700-800 per day for a four-month period, before an angry Chief Minister B S Yediyurappa put a swift end to these plans.

Officials who had approved the project came under fire, after a senior IAS officer wrote to the government about the unnecessary expense incurred by renting the beds. The saga ended with a blame game over the issue between ministers and bureaucrats.

Deepak C N, general secretary, Karnataka Rashtra Samithi, says that these are just a few instances of corruption in Covid-19 procurement.

“The justification provided by the Health and Family Welfare Department to PAC does not explain how prices for PPE kits fluctuated from Rs 350 in early March to
Rs 750 or more when production had
already peaked,” he said, commenting on the recent response by the Health and Family Welfare Department regarding procurements to PAC.

On whether any report was sought on procurement by the government, N Manjushree, Additional Director, KDLWS said that the department had not submitted any report. “There is no internal enquiry regarding procurement,” she said.

“Most of the complaints were filed by those who failed to bag an order from the government,” she added.

Emerging documents and notices issued by the government call for immediate action to prevent further leakage of public funds dedicated for health infrastructure during this unprecedented crisis.