Few are surprised by accounts of corruption on Sri Lanka’s mega-projects such as highways, ports and airports. These were widely rumoured at the time and hardly come as a surprise. But even as President Maithripala Sirisena struggles to implement the Senaka Bibile drug policy reforms in an attempt to reduce healthcare costs, emerging revelations from the Health Ministry cast shadows over the transparency of a multi-billion rupee cancer treatment project inherited from the former government.
Anatomy of a Scam
The project appears to have had its origins in a proposal drafted by Drs Mahendra Perera (Board Chairman for Oncology) and Jayantha Balawardane (Senior Consultant Oncologist at the National Cancer Insitute, Maharagama), which was then submitted to the Sri Lanka College of Oncologists. Sensibly, the proposal called for a transition from the outdated Cobalt-60 radiotherapy machines to more modern linear accelerators. It was adopted at the College’s annual general meeting and submitted to the Ministry of Health, now dubbed “Provision of High Quality Radiotherapy for Cancer Patients in Sri Lanka with High Energy Radiation”.
The Treasury then went on to make a provision of Rs 900 million for the project in 2014, Rs 2,750 million in 2015, Rs 2,640 million in 2016 and a further Rs 800 million for 2017. The total spend on the project? A hefty Rs 7,090 million. To put it in perspective, the value of this single project (Rs 7 billion) is equivalent to the annual equipment budget for all 550 hospitals under the Ministry of Health for two years.
According to the Financial Regulations, the procedure for making any procurement for the government is a public call for tenders, sometimes preceded by a prequalification process. In the present case, however, there was no prequalification process. Neither was there a call for tenders. Instead, a decision was made arbitrarily to make this massive purchase from the UK branch of a Swedish company called Elekta. The local distributor for Elekta is Siyol International (Private) Limited, located on the second floor of Bible House in Colombo 3. Incredibly, the decision to make this purchase from Elekta—in strict secrecy and flagrantly violating tender procedure— was despite the fact that there are at least four reputed international manufacturers of medical linear accelerators. Elekta, however, simply named its price and the Health Ministry paid up. According to industry insiders, the prices being paid by the Ministry exceed market prices by more than 50%, a rorting of the public purse and raising questions as to who the beneficiaries of this largesse are.
The UAE Deal
Elekta had been unheard of until the government of the United Arab Emirates was approached for the gift of two multimillion dollar brachytherapy units, for the Maharagama cancer institute and Teaching Hospital Kandy. Again no tenders were called. Instead, the equipment was purchased through Siyol with no transparency or competitive bidding. So cynical has the scheme become that Siyol proudly lists “Coordinating with the UAE Embassy for the donation of 02 Nos Brachytherapy units” in its Corporate Social Responsibility report, as if this were an act of charity. But the question remains: Who recommended Elekta and its agent Siyol without any transparent procedure?
For the linear accelerator deal, however, Elekta and Siyol brought in a third company, Philips Electronics (Israel) Limited. Elekta had acquired the Radiotherapy Division of Philips Medical Systems and now had an additional front under which to do business. Hans Barella, former President and CEO of Philips Medical Systems now sits on Elekta’s board. What is more, working out of Israel means not being subject to the tedious anticorruption regulations of the European Union, or the draconian Foreign Corrupt Practices Act of the United States. The deal had by now reached astronomical proportions, with plans to supply 13 more linear accelerators, together with a host of ancillary equipment. These include eight Big Bore Philips CT simulators at a price of US$ 15 million (Rs 2000 million) and nine IBT Bebig brachytherapy units for US$ 6 million (Rs 810 million). For its part, Elekta (UK) would supply 13 more linear accelerators at a mind-boggling Rs 3200 million. In all, the consortium would walk off with more than Rs 7000 million in public funds. Amazingly for so large a project, Philips (Israel) refused to provide a detailed breakdown of costs even when requested to do so by the Health Ministry (Image 1).
A Much-travelled Engineer
The technical specialist to sign off on the project was S.A.J. Karunatilaka, an engineer attached to the Health Ministry’s Division of Biomedical Engineering Services based on de Saram Road, Colombo 10. Information now in the hands of Colombo Telegraph (see image 2) show that this individual had been caught red-handed, making as many as 15 secret, unauthorised overseas trips over the past several years. While the sources of funding for these trips are as yet unknown, the matter of finding out who paid for them is child’s play given that a schedule of the relevant flights has been obtained from the Department of Immigration and Emigration (see Image 3). Yet, the Ministry of Health has failed to interdict this officer, report him to the Bribery Commission or even investigate many other multimillion rupee deals with which he was associated.
Documents the Colombo Telegraph has seen show that these deals include not only procurements for the Ministry of Health, but also for the Ministry of Higher Education, the Sri Lanka Army and Sri Lanka Navy. These projects include “Supply of Medical Equipment to the Medical Faculties of Rajarata and Eastern Universities and the Faculty of Allied Health Sciences of the University of Peradeniya” for the Ministry of Higher Education for Rs 750 million”, “Purchase of Single-Place Floor Mounted C-arm System” for the Sri Lanka Army for Rs 86.8 million, and a “Digital Radiography System” for the Sri Lanka Navy for Rs 65.9 million. Sources in the Army and Navy state that these deals are being separately investigated by them for improper procurement process.
All this begs the question, why was an officer found guilty of undertaking 15 foreign trips without official approval, and blatantly using undeclared sources of income, allowed to sit on such important technical procurement committees? Why did the Secretary of the Ministry of Health not inform the Secretary of the Ministry of Higher Education and the commanders of the Army and Navy that S.A.J. Karunatilaka had been found guilty of serious misconduct in a formal ministerial inquiry? Was it so that these deals could proceed without further scrutiny?
The question also remains as to who it was that decided to subvert the government’s procurement procedure and award this enormous contract to a single supplier with no calling for tenders. Such a decision can have only come from very high indeed. Asked for a comment by Colombo Telegraph Dr Jayantha Balawardane denied ever asking that this procurement be made from Elekta without calling for open tenders. “We only requested high energy linear accelerators with associated equipments”, he said. “We have not requested or specified any particular brands at any stage in our proposal.” Asked why no tenders were called for this multibillion-rupee procurement, which clearly violated the government’s tender procedure, Dr Balawardane stated “I am not involved in [this] process”, putting the ball squarely in the Ministry’s court.
Yahapalanaya on Trial
The question now before Rajitha Senaratne, who presides over the ministry that President Maithripala Sirisena himself in a speech at Maharagama last week described as “the most corrupt ministry” in the country, is what action to take? Should this multibillion rupee scam be swept under the carpet (with the implication that the new administration too, is complicit in it), or should a public inquiry take place to find out why no tenders were called and on what basis the astronomical prices quoted by Elekta and Philips (Israel) were accepted as being reasonable. This, after all, is precisely the kind of wasteful and extravagant excess the Common Candidate bemoaned publicly and swore to investigate and eradicate. That said, will the government live up to its promise?
© Colombo Telegraph- oooTiHa