‘Substandard, overpriced’ equipment: Deals under scanner in Karnataka

There are allegations of corruption and irregularities in the procurement of several medial equipment

Hospital equipment
At least four contracts appear to be of serious nature and are backed by documents and communication of the KSDLWS | Photo: iStock (Representational)

Even as the Karnataka government is trying to save money by cutting down on all non-essential expenditures, one of its own departments is now under the scanner for shady procurement deals during the ongoing COVID-19 pandemic.

The Karnataka State Drugs, Logistics and Warehousing Society (KSDLWS) has allegedly bought substandard personal protective equipment (PPE) kits, used ventilators and IV fluids from a blacklisted company, and procured other medical equipment at a price much higher than that of the market value during the pandemic.

Related news: Behind PPE supply: Irregularities, anomalies and alleged scams

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Deepak N, associated with the Karnataka Rashtra Samithi, has complained to the Karnataka Legislature’s Public Accounts Committee (PAC) about irregularities, suspicion of corruption and favouritism in these procurement contracts.

Deepak was part of the team that approached the Lokayukta and the Supreme Court to get the multi-crore Bellary mining scam investigated. Out of the seven contracts that he has raised questions about, at least four of them appear to be of serious nature and are backed by documents and communication of the KSDLWS.

Substandard PPEs at inflated cost

The society, which is procuring PPE suits for government hospitals, gave nine purchase orders in March 2020. According to one such purchase orders given to the Amaravati-based ‘Plasti Surge Industries’ for 1.5 lakh PPE kits on March 9, 2020, PPEs were being procured at ₹330.40 per unit while the same company received a second purchase order for one lakh kits on March 14, 2020, where it was being paid ₹725 per PPE suit.

The complainant, Deepak, has raised questions as to how the price of PPE increased by more than two folds in just five days. Besides the increase in cost, the quality of the PPE suits were deemed substandard by various hospitals and the society had to write to the company to take back the unused PPE suits.

(In this letter written by the additional director of KSDLWS to the Health Commissioner: On Page 1, the table gives the break-up of pricing, quantity of orders given to Plasti Surge and other manufacturers. The next table gives details of comments from Quality Control, while other consignments were according to the standard)

Intravenous fluids from blacklisted company

The society has allegedly procured intravenous fluid bottles to the tune of several crores from the Gujarat-based Aculife healthcare, a company that has been blacklisted in Gujarat, Rajasthan and Odisha. In fact, the society itself had issued a show-cause notice to the company in February 2020, asking why it should not be blacklisted in Karnataka as well. This after the medicine it had provided to the society was found to be substandard on two occasions last year.

The complainant says the society never called for a short-term tender or quotation for this procurement, raising further suspicion. “It is an emergency procurement, but they could have called for quotations from other players who have taken part in earlier tenders like how they have done for other emergency procurement,” says Deepak.

Related news: UP hospitals allege state agencies supplying ‘substandard’ PPE kits

“Here they didn’t even approach the lowest bidders in earlier tenders to seek quotation, but instead just procured from one company which has a history of providing substandard drugs to several states,” he adds.

(In this document, Page 1 and 2: The society’s letter to Aculife in February asking why it should not be blacklisted for supplying substandard drugs; Page 3: Officials from District drug warehouse in Mangaluru pointing out substandard drugs from the company; Page 4: Odisha Medical Corporation order against Aculife)

‘Used’ ventilators supplied

A Delhi-based firm, RK Medical solution, has allegedly supplied 15 used ventilators to the society despite the order being for new ones. The ventilators procured for a cost of ₹3.88 crore were found to be manufactured in 2007 and some of them had been used for 46,583 hours. While the ventilators were delivered on April 14, 2020, the society cancelled the order much later, on April 28.

“As per the work order the technical specifications do not comply fully compared to the data sheet. Many essential modes/options are not available, it cannot ventilate at neonatal mode/paediatric mode which is an essential mode for different COVID-19 patients as per anaesthesia specialist opinion. The ventilator does not comply with the supply order, you are directed to take back the supplied ventilator at your own cost and order stands cancelled,” stated a letter from Manjushree, additional director, KSDLWS.

“It is difficult to believe that a company delivered ventilators which are in almost junk state and it was with the KSDLWS for two weeks. We suspect there was an attempt to cover up but when few honest officers put this on record, they had no option but to cancel the order. Time is essential during COVID-19, and crucial time was lost because of this irregularity in procurement and cancellation,” argues Deepak.

(This letter, written by the additional director of the Society on April 28 to the company, states that the ventilators do not comply with the supply order)

Dirt in sanitiser deal?

In October 2019, the KSDLWS, through a tender, gave an order to SM Pharmaceuticals for supplying 47,000 sanitiser bottles of 500 ML at ₹97.44 per bottle over a period of 15 months. But the company, anticipating a spike in demand for sanitisers, allegedly refused to supply anymore in February after having supplied only half the quantity as ordered.

But this didn’t force the KSDLWS to take strict action against the company for violating the tender. Instead, the society entered into another procurement contract with this company at a higher cost where the same 500 ML sanitiser bottles were allegedly procured at ₹250.

“We suspect blatant corruption in this. In February, when the pandemic was spreading, the company saw a spike in demand and went back on its contract. But still they were not punished and instead given another contract,” says Deepak.

(The tender document of October 2019 for the order given to SM Pharmaceuticals for 47,000 sanitizer bottles of 500 ML at ₹97.44 per bottle over a period of 15 months)

Apart from these procurement deals, Deepak has also complained about the purchase of other medical equipment like syringe pump, table top oximeter, ECG machine, suction machine and monitors. The complainant alleges that these have been purchased at an inflated price much higher than market value.

“They have purchased from companies like Madras Surgicals and AKAS. We looked at the price at which some of these equipment were purchased by KSDLWS and the rate at which these companies were selling online, and there is a big difference. For example, an ECG machine was procured by the Kerala government for ₹25,856, but a similar machine has been bought for ₹1.12 lakh by Karnataka. Even masks have been procured at an inflated cost,” says Deepak.

PAC wants to inspect, speaker blocks

With several complaints pouring in, the PAC of the Karnataka assembly wanted to inspect some of these procured equipment being used in hospitals. Suspiciously, while the PAC inspection was scheduled on May 28, the Speaker’s office issued an order on May 27, barring the house committee from going on inspection, field visits and holding meetings.

The 20-member PAC comprises MLAs from all parties and is headed by senior Congress leader HK Patil. Speaking to The Federal, Patil said that the constitutional duty of the PAC was being obstructed by the Speaker and despite writing two letters, the Speaker had not bothered to respond.

“We have got a complaint about the procurement and some of them are backed by credible government documents. We have a duty to audit and check public spending. The allegations are serious; can you imagine the impact of two lakh substandard PPE kits? What will it mean for the health of corona warriors? Is this how we respect them? Corruption during a pandemic is anti-social and anti-national; we have the power to check and I wish the Speaker stands behind us,” said the head of the Committee.

Related news: Again! Govt agency in UP accused of supplying substandard safety kit

BJP MLAs in the PAC were quick to defend the Speaker, saying that the advisory to not hold inspections or meetings was for all committees, and it was issued keeping in mind the increasing number of COVID-19 cases. They are disappointed with the Chairman talking about the issue in the media, and argued that the matter can be discussed when it comes before the PAC in due course.

“Whenever the Speaker allows normal functioning, this will come up for discussion in the PAC meeting, and if required, we can check or inspect it. I don’t think there will be any irregularity but if there is any corruption it will come to light. But we don’t think it is correct for the PAC Chairman to talk about the Speaker in this manner,” said BJP MLA Umesh Katti.

Jawaid Akhtar, additional chief secretary, State Health and Family Welfare Department, said that most of the allegations were baseless and he did not have the specific details of the procurements under question. “As far as the used ventilators are concerned, as soon as it was known, we have cancelled it. Where is the question of irregularity? The rest, I don’t have the exact details,” said Jawaid Akhtar.

Karnataka’s health department has been praised for its management of the pandemic when compared to other states, but these allegations could dent its image if proven during the PAC audit.

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