'BJP govt in Karnataka paid Rs 14 crore more to procure Chinese-made PPE kits during Covid'

Bengaluru: Karnataka's erstwhile BJP government paid at least Rs 14.24 crore more to two Chinese companies that supplied three lakh PPE kits during the Covid pandemic in 2020, the Justice John Michael D'Cunha Commission has detailed, recommending the initiation of criminal prosecution against then chief minister B S Yeddiyurappa and then health minister B Sriramulu. 

Excerpts from the report accessed by DH show that three lakh universal PPE kits were imported after direct purchase orders were placed with two Chinese firms — DHB Global Hong Kong and Big Pharmaceuticals — in April 2020, procuring them at three different rates above Rs 2,000 apiece. 

The note sheet indicated that due to the urgency of the pandemic, a direct purchase order was placed with DHB Global Hong Kong on April 2, 2020, for one lakh PPE kits after the approval by Yeddiyurappa and Sriramulu. 

After the Price Fixation Committee's meeting on April 1, 2020, the price of the universal PPE kit with 10 items was estimated at Rs 2,117.53 per unit. However, while one purchase order was issued on April 10 with this quotation, a second order was issued four days later with Rs 2,104.53 per unit to the same company DHB, and a third one was issued to Big Pharmaceuticals at Rs 2,049.84 apiece — each order for 1 lakh kits. The total amount of all purchase orders was Rs 62.71 crore. 

The commission found that there was no "compelling reason" to import the kits from China at such exorbitant rates because the Karnataka State Medical Supplies Corporation (KSMSCL) had previously procured the kits multiple times at much cheaper rates, ranging from Rs 330 to Rs 1,444, and they were "readily available in the domestic market at reasonably lower rates". 

The rates were also decided without calling for any quotations and were injudicious due to the disparities between purchase orders, resulting in an avoidable expenditure and loss of Rs 1.22 crore. 

The report added that the explanation that local suppliers couldn't supply the required amount was a "mere ruse" to justify the supplies from select suppliers and that the process was manipulated to grant the contracts to favoured suppliers of the then CM and health minister. 

Although the quoted rates were inclusive of freight and transport costs till the kits reached Bengaluru, an additional Rs 21.34 crore was spent on cargo expenditure. Excluding over Rs 7 crore on GST and IGST, this has resulted in the undue benefit to the suppliers to the tune of Rs 14.21 crore as the consequent payment of freight and transportation charges was "wholly arbitrary, mala fide, without authority of law". Additionally, as 140 kits were not supplied, an excess of Rs 2.96 lakh was also paid to DHB Global. 

Reacting to these findings, Health and Family Welfare Minister Dinesh Gundu Rao said that the report "clearly details" Yediyurappa and Sriramulu's involvement in "Covid corruption". 

"Although PPE kits were available in the domestic market at Rs 330 per kit, they purchased kits from Chinese companies at Rs 2,104 per kit. This has led to a loss of Rs 14 crore to the exchequer, as noted by the report," he said. 

Lashing out at the previous government, he wondered how the BJP leaders "looted money" when worried citizens were fighting death and suffering due to the pandemic. 

Rao told DH that a cabinet sub-committee meeting would be held after the bypolls and a team of officials headed by an IAS officer would likely be formed to take action as per the commission's report. 

"We are not doing this out of political differences or any hatred. The government will take cautious steps, not any hasty decisions," he clarified.