The Agriculture Ministry vacated its sprawling premises on a 17-hectare property to cram into a building with low public accessibility, priced ten percent more per square foot than market rates, erected in violation of regulations and was not even completed when the lease was signed, the National Audit Office (NAO) says. By October 31 last [...]

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Audit report reveals irregularities in Agri Ministry

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The Agriculture Ministry vacated its sprawling premises on a 17-hectare property to cram into a building with low public accessibility, priced ten percent more per square foot than market rates, erected in violation of regulations and was not even completed when the lease was signed, the National Audit Office (NAO) says.

By October 31 last year the public had paid Rs 1.52bn for the deal – forged under the previous Government – inclusive of electricity and water bills.  There have been several inquiries into the leasing of the D P Jayasinghe Building in Rajagiriya (including one that is ongoing). Nobody has been penalised.

But in a special report released online this week, the NAO calls for a formal examination into the economic impact of the decision to lease the private building “without transparency and in contravention of procurement guidelines whilst exceeding the valuati on of the Government Assessor”.

The NAO report adds to a growing pile of testimony against the Agriculture Ministry, which was headed by Minister Duminda Dissanayake at the time. And it contains finer details of the case. It states, for instance, that the lease conditions were laid down by the owners and accepted in full by the Ministry.

Ranil Wickremesinghe, then Prime Minister, is also implicated. It was on his request that the Agriculture Ministry – with all departments and institutions under its purview – was shifted lock, stock and barrel out of the “Govijana Mandiraya” at Rajamalwatta Mawatha, Battaramulla.

These premises were specifically designed for the Ministry. It had thriving model cultivations in its gardens, a cafeteria selling indigenous foods and an outlet vending traditional paddy, seeds and plants. It also had driver quarters. This was, the NAO observes, “in an ideal environment with ample space”.

In September 2015, Mr Wickremesinghe submitted a memorandum to Cabinet seeking to acquire Govijana Mandiraya to accommodate the various sectoral committees he wanted to set up under a Parliamentary committee system reform. The memo said the move was “urgent”. But even by October last year, it had not been done.

The Agriculture Ministry, it was proposed, would shift to the Suhurupaya building in Battaramulla. But this was rejected by the Ministry saying it lacked various facilities which the NAO report has deemed “inessential”. “Clear, written explanations” were not provided to substantiate why Suhurupaya was unsuitable.

Instead, Minister Dissanayake and his staff visited No 288, Rajagiriya – the DPJ Building – and presented to Cabinet a lease proposal which contained terms and conditions decided by the building owner. The agreement did not contain contingencies in case a party wished to withdraw before expiry of the lease.

The DPJ Building was to have been a shopping complex, the NAO said, underscoring its unsuitability to accommodate Government offices. It was three stories and 33 feet above the height stipulated in regulations. It did not have sufficient or undisturbed access, had limited parking space and there was severe traffic congestion around the premises. It was not completed and needed partitioning.

The building required repairs, electricity supply was short, the sanitary facilities needed constructing and electric lifts needed improvement. Office equipment, too, had to be supplied externally. Only the ground floor was tiled. Eight floors needed to be carpeted. And the IT system was re-established at Rs 61.03mn.

The Ministry overlooked all this and accepted the owner’s conditions which the NAO deemed were unfavourable to the State. For instance, it paid a 24-month advance of Rs 315mn (including service charge) which, under the five-year lease agreement, could only be set off in the final two years. The rent rose by 15 percent with effect from the third year.

The Ministry spent Rs 342.7mn more to set up other facilities. The Government Valuer determined that the market rate at the time was Rs 150 per square foot. But the Minister accepted the owner’s rate of Rs 166.67 – overpriced at Rs 16.67 per square foot.

The rent, therefore, was Rs 21mn per month (Rs 6mn was a “service charge”), rising to Rs 23mn after the second year. Payments were made on the basis of the floor area being 103,000 square feet but this was not independently surveyed and confirmed.

While the Govijana Mandiraya had furniture and equipment in the old building, which was of high value and quality, these were distributed among other Government institutions and new ones bought at Rs 114.6mn.

The first memo to acquire the DPJ Building was submitted by Minister Dissanayake in 2015. He said the terms will be submitted to a pricing committee. The second memo on the matter was submitted by Prime Minister Wickremesinghe in 2016, maintaining that Suhurupaya was not suitable. Cabinet approved the lease, despite it not having been sanctioned by the said pricing committee.

And, while it was only the Ministry of Agriculture that needed shifting, the Cabinet memo claimed all other institutions housed at Govijana Mandiraya must also vacate.

As the Agriculture Ministry did not need new premises when the 2016 budget estimates were prepared, there were no financial provisions for it. The payments were, therefore, allocated from the Supplementary Support Services and Contingent Liabilities Project.

Despite the rush, the building remained vacant for 36 months. The rent was paid to cover this period. In the meantime, the Parliamentary sectoral committees also did not function at Govijana Mandiraya. The NAO points out that the Agriculture Ministry owned a hectare in Battaramulla and could have constructed a new office for the amount it wasted.

The rental of this building was unplanned, not transparent, and no regard was paid to economical or financial accountability in spending the funds, the NAO held.   By Namini Wijedasa

The Agriculture Ministry vacated its sprawling premises on a 17-hectare property to cram into a building with low public accessibility, priced ten percent more per square foot than market rates, erected in violation of regulations and was not even completed when the lease was signed, the National Audit Office (NAO) says.

By October 31 last year the public had paid Rs 1.52bn for the deal – forged under the previous Government – inclusive of electricity and water bills.  There have been several inquiries into the leasing of the D P Jayasinghe Building in Rajagiriya (including one that is ongoing). Nobody has been penalised.

But in a special report released online this week, the NAO calls for a formal examination into the economic impact of the decision to lease the private building “without transparency and in contravention of procurement guidelines whilst exceeding the valuati on of the Government Assessor”.

The NAO report adds to a growing pile of testimony against the Agriculture Ministry, which was headed by Minister Duminda Dissanayake at the time. And it contains finer details of the case. It states, for instance, that the lease conditions were laid down by the owners and accepted in full by the Ministry.

Ranil Wickremesinghe, then Prime Minister, is also implicated. It was on his request that the Agriculture Ministry – with all departments and institutions under its purview – was shifted lock, stock and barrel out of the “Govijana Mandiraya” at Rajamalwatta Mawatha, Battaramulla.

These premises were specifically designed for the Ministry. It had thriving model cultivations in its gardens, a cafeteria selling indigenous foods and an outlet vending traditional paddy, seeds and plants. It also had driver quarters. This was, the NAO observes, “in an ideal environment with ample space”.

In September 2015, Mr Wickremesinghe submitted a memorandum to Cabinet seeking to acquire Govijana Mandiraya to accommodate the various sectoral committees he wanted to set up under a Parliamentary committee system reform. The memo said the move was “urgent”. But even by October last year, it had not been done.

The Agriculture Ministry, it was proposed, would shift to the Suhurupaya building in Battaramulla. But this was rejected by the Ministry saying it lacked various facilities which the NAO report has deemed “inessential”. “Clear, written explanations” were not provided to substantiate why Suhurupaya was unsuitable.

Instead, Minister Dissanayake and his staff visited No 288, Rajagiriya – the DPJ Building – and presented to Cabinet a lease proposal which contained terms and conditions decided by the building owner. The agreement did not contain contingencies in case a party wished to withdraw before expiry of the lease.

The DPJ Building was to have been a shopping complex, the NAO said, underscoring its unsuitability to accommodate Government offices. It was three stories and 33 feet above the height stipulated in regulations. It did not have sufficient or undisturbed access, had limited parking space and there was severe traffic congestion around the premises. It was not completed and needed partitioning.

The building required repairs, electricity supply was short, the sanitary facilities needed constructing and electric lifts needed improvement. Office equipment, too, had to be supplied externally. Only the ground floor was tiled. Eight floors needed to be carpeted. And the IT system was re-established at Rs 61.03mn.

The Ministry overlooked all this and accepted the owner’s conditions which the NAO deemed were unfavourable to the State. For instance, it paid a 24-month advance of Rs 315mn (including service charge) which, under the five-year lease agreement, could only be set off in the final two years. The rent rose by 15 percent with effect from the third year.

The Ministry spent Rs 342.7mn more to set up other facilities. The Government Valuer determined that the market rate at the time was Rs 150 per square foot. But the Minister accepted the owner’s rate of Rs 166.67 – overpriced at Rs 16.67 per square foot.

The rent, therefore, was Rs 21mn per month (Rs 6mn was a “service charge”), rising to Rs 23mn after the second year. Payments were made on the basis of the floor area being 103,000 square feet but this was not independently surveyed and confirmed.

While the Govijana Mandiraya had furniture and equipment in the old building, which was of high value and quality, these were distributed among other Government institutions and new ones bought at Rs 114.6mn.

The first memo to acquire the DPJ Building was submitted by Minister Dissanayake in 2015. He said the terms will be submitted to a pricing committee. The second memo on the matter was submitted by Prime Minister Wickremesinghe in 2016, maintaining that Suhurupaya was not suitable. Cabinet approved the lease, despite it not having been sanctioned by the said pricing committee.

And, while it was only the Ministry of Agriculture that needed shifting, the Cabinet memo claimed all other institutions housed at Govijana Mandiraya must also vacate.

As the Agriculture Ministry did not need new premises when the 2016 budget estimates were prepared, there were no financial provisions for it. The payments were, therefore, allocated from the Supplementary Support Services and Contingent Liabilities Project.

Despite the rush, the building remained vacant for 36 months. The rent was paid to cover this period. In the meantime, the Parliamentary sectoral committees also did not function at Govijana Mandiraya. The NAO points out that the Agriculture Ministry owned a hectare in Battaramulla and could have constructed a new office for the amount it wasted.

The rental of this building was unplanned, not transparent, and no regard was paid to economical or financial accountability in spending the funds, the NAO held.

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