Karnataka Covid ‘scam’: Justice D’Cunha Commission finds purchase of expired RT-PCR kits, items worth Rs 45 crore without approval

Verifying the purchases made without approvals, it noted that supply orders were placed for these kits at almost double the minimum rate of Rs 684.4 specified by the TAC.
The findings are part of the multi-volume interim report on illegalities in Covid procurements submitted by the one-man Justice D’Cunha Commission in August this year, portions of which are accessed by The Indian Express.

The Commission was set up in August last year by the Congress government to probe the alleged irregularities that took place during the pandemic when the BJP was in power in the state. Among its other findings in its interim report, it has recommended action against former chief minister B S Yediyurappa and former minister B Sriramulu over irregularities in PPE kits and flagged violations in several procurements conducted by government bodies under Health and Family Welfare, and Medical Education Departments.

The Commission has noted that the purchase of RT-PCR kits was made without quotations and agreement. For instance, supply orders were placed with Patel Enterprises in March and April 2020 for 65,000 RT-PCR kits at 1,200 each. While the note sheet states that cost per test was accepted as per the quotation submitted by Patel Enterprises, the quotation was not on record.

“Without inviting the quotations, the contract was awarded to the favoured/chosen supplier of the procurement entity”, the Commission said, noting that “the process was designed to benefit the supplier obviously in consideration of quid pro quo.”

It said that there were no documents with KSMSCL showing the distribution of these kits procured from the company to any taluk or district. Similar violations were found in other procurements, where the Commission found “no quotations, no agreements, no validation reports, no invoices, no entry in stock and issue registers” and sought detailed inquiry against officials responsible for the same.

Procurement after Covid second wave

Another purchase of RT-PCR kits flagged by the Commission was in connection with a decision to buy 74.85 lakh kits from Genes 2 Me Pvt Ltd, based on a TAC decision on January 1, 2022. Subsequently the TAC decided to procure only 75 per cent of the quantity and a purchase order was issued for 56.14 lakh kits at Rs 15.87 per test on July 12, 2022.

As the Covid positivity rate decreased, the order was kept on hold and the same was communicated to the company. However, this order was revived on March 30, 2023, and the company was asked to supply 10 lakh RTPCR kits based on the tender dated July 12, 2022.

The decision in March was attributed to a suggestion from the TAC, but no record shows TAC made such a decision. The Commission said it found no justification for revising the earlier supply order. “Though the process to procure these kits was initiated during Covid, by the time M/s Genes 2 Me Pvt Ltd. was directed to supply 10,00,000 RTPCR kits, the Covid-19 had already subsided. As such the procurement has not served the purpose of Covid-19. The need and requirement of this procurement needs to be inquired into by instituting disciplinary action against the officers/officials involved in the procurement,” it said.

Unvalidated and expired kits

In November 2020, a report by Bangalore Medical College and Research Institute (BMCRI) said that the kits supplied by a firm called POCT Services were unsatisfactory. Despite this, a purchase order was issued in favour of POCT services for 4.07 lakh kits at Rs 50.40 per unit.

“…. the entire payment made of POCT Services towards the supply of RTPCR tests of the total value of Rs 2.05 cr has to be held unauthorized, illegal and arbitrary and the said amount has to be recovered with interest from POCT services…,” the Commission said, recommending action against those responsible.

KSMSCL also made a similar procurement of unvalidated kits from Imperial Life Sciences (ILS), which received a supply order for 5.5 lakh kits in October 2020. The company supplied 2.43 lakh kits that were found unsatisfactory by BMCRI and in violation of the supply order, which required test kits to be validated.

“…in view of the invalidation report issued by BMCRI, no payment could have been made to the Imperial Life Sciences” for 2.43 lakh units. Yet Rs 1.89 crore was paid, which has to be recovered from the company, the Commission has said. The report noted that unvalidated kits were also previously supplied by the company.

Meanwhile, after BMCRI’s invalidation report on ILS, Chief Supervisor (Equipment), KSMSCL was directed to place orders with another company called M/s Trivitron to supply 25 per cent of the quantity which was to be supplied by ILS. This direction, the Commission said, was “ex facie illegal and beyond the financial powers and competence of the Chief Supervisor (Equipment), KSMSCL”.

“… in the absence of any prior approval by the government for procurement of these goods from Trivitron and in the absence of any quotation or tender in this regard, the issue of supply order to Trivitron and consequent payment of Rs 1,51,96,500/- has to be held as illegal and unauthorized,” the Commission said. It has sought disciplinary inquiry into the conduct of the then Chief Supervisor (Equipment), suspecting foul play in the transaction.

In other cases, RT-PCR kits supplied by JJ Biotech and Q-Line Biotech Ltd, Lucknow, were found to have either expired on the date of supply or were nearing expiry. While the TAC issued directions to initiate action for replacement or extension of the expiry dates of RT-PCR and RNA extraction kits, KSMSCL did not initiate action against the companies.

“Since the KSMSCL has failed to discharge its obligation and responsibility, the loss caused to the State exchequer to this extent is required to be replenished by the erring officers and/or officials of the KSMSCL as well as the officers and/or officials of the consignee designated laboratories who received the consignment,” the report said, pegging the losses due to expired kits supplied by companies at Rs 3.11 crore.