A policy decision that led to a massive crisis in Sri Lanka

COLOMBO (News 1st); Sri Lanka is facing the worst economic crisis since its independence in 1948 and now awaits the initial disbursements under the International Monetary Fund's Staff-Level Agreement.

Fraud, Corruption, and Waste paid a key part in leading Sri Lanka to a crisis.

In April 2021, the Sri Lankan Government took a sudden decision to completely ban Chemical Fertilizer imports to turn the island nation's agriculture sector to 100% Organic.

Not only did the experts warn about the consequences of such a policy, even farmers pointed out that it would carry Sri Lanka to the brink of destruction.

However, given the forex crisis faced by the country, Sri Lanka decided to ban Chemical Fertilizer imports.

But, did Sri Lanka manage to save its reserved by banning Chemical Fertilizer?

Or, did it lose what ever the remaining dollars it had in its reserve for a shady-deal?

The country eventually paid US $ 6.9 Million for a Chinese Fertilizer shipment, despite not a single scoop of fertilizer touching Sri Lankan farmlands.

China's Qingdao Seawin Biotech Group Co., Ltd that produces Organic Fertilizer using Seaweed came forward to supply Organic Fertilizer to Sri Lanka after applying for it via an Open Tender.

Although the tender was awarded to Qingdao Seawin Biotech Group Co., Ltd. Sri Lanka's National Plant Quarantine Service after conducting tests twice, confirmed that the fertilizer samples contained a pathogen.

However, an order was already placed for 20,000 MT of Organizer Fertilizer shipment that was shipped aboard the Hippo Spirit vessel without approval from the National Plant Quarantine Service.

In order to obtain the license to import fertilizer to Sri Lanka it is paramount to obtain clearance from the National Plant Quarantine Service.

In the end, the Hippo Spirit changed it vessel name, disappeared from Satellite Tracking systems for days while remaining stationary in the Sea of Sri Lanka, and later turn back to its port of origin.

However, the deal regarding the Chinese Fertilizer shipment is far from over.

As per the agreement the supplier had reached with Sri Lanka, the island nation had to pay US $ 6.9 Million for the shipment.

The Performance Bond placed by China's Qingdao Seawin Biotech Group Co., Ltd was also taken back, and the Chinese suppluer is seeking another US $ 8 Million as compensation for losses incurred from the deal.

If not, the Chinese supplier wants a definite answer on the agreement.

At a time when Sri Lanka was struggling to maintain its foreign reserves, it simply lost US $ 6.9 Million.

Recently, Sri Lanka's Auditor General produced a report on the Fertilizer Agreement, and made some startling revelations.

1. There was NO confirmation as to whether the Hippo Spirit was actually transporting a fertilizer shipment.

2. Sri Lanka was not prepared to clear and unload the fertilizer shipment.

3. The Chinese supplier had not even appointed an agent for the clearing process of the shipment.

4. Incorrect log entry with respect to the departure date of the vessel.

5. Shipping the fertilizer without an import license from the Director General of Agriculture and a clearance certificate.

6. Violation of Agreement, as the Chinese supplier had shipped the fertilizer ahead of opening a Letter of Credit.

7. Disconneting the ships tracking system, and heading towards Africa.

Based on these findings, the Auditor General's report reveals that the payment is in fact questionable.

The Auditor General has recommended that the Chinese supplier be blacklisted, and those responsible be prosecuted and the losses incurred by the government be recovered from them.