Water Board's purification of a dubious supplier

By Dilrukshi Handunnetti

A supplying company that allegedly offered a forged bank guarantee while contracting with the National Water Supply and Drainage Board (NWSDB) and now referred to the National Procurement Agency (NPA) for fraud and contractual violations has once again bid for a similar NWSDB tender despite heightened controversy over its qualifications to bid.

Asha Lanka Enterprises (Pvt) Ltd, a supplier that secured a NWSDB tender to supply aluminum sulphate for water purification at a cost of Rs. 24,550,000 as the second lowest bidder has allegedly submitted forged bank guarantees to the NWSDB - but the blacklisting of this company, despite being requested is yet to be made official.

While the NWSDB officials have gone public with the fact that the bank guarantees were indeed forged, the doors are still kept open allowing the same company to once more submit its bidding documents for a second tender, this time around to supply 1500 MT of aluminum sulphate to the value of Rs. 9,900,000 (US$ 430,000). 

Let's go back to the initial tender secured by Asha Lanka Enterprises (Pvt) Ltd. in August 2008. Seven companies bid for the initial tender to supply 500 MT of aluminum sulphate and the tender results were announced on August 29, 2008. The results included Patno Construction's offer of Rs. 22,550,000, Cee Green Engineering (Pvt) Ltd (Rs.25, 750,000), Dowell International (Pvt) Ltd (Rs. 26,722,500), Engineering Services Ltd (Rs. 28,475,000), Rodesha Enterprises (Rs. 29,102,300) and Natco Pacific Pte (Rs. 29,375,000).

Second lowest bidder

The tender was awarded to Asha Lanka Enterprises (Pvt) Ltd, the second lowest bidder.

Subsequent to the awarding of the tender, on September 22, General Manager, NWSDB, K. L. L. Premanath wrote to the selected company informing of the decision.

The letter stated that the tender offer of Rs. 24,925,000 has been accepted and required a performance bond to be submitted in the prescribed form from a recognised bank of an amount of 10% of the total contract price valid for a period of four and a half months, to be submitted within 14 days from the date of awarding the tender.

Consequently, Chairman, NWSDB received a performance guarantee dated October 6, 2008 bearing No: 17/KOL/GTN/289 for Rs. 2,492,500 issued on behalf of Asha Lanka Enterprises (Pvt) Ltd.

Performance guarantee

The letter acknowledged that a performance guarantee was required as per contractual conditions which the bank was happy to offer and undertook in writing to pay in total an amount of Rs. 2,492,500 upon receipt of the first demand in writing accompanied by a written statement stating that the contractor is in breach of its obligation(s) under the contract, without the NWSDB needing to prove or to show grounds for the demand such sums specified.

However, the letter stated that the performance guarantee would indeed expire by February 28, 2009 and any demand for payments under it must be received by the bank on or before the specified date.

Accordingly, the National Water Supply and Drainage Board (NWSDB) signed a contract with Asha Enterprises Pvt. Ltd., on October 7, 2008 to supply and deliver 500 Mt of aluminum sulphate.

It was thus agreed to complete the work described or referred to in the Bill of Quantities to the entire satisfaction of the engineer and to have the first consignment delivered on or before November 7, 2008 and the second consignment by December 8, 2008.

Performance guarantee

It was further agreed in writing that the contractor would be paid Rs.24, 925,000 plus applicable VAT for the execution of the said work and required as security for the due and proper performance and fulfillment of the contract, a performance guarantee in an amount of 10% of the contract price in favour of the Board from a bank approved by the engineer, as surety amounting to Rs. 2,492,500.

The contract was signed by Chairman, NWSDB, S. C. Amarasinghe and Vice Chairman, NWSDB, Dr. A Uthumalebbe on October 7, 2008 at the Ratmalana office. On behalf of the fraudulent company, A. A. M. Rinthas signed the papers in the capacity of director, Asha Lanka Enterprises (Pvt) Ltd.

It was made to believe, at the time of signing the contract that the performance guarantee was already issued by the bank, as it bore the date of October 6, 2008 and had every sign and symbol of being an authentic bank guarantee at the time of contracting.

Further to that, another letter was also issued under the letterhead of Commercial Bank, addressed to the Chairman of the NWSDB.

Advance payments guarantee

Dated October 30, the Commercial Bank, Kollupitiya Branch wrote to Chairman, National Water Supply and Drainage Board this time regarding the advance payments guarantee No: 19/KOL/GTN/301 for Rs. 4,985,000 issued on behalf of Asha Lanka Enterprises (Private) Limited.

The letter referred to the contract (No: AGM/SUP/CHEM/ALS/2008/08) entered into by the said company on September 22, 2008 for the supply and delivery of 500MT aluminum sulphate to the NWSDB, Ratmalana.

The letter added that it was understood by the Bank that according to the conditions of the contract, an advance payment guarantee was required and yet again offered an irrevocable undertaking to pay Rs. 4,985,000 upon the receipt of the first demand in writing accompanied by a written statement stating that the contractor is in breach of its obligation(s) under the contract.

The letter further informed that the said guarantee expired on February 28, 2009 and stipulated that any demand for payment under this guarantee should be received by the Bank on or before the said date.

It is in the meantime that the truth surfaced that the bank guarantees were nothing but forgeries that caused undue embarrassment to reputed banks besides being an attempt to take the NWSDB for a complete ride.

Cancelled the bid

At this point, the NWSDB Ratmalana quickly took steps to bring the matter to the notice of the authorities and disqualified the said company and cancelled the bid.

The NWSDB promptly informed the National Procurement Agency (NPA) as stipulated and through that the Criminal Investigations Department (CID) to ensure a speedy probe and put an end to the duplicitous company's wheeler dealing. What is more, even the Fraud Bureau had been alerted with regard to the forgery. But these facts have been skillfully hidden, as it now transpires. 

On August 6, 2008 the National Water Supply and Drainage Board (NWSDB) called for tenders for the supply and delivery of 1500 MTs of aluminum sulphate.

The newspaper notice specified that the Chairman, Ministry Procurement Committee, Ministry of Water Supply and Drainage would receive bids for the same and close such on September 11, 2008 at 10 am.

The delivery of the tender was to be within four months from the date of the award.

Bid documents were thus issued to manufacturers or their local accredited agents for the supply and delivery of aluminum sulphate and a bid security of  Rs.800,000 was to accompany as bid security.

Bid once again successfully

But for this second tender bearing No AGM/SUP/CHEM/ALS/2008/03, Asha Lanka Enterprises (Pvt) Ltd. bid once again successfully, inside sources reveal.

It is reliably learned that the company that is yet to be blacklisted has managed to submit its bid for US $ 430,000 (approximately Rs. 9,900,000) on September 11, 2008.

Besides Asha Lanka Enterprises, several other companies also submitted their bids.  Included among the competitors were Patno Construction's offer of US$ 532,400, Cee Green Construction's offer of US$ 532,400, Missive Lanka Pvt. Ltd. at US$ 519,950, Dowell International (Pvt) Ltd at US$ 529,450 and Engineering Services Pte. at US$ 534,000.

In the meantime, what happens within the Ministry is still a mystery to most, for other bidders do have fair knowledge that Asha Lanka Enterprises that secured the first tender suffered a terrible disqualification. But investigations are slow to move, the blacklisting, according to inside sources yet to happen.

Thus with one messed up tender, it looks like the dubious company might just about stand another chance, despite alleged forgeries of bank guarantees.

What's more, the NWSDB officials who are concerned about this development have another legitimate query besides the possible fraudulent conduct. Even if the name is some day cleared, how to believe in the safety of a chemical supplied by a company of this nature to be used for water purification. God help the consumers.