Description
In early 2022, the Metallurgical Corporation of China (MCC) Ltd. wrote to former President Gotabaya Rajapaksa regarding a potential tender irregularity for the construction of the 19.6 km section from Rambukkana to Galagedera, or Central Expressway Project phase 3 (CEP- 3)[i]. The company claims Sri Lanka violated the guidelines for competitive bidding practices as a local consortium of companies was ultimately given construction approval despite having higher bidding rates than MCC.
Writing to the President, MCC, who has been involved in Sri Lankan expressway construction since 2009[ii] complained about the decision taken by local authorities to choose the local companies, now identified as LIDC, rather than their own. MCC bade USD 1070 million including the cost of construction, operational and maintenance (O & M) for 15 years and the cost of financing, while LIDC stipulated USD 1872 million payable in 30 semi-annual instalments of $62.4 million.
A Cabinet Paper submitted by former Minister of Highways Johnston Fernando initially proposed cancelling the original tender process which was followed in 2021. However, only 10 days later he presented another Cabinet Paper recommending that the original process be continued in haste.[iii] This hasty and opaque process with no publicly available information on the process raised serious concerns about whether the due process has been followed in selecting a supplier[iv] .
What is the corruption
- Violation of the due procurement process
- Possible undue gains by the decision-makers and possible collusion between the private entity and the decision makers
- Lack of accountability to the public regarding the due process followed
- Lack of transparency towards the public
Monetary value involved
LKR 542.6 billion (US$ 1.87bn)
What has been done
A public interest petition was filed at the Court of Appeal by the two activists Sandun Thudugala and Renuka Sampath, seeking several reliefs including an interim order to halt the awarding of any contract to any party related to this project[v]. The petition stated that the economic viability of the project will have a detrimental effect on the citizens of Sri Lanka while arguing that the process of expediting this project is violating the due procurement process.[vi] In July 2022, the Attorney-General informed the Court that the government will not go ahead with the tender and will call for fresh bids for the project.
Later, the Ministry of Highways announced that the tender was cancelled “due to the adverse economic conditions”[vii].
What can be done
- Ensure that the due process is followed during the next procurement cycle.
- Journalists and citizens take preventative action to address cases of this nature.
- Advocate for open and transparent information
[i] https://english.theleader.lk/news/1963-highway-robbery-mcc-writes-to-president-on-cep-tender-fraud
[ii] https://www.sundaytimes.lk/220417/sunday-times-2/the-hurry-to-award-the-central-expressway-project-hara-kiri-for-lankas-economy-479790.html
[iii] https://www.pressreader.com/sri-lanka/sunday-times-sri-lanka/20220403/281715503134271
[iv] https://www.sundaytimes.lk/220220/business-times/central-expressway-project-phase-3-tainted-with-irregularities-473234.html
[v] https://www.sundaytimes.lk/220612/news/central-expressway-third-section-rda-tells-court-it-wont-sign-agreements-till-july-26-485787.html
[vi] https://www.sundaytimes.lk/220605/news/public-interest-petition-seeks-a-halt-to-central-expressway-section-3-contracts-484968.html
