Minister for Health Bhanubhakta Dhakal decided to award a controversial medical equipment procurement contract to a private company upon the advice of his chief advisor Dr Khem Karki, a parliamentary committee investigating the deal said in its preliminary report.

The report by members of the Public Accounts Committee (PAC) who studied official documents related to the case states that Karki didn’t have the legal authority to recommend Omni Group to procure medical equipment from China. It also says that due process wasn’t followed in the procurement and equipment and medicines were bought at rates higher than that of the market.

“An advisor to the minister doesn’t have legal authority [to recommend procurement deals]. But he was authorised to negotiate the procurement,” said Bharat Kumar Shah, chairperson of the Public Accounts Committee.

The government on March 25 had assigned Omni Business Corporate International to purchase medical equipment from China after the first cases of coronavirus were reported in the country. Omni brought in its first cache of supplies on March 29, but the Health Service Department cancelled the agreement on April 1 after the deal courted controversy.

By going through the documents provided by officials involved in the procurement, the committee pointed out a number of weaknesses in the deal.

“For example, due process was not followed and equipment and medicines were purchased at rates higher than that of the market. We need to study the details of the deal properly,” Shah told the Post adding that the committee hasn’t prepared its final report yet.

According to the preliminary report, the Ministry of Health, after discussing with potential suppliers, formed a team led by Karki to negotiate a deal with potential suppliers.

Six companies submitted their quotations for the procurement and after negotiations were held, Karki’s panel recommended Omni for the deal. The decision was approved by the health minister, and necessary documents were sent to Omni and its bank the same night.

The report also pointed out that the deal was awarded to Omni even when it had no experience of importing medical goods; it didn’t even have documents to show it was tax compliant.

The Ministry of Health is yet to furnish the reason why an advisor, who is nominated by the minister, was involved in the procurement process while a statutory evaluation committee that was supposed to do the job was not consulted.

However, Karki claimed that he was only involved in negotiations after Omni had been selected for the job. “I was there just to lower the price of the medical supplies and I had managed to do so by 0.5 percent,” said Karki. “If it was a crime to do that, I'm ready to be punished. ”

According to the report, Omni bought N95 masks at Rs 828.67 per piece though the market rate was only Rs 462.50. It also bought thermometers (non-contact) at Rs 7,500, but the market rate was only Rs 4,000 until a month earlier.

The parliamentary committee has invited the director general of the Department of Health Service and the secretary of the health ministry to discuss issues related to the deal on Monday.

Dr Rojnath Pande, secretary of the House committee also involved in preparing the draft report for the lawmakers, said, “The report shows that authority has been abused in the case,” said, secretary of the committee. “It depends on how the committee will take the issue ahead. It could either be investigated further or forwarded to the anti-graft body.”

Health secretary Yadav Koirala and director general of Department of Health Services Mahendra Shrestha have already been transferred from their work stations.