The parliamentary Public Accounts Committee (PAC) has opened a formal investigation into potential corruption over allegations that government officials procured essential medicines and health products at inflated prices, taking undue advantage of the Covid-19 pandemic.

“We have started an investigation into the irregularities,” said Rojnath Pande, secretary for the Public Accounts Committee. “Today [Monday], we summoned secretaries from the Prime Minister’s Office and the Health Ministry, and the director-general of the Department of Health Services to discuss the issue.”

Health Secretary Laxman Aryal and Director General of the Department of Health Services Dipendra Raman Singh both told the PAC that they were unable to respond to queries since the deal took place before they were deputed.

“We asked them how the medical supplies were much more expensive than the market price but they suggested that the committee ask the authorities who were responsible for the purchase,” said Surya Pathak, a member of the committee. “Since the ministry secretary and department director general were new, they suggested we talk to their predecessors.”

The committee is preparing to summon former health secretary Yadav Koirala and previous director general Mahendra Shrestha, under whose tenure the tender was awarded to Omni, said Pathak.

“The PAC will summon all the authorities involved in the purchase, including Health Minister Bhanubhakta Dhakal, and then a subcommittee will be formed for further investigation,” said Bharat Kumar Shah, the PAC chairperson. “We have received all the necessary documents only after sending letters for the fourth time.”

A preliminary PAC report obtained by the Post has implicated Health Minister Dhakal and Dr Khem Karki, Dhakal’s chief adviser, in the decision to award a medical equipment procurement contract to the private company Omni Business Corporate International. The decision, in late March, had courted controversy for not following public procurement processes. Questions had also been raised in the media over the quality of the equipment procured by Omni.

The PAC, in its preliminary report, said that Omni Business Corporate International had procured N95 masks at Rs 828.67 per piece, even though the market rate was just Rs 462.50. Non-contact thermometers were purchased for Rs 7,500 each, but the market rate was only Rs 4,000 in February.

The government on March 25 had awarded Omni Business Corporate International the tender to purchase medical equipment from China after reports of more Covid-19 cases in the country. Omni brought in its first cache of supplies on March 29, but the Department of Health Services annulled the tender on April 1 after the deal courted controversy.

However, many pieces of medical equipment, including 75,000 rapid test kits, had already been imported. A report by the Nepal Health Research Council, submitted to the Health Ministry in May but released to the public just a week ago, had concluded that the test kits were only effective 50 percent of the time.

The PAC preliminary report also states that the cost estimate was carried out in Nepali rupees while the agreement was signed in US dollars. Another company—Anita Business House Pvt Ltd—was included in the talks for the selection despite not being involved in the discussion. As per a May 5 report by an expert committee formed by the Health Ministry, the five PCR machines imported by Omni were not on par with the specifications, according to the PAC report.

According to the preliminary report, the tender was awarded to Omni, a company involved in other businesses and with no prior experience in procuring medical equipment. Media reports claim that Omni got the deal on the basis of a person connected to the company, Yubaraj Sharma, having close relations with Prime Minister KP Sharma Oli. The company did not even have documents to prove that it was tax-compliant, said the report.

Even lawmakers representing the ruling Nepal Communist Party (NCP) have raised serious questions regarding the deal with Omni.

Lawmaker Dharmashila Chapagain of the ruling party told the PAC that Omni group was prepared for the tender because it had been informed about all the requirements before the tender was made public.

“Information was leaked before the tender was opened and Omni was ready with all its documents. Many could not prepare due to the lockdown while others did not know of the ender,” Chapagain told a Monday meeting of the PAC.

The agreement with Omni was sealed on March 24, the same day that the nationwide lockdown was imposed.

According to Birodh Khatiwada, another lawmaker from the ruling party, the authorities completed all processes in a rush because it had already been decided that the tender would go to the Omni group.

“There was an understanding that the quality of rapid diagnostic test kits must be checked before their use. But they were employed without testing,” Khatiwada said at the PAC on Monday. “This shows how grave a crime we committed.”

The government rolled out rapid testing across the country on April 7, without waiting for validity testing from the Nepal Health Research Council. Serious questions have been raised about the validity and reliability of the rapid test kits. Young people across the country have taken to the streets demanding that the government discontinue RDTs and employ only PCR testing.

Khatiwada also questioned the role of Karki, Health Minister Dhakal’s chief adviser, in the procurement process. Karki, according to the PAC, had headed a committee that chose Omni for the deal. Karki is not a civil servant or an elected official and thus holds no authority to award public procurement tenders to private companies, said Khatiwada.

Responding to public criticism, Deputy Prime Minister Ishwar Pokharel, who also leads the High-Level Coordination Committee to Control Covid-19, said on April 2 that the Department of Health Services was solely responsible for awarding the contract.

“It [procurement] is the right of the director general of the Department of Health Services as per the law. He signed the contract as per the law and cancelled it because the other party failed to follow through,” Pokharel said in an interview with the news portal Onlinekhabar in April. “I need not say anything on this. Ask the concerned authority.”

The Department of Health Services subsequently terminated the contract with Omni, claiming that it had failed to bring in the second cache of supplies on time. The government then decided to allow the Nepal Army to procure all necessary medical equipment through a government-to-government deal. The rates of the supplies procured by the Army from China were also found to be higher compared to the market price, according to a report in Kantipur, the Post’s sister publication.

“We have received documents from the Nepal Army as well. We will study all of them and then decide how to proceed with the investigation,” Secretary Pande told the Post.

The members of the parliamentary committee have also asked Narayan Bidari, member-secretary of the High-level Coordination Committee for the Prevention and Control of Covid-19, whose responsibilities have now been moved to the Corona Crisis Management Committee, to provide details about the government’s alleged expenses of Rs10 billion in fighting the pandemic.

Bidari informed the committee that he would come up with the breakdown of the government’s expenses by Friday, according to Pande.

Sangam Prasain contributed reporting.