Dec 20, 2020

Massive fertiliser fraud exposed; files missing, fake lab reports Featured

Certain National Fertiliser Secretariat (NFS) employees have been permitting the release of “failed fertiliser stocks” — with lead, chromium, arsenic, cadmium and other components above permissible levels — by replacing accurate laboratory test reports with fake ones, the National Audit Office (NAO) has revealed in an explosive report.

Recent audit checks revealed 34 instances in which subject clerks and supervising officers handling the respective files “misplaced” accurate lab test reports pertaining to seven types of fertiliser and inserted fake ones. The stocks were released and Government subsidies exceeding Rs 1bn paid to the importing companies.

In another case, trade approval was rejected for a consignment of an established fertiliser company as sample tests did not comply with national parameters. It nevertheless released the stocks to the market. The Secretariat had “neglected its responsibility” to prevent the stock’s distribution and to have it destroyed, the NAO stated.

The company had then submitted claims to the NFS seeking a subsidy of Rs 179mn for these substandard stocks which were “not suitable for use but issued to farmers”.

The NAO found instances where the NFS sent one of the customary three samples it extracted from a stock to a randomly selected lab. If the test result matched national parameters, trade approval was granted. If it did not conform, the second sample was sent to another randomly selected lab. When that returned as compliant, the fertiliser was deemed suitable and allowed to be sold.

“The reasons for accepting that the first laboratory report was inaccurate and the second laboratory report was accurate were not clear to the audit,” the NAO held.

It cited the example of two samples of one fertiliser stock sent to two randomly selected laboratories on two occasions which were both found non-compliant. The NFS deemed both results to be erroneous and a third lab test was commissioned.

This was then found to be accurate and trade approval granted.

“The reasons for not accepting the test results of 02 laboratories as correct and accepting the final test report and its results as correct were not explained to the audit,” the NAO said.

The audit report contains details of all the irregularities. For instance, a stock of 385 metric tonnes of triple super phosphate (TSP) dated September 2018 failed as its lead value was 51.83ppm (parts per million) when tested by the Bureau Veritas Lab. The allowable lead value is 30ppm.

The second sample also failed with the lead value returning even higher, at 67ppm, tested by SGS Laboratory. But the NFS “had approved to release the relevant stock of fertiliser to the market after removing the two failed test reports from the file and attaching a fake laboratory test report prepared under the name of SGS Laboratory which had stated lead value as ‘Not Detected’,” the NAO said.

This TSP stock was issued to the market on the false premise that it was compliant with national standards (“by attaching a fake laboratory report”). The NFS also paid the importer a subsidy of over Rs 17.6mn.

A second case pertains to 1,036 metric tonnes of urea dated February 2018. The first sample failed as the chromium value was 3.4ppm (national standard is 3ppm), tested by ITI Laboratory. NFS approved its release without even referring it to a second sample test by removing the report from the file and attaching a “fake laboratory test report prepared under the name of SGS Laboratory” stating the value of chromium as “Not Detected”. A subsidy of over Rs 36mn was paid to the importer.

Another applies to 220 metric tonnes of TSP dated August 2018. The stock failed owing to an arsenic value of 28.33ppm (required standard is 25ppm), lead value of 73.87ppm (required standard is 30ppm) and chromium value of 51.64ppm (required standard is 50ppm), tested at the Bureau Veritas Laboratory.

The second sample test conducted by SGS Laboratory in October also failed due to all three components exceeding recommended values. The NFS approved the consignment’s release “by attaching a fake laboratory test report” prepared under the name of SGS Laboratory stating arsenic, lead and chromium as “Not Detected”. The other two reports were removed from the file. The NFS then paid a subsidy of over Rs 10mn to the importer.

The audit report shows that these malpractices involve a majority of the country’s leading fertiliser importers, all the main types of fertiliser distributed in the market and were also pervasive throughout 2019.

For instance, in July last year, a consignment of 1,026 tons of TSP was imported. A sample was extracted by the NFS, coded by the Director and handed over to the Subject Clerk, the Supervising Officer and the Assistant Director to be passed on to the SGS Laboratory. It was not sent.

But the officers in charge of the subject prepared “a fake laboratory report” in the name of SGS, filed it as if it was obtained from the lab and obtained trade approval from the Director. It is mandatory to check fertiliser stocks to determine they meet national standards. But the stock was released and a subsidy of more than Rs 53mn was paid to the importer.