The Royal Audit Authority (RAA) Audit report on the USD 31.526 mn or Nu 2.4 bn (1 USD = Nu 77) ‘Commercial Agriculture Resilient and Livelihoods Enhancement Programme’ (CARLEP), Wengkhar, Mongar project has shown poor implementation of the project targeted at farmers in selected gewogs in six eastern Dzongkhags of Lhuentse, Mongar, Pemagatshel, Samdrupjongkhar, Trashiyangtze and Trashigang.
The Audit report is from the period of 1 July 2020 to 30 June 2021 though the project is a seven year one from 2015 to 2022 aiming to benefit 28,000 small holder households of which 5,000 are to directly benefit from vegetable and dairy value chains.
The report says that, ‘based on the various audit observations made so far, it can be fairly concluded that there has been laxity on the part of the project and the dzongkhags in the implementation of the planned activities. It seems that progress of the various activities is measured based on the fund release and not on the actual implementation and their subsequent benefits to the farmer and the community at large.’
It says most of the activities have remained incomplete or not implemented despite the release of funds and materials. There has been very little monitoring and supervision from the project office, the parent department (Department of Agriculture) and the ministry (Ministry of Agriculture and Forests).
‘Many of the activities now remain complete only upon insistence from the audit team. There were also many cases of excess payments made to the third parties including some possible indications of fraud and corruption at the implementation level,’ says the report.
Based on the nature of observations, the RAA has recommended Disciplinary Actions against those involved including seeking legal actions.
The report says the MoAF must review the project, as a whole, and see if there could be a better way of implementing the activities, rather than simply disbursing the fund.
Fraud in Trashiyangtze
RAA uncovered an instance of fraud where livestock officials inflated the cost of cattle to siphon the subsidy money.
The RAA said the Dzongkhag, during the financial year 2020-2021, had an approved budget of Nu. 1.5mn where jersey cows were supplied to the farmers by providing 30 percent subsidy on the total cost of the cattle as per the cost sharing guideline of the Ministry of Agriculture and Forests (MoAF).
The RAA during the joint verification of the cattle noted that while the cattle were supplied to the beneficiaries as per the distribution lists, the team found disparity in the cost of the cattle during the visit to Tongzhang on 24 November 2021. The cost of cattle was found to be inflated as opposed to the actual price paid by the farmer, which ultimately shot up the subsidy amount.
The farmers received only the subsidy amount based on the original price and not on the inflated price. With the indications of fraud and corruption. The team visited the Gewogs from 19-22 April, 2022 and met with the beneficiaries in the presence of Chiwog Tshogpas and confirmed with the entire beneficiaries the actual cost paid by them.
The receipts attached along with the disbursement vouchers were countersigned by the gewog extension officers, beneficiaries and the sellers.
RAA said that based on the evidences collected till date, this seems to be a clear case of fraud whereby the cost of the cattle was inflated in the payment vouchers to siphon the proportionate amount of subsidy from the government fund. It said besides recovering the difference amount from the concerned officials, the Dzongkhag Administration should take legal action against the perpetrators.
An October 2017 Ministry of Finance notification had stated that that HDPE pipes are mandated to be procured directly from recognized manufacturers like Bhutan Polythene Company Limited and Bhutan Plastic Industry with a price list.
However, the Dzongkhag bought the pipe from others paying Nu 214,890 more than the rates.
Though Nu 1.12 mn had been spent for improved cowsheds there were 19 sheds not constructed or not complete.
The livestock sector told the RAA that it supplied 13 bags of cement each to 44 beneficiaries for the cow shed construction but a RAA review found only 10 bags each supplied which is a total shortage of 186 bags worth Nu 67,890.
44 CGI sheets for poultry shed construction are not issued or utilized.
Nu 850,000 was spent in 2020-21 for biogas construction but it was not complete in 28 households.
The Dzongkhag spent Nu 1.48 mn for electrical fencing for FY 2020-21, but there were 35 farmers who did not see the fencing being complete.
Poor monitoring from ARDC, Wengkhar
The Agriculture Research and Development Center (ARDC) in Wengkhar was supposed to construct irrigation facilities to benefit 15, 14 and 28 households for Bongman, Sayul and Chuthawoong Gewogs respectively in FY 2020-21.
RAA says due to poor monitoring and lack of supervision from the Centre, their target automatically turned achieved soon after distribution of materials to the beneficiaries, without considering the final output or result.
However, a joint verification showed the construction was not yet started and though Nu 1.43 mn in payment had been made in full to the suppliers only the HDPE pipes had been lifted.
The management had approved to procure upland paddy (kambja) at the rate of Nu.70 per kilogram from the community-based suppliers in order to promote drought tolerant upland paddy in climate smart villages and subsequently approved an advance of Nu. 84,000.
Upon enquiry with the sellers RAA found that, they have supplied kambja at the rate of Nu. 50 per kilogram of Nu 22,330 resulting in difference amount of Nu. 61,670. Audit has asked for more bills and details.
ARDC during the FY 2020- 21 had procured greenhouse sets along with drip kit irrigation for distribution across six eastern dzongkhags. The RAA during the joint physical verification across the six implementing dzongkhags noted some non-completion of greenhouse installation in 8 instances in Mongar and Trashigang.
Mongar and expensive milk cans
The RAA found that after the lowest bidder declined to supply milk cans at Nu 475 per unit, another supplier was allowed to supply it at Nu 899 per unit though the new supplier quoted less in other agencies for same item. This resulted in excess payment of Nu 112,784.
In the Construction of Woopkhar Irrigation Channel under Ngatshang Gewog a physical verification of sites revealed an excess payment of Nu. 52,655 to the contractor for PN HDPE pipe including fittings.
The excess payment occurred apparently due to improper measurement taken by the site engineer while passing the final bill and making payment.
An amount of Nu. 240,124 was paid to the contractor for burying pipes but pipes were exposed above the earth making it susceptible to damage especially during the forest fire between.
A total of 1.7 km of V-shaped open surface drain has been constructed alongside the Sherimohoong Gewog center road, but during the physical verification of sites there was major scoring of the V shaped drain in majority of the stretches.
The Dzongkhag Administration had an approved budget of Nu. 3 million under the (IFAD-LOAN) for the construction of improved cow sheds. During the physical verification in various Gewogs, it was noted that 15 sheds was not constructed or completed.
RAA found some instances where the cement supplied to the beneficiaries were not used within its usable lifespan and eventually turned hard and was found not usable anymore.
RAA during the review of payment vouchers for the financial year 2020-2021, noted that funds of Nu 1.6 mn were diverted from one activity to another without following the due financial procedure while some funds were not used for the intended purpose.
The Dzongkhag spent Nu. 1.3 million for the supply of materials for biogas construction for 50 households under Thangrong and Narang Gewog in FY 2020-2021. It found 7 cases where the construction is yet to start or is incomplete. Also, 15 sets of biogas material were left unutilized in the store.
Lhuentse and sprinklers
There was an approved budget of Nu.1.5 million for the construction of onion curing shed prioritized in various locations under Gangzur and Minjey Gewog. Out of seven sheds only one was completed under Gangzur Gewog despite issuance of all materials on time.
There was an approved budget of Nu.1.350 million for the establishment of sprinkler irrigation system prioritized in various Gewog under Lhuentse Dzongkhag for 40 households for growing vegetables, but the physical verification revealed that none of the gewogs have installed the sprinkler irrigation system despite distribution of materials.
Also majority of the households in seven gewogs didn’t receive a complete set of equipment.
Nu 1 mn was spent for the construction of improved cow sheds but construction of sheds was not completed in some of the Gewogs.
The Dzongkhag spent Nu 600,000 for improved cattle shades but 9 of them were incomplete at the time of audit.
Pemagatshel and excess payment
Scrutiny of disbursement vouchers with that of annual quotations noted excess payment of Nu. 57,740 in the procurement of various items from the suppliers due to failure to verify the rates obtained for National Seed Centre and annual quotation by the officials responsible in verifying the bills and making payments.
Nu 2.51 mn was spent in FY 2020-21 for rainwater harvesting in 40 households. However, there were 8 cases of incomplete works and incomplete issuance of equipment to all 40.
There was also excess payment of Nu. 130,607 for MS rods due to different rates quoted by the same supplier.
The Dzongkhag did not follow the MoAF’s cost sharing ration of 60:40 for buying chaff cutters and instead followed the 80:20 ratio resulting in beneficiaries paying Nu 1.07 mn less. The same lapse had occurred in the previous audit year of FY 2019-20 resulting in excess payment of Nu. 916,500.
A Nu 2.5 mn dry land irrigation at Durungri village under Dungmaed gewog was completed in the financial year 2019-2020 to benefit 37 households. However, during the verification of water distribution to households, the FCR tank was empty and in fact there was no water supply for past one year as shared verbally by some beneficiaries. Annually Nu 300 from every beneficiary household is collected and paid to the appointed water in-charge.
Nu 2.1 mn was spent for improved cattle sheds but 19 of them were not complete.
120 CGI sheets worth Nu 74,080 were found missing.
Samdrupjongkhar and overpayment
The RAA found Nu. 487,098 had been overpaid to suppliers’ due to procurement from firms of one’s preference and convenience with item rates relatively higher than the winning bid prices.
M/s Bhutan Green Products, a privately owned business enterprise of Samdrup Jongkhar was to provide value addition to natural grown local gingers by processing essential oil and powder for both export and domestic supply.
Nu 1.16 mn was sanctioned for the construction of ginger sheds but the RAA says the construction of the sheds were done without technical personnel and there were lapses.
RAA says its last audit showing similar audit issues and recommendation to withhold payment of a balance amount of Nu. 550,625.00 was to no avail. RAA said the concerned sector should furnish the records supplementing all above lapses failing which the sum total of Nu. 1.16 mn shall stand recoverable.
The order for Raw Ginger Processing Machine was placed on 31 December 2019 to M/s Kartikays International, Noida, India. As per supply agreement, 60% of total cost amounting to Nu. 1.19 mn was paid. The balance 40% value amounting to Nu 795,200 was retained in the form of Bank draft for later payment to supplier.
The delivery was to be completed by 24th June 2020. Following the assurance of supplier, years have passed but the material in order was not delivered to the beneficiaries till date. The RAA has asked for a 10% penalty to be imposed when the goods are delivered.
Bhutan Green Product was supposed to share 50% of the cost under as per RNR guidelines but the entire supply order of the above machines worth Nu 1.988 mn was borne by the government with a loss of Nu 994,000.
RAA said that despite recommendations and observations in previous audit reports there are repeat observations like materials not used for the purpose, dairy shed materials were issued to households without any jersey cows or to those not meeting the required number of cows and supply of inferior quality CGI sheet.
RAA said judging from the repeated nature of observations, it clearly indicates lack of determination and commitment on the part of the management of both the project and the dzongkhags in improving the system.