LWMC reveals financial irregularities in contracts with Turkish companies

Chairman says estimated losses over the period of contract are around Rs6 billion

LAHORE: The Lahore Waste Management Company (LWMC) has revealed serious financial irregularities in contracts with Turkish companies, Albayrak and Ozpak, declaring the contracts as flawed and claiming that they were only in favour of the international contractors.

LWMC Chairman Malik Amjad Noon believed that the agreements with the contractors were fundamentally wrong and detrimental to the company.

“If the points of the agreements with the Turkish companies are observed, it will be found that they were wrong, untrue and vague. These were poorly designed contracts that stipulate the procurement of services at inflated rates, favouring the international contractors. Additional terms and conditions were also cleverly designed for the persons of choice. The bidding process itself was rigged by non-transparency of prequalification. Even the issuance of the tender documents to the international contractors in 2011 was without the approval of the Board of Directors. The executed contract delivered over payments to the international contractors by allowing higher import duties and caused losses of Rs236.735 million to the organisation,” he said.

Speaking to the reporters, Noon revealed that according to the forensic report, the accounts were misused and exaggeration was done, ignoring the amount and structure of waste stipulated in the agreement.

He said that Turkish companies claimed the disposal of 4,700 tonnes of garbage on a daily basis while the actual volume was around 3,800 tonnes, which was delivered to the landfill site on a daily basis.

“The international contractors were allowed to submit performance guarantees worth $4 million in two and three-year installments in case of breach of the terms and conditions. Additionally a mobilization advance of Rs3 billion was given to the contractors, whereas such a facility was not disclosed at the time of invitation of prequalification for other potential bidders. The contracts were also sustained on inflated cost with incorrect calculations of $2.5 million. Transfer stations that were to be built as a part of the contract were not made. Even the income tax that was to be contractually and legally paid by the contractors was thrust upon the LWMC to bear, which was against the principles of normal course of business in Pakistan. These are not just allegations, as evidence from hundreds of videos and images prove that unauthorised waste of construction and demolition material was lifted. Estimated losses over the period of the contract are around Rs6 billion, which is a gargantuan sum of money for a country that cannot afford to waste even one rupee,” he added.

He also revealed that as per the contract with the foreign companies, $16 per tonne was the contractually agreed rate to be paid and multiple evidence were found, where muds were ported into the waste to increase the total tonnage.

“Additional evidence also points towards tampered calibration of the weigh station. To meet a falsified number of the daily tonnage, the weights of the carrier trucks were not deducted from the total gross tonnage. Unprofessional corrupt practices was standard. Albayrak (for construction of the Metro Bus) was required to clear debris from the side areas, whereas it illegally charged the LWMC more than Rs100 million for the work. Similarly, the contractors collected unauthorised debris from the Orange Line Train and charged the LWMC more than Rs400 million. The Lahore Ring Road’s janitorial services contract was issued for Rs110 million and outsourced to Albayrak for Rs150 million per year. These are a few allegations in the long list of grievances. The rectification of the past mistakes and administrative embezzlements and misuse is not an easy task,” Noon further said.

He added that even the machinery was very old and reduced at its book value cost. “A lesser performance guarantee of $1.2 million was submitted much later. Again the contracts were extended up to December 31, 2020, for which performance guarantees were not submitted. These are the elements that need public accountability and the LWMC should recover the illegitimate payments and also take disciplinary actions against all those responsible. The LWMC Board of Directors would look into charging financial claims for non-compliance of the performance of the contractors. The government can even initiate the black listing process against the contractors to safeguard other business entities and prevent their future participation for public procurement,” Noon concluded.

Shahab Omer
Shahab Omer
The writer is a member of the staff and can be reached on [email protected]

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