Fertiliser riddle - 1: Exists on paper, lost in reality | The Daily Star
12:00 AM, January 25, 2017 / LAST MODIFIED: 07:21 AM, January 25, 2017

Fertiliser riddle - 1: Exists on paper, lost in reality

Fertiliser worth over Tk 900cr vanishes on way to farmers in 8 years; syndicates making hefty sumsfrom clandestine 'transit game'; audit being done on imaginary data; no one gets punished

Despite fertile land loss, weather stresses and depleting irrigation water, Bangladesh's agriculture keeps contributing a fifth of the GDP each year. Along with other factors, government's policy support in the form of fertiliser subsidy plays a big part here. But misappropriation of the key agro input by a syndicate involved in shipment and transport, and mismanagement by the authorities, in this case Bangladesh Chemical Industries Corporation, have tainted this otherwise commendable effort. If such large-scale corruption is outrageous, the culture of impunity within the corridors of the BCIC and elsewhere is worrisome. This systematic graft has cost the state about Tk 100 crore each year since 2009. In this four-part report, Hasan Jahid Tusher exposes the corruption in the fertiliser sector. Here is the first part. 

Sometimes, a simple phrase can make you richer by hundreds of crores of taka. Consider the magical term “in transit,” which is making a syndicate of fertiliser traders unimaginably rich. 

This syndicate along with some officials of Bangladesh Chemical Industries Corporation (BCIC) has made off with urea worth hundreds of crores of taka over the last eight years with impunity, The Daily Star has found.  

As of 31 December last year, at least 2.58 lakh tonnes of the key agro input valued over Tk 900 crore never reached the buffer warehouses of the state-run BCIC. It is this Corporation that looks after the production, import and distribution of fertiliser through traders across the country.

This huge volume of fertiliser remained “in transit,” a tricky buzzword word used in the country's typical, flawed urea distribution system. Though traders and transport carriers must deliver the fertiliser within 21 days of unloading in Chittagong and Mongla ports, it is hardly ever delivered and its status is shown in transit for an indefinite period.  

These traders and carriers with complicity of some officials at BCIC's head office and at different district warehouses misappropriate thousands of tonnes and sell those in and outside the country, multiple reliable sources have said.

On top of this, some traders have stolen and smuggled thousands of tonnes of fertilisers from mother vessels, submitted cooked up bills worth crores of taka and supplied substandard fertilisers, documents obtained by this newspaper show. 

Investigations by the BCIC show some of its own officials along with traders are involved in such crimes, but other than transferring one or two officials it took no serious action to stop these gross irregularities.      

'TRANSIT' THE TRICK

The volume of the fertiliser “in transit” has multiplied manifolds year-on-year since the Awami League took office in 2009. 

When Dilip Barua became industries minister that year, only 7,400 tonnes were in transit, which shot up to 1.73 lakh tonnes at the end of his tenure in 2013. It has risen further in the last two years -- to 3.34 lakh tonnes in FY 2014-15 and 4 lakh tonnes in FY 2015-16, a staggering increase of around 54 times since 2009.

“This is nothing but a trick to eat up the fertilisers and sell those in local markets and in some cases in neighbouring countries,” said a BCIC source with direct knowledge of the syndicate and its workings.

Every year, the government spends a hefty sum -- between Tk 6,000 and 9,000 crore -- to make sure that farmers across the country get urea on time and at a subsidised price.

Dividends have been enormous. In recent years, farm outputs have grown so much so that Bangladesh is now not only self-sufficient in rice production; it also exports quality rice.

However, that does not mean that farmers always benefit from government subsidy. Though there has not been any supply shortages because of surplus import and also because these unscrupulous traders sell the misappropriated fertilisers in local markets, farmers in some cases had to buy those at higher prices.

The average import rate is about Tk 35,000 per tonne while farmers buy it at Tk 14,000 a tonne.

The BCIC manufactures urea in six factories around the country and imports part of the demand. Private traders then sell the urea throughout the country.

The six factories and 24 buffer warehouses can store 3.55 lakh tonnes, but carriers have piled up 7.5 lakh tonnes there with hundreds of thousands of bags open to the weather. 

The syndicate exploits this inadequate storage capacity. Traders and carriers write to the BCIC that they kept the fertilisers in “transit” warehouses due to the space shortages in the buffer warehouses. Lakhs of tonnes remain in “transit” for months and even years and never ever get delivered.

An official in Chittagong, requesting anonymity, said, “We never get these fertilisers shown in transit. Just by issuing these letters, the syndicate tries to wash its hands off and continues to gobble up huge amount of fertilisers.”

NO TRACE!

BCIC's closing balance of 2014-15 showed 1.61 lakh tonnes of fertiliser (worth Tk 566 crore) in transit, but there was no information on the exact whereabouts. Another 1.72 lakh tonnes existed only on paper; they were neither in the warehouse nor in transit.  

In October last year, Audit and Accounts Officer Md Abdus Salam found the BCIC in a report to the industries ministries showed 3.82 lakh tonnes in transit as of July 30 last year. But BCIC's internal report showed 2.8 lakh tonnes in transit.

This “discrepancy of 86,657 tonnes of fertiliser in transit" cost the BCIC a loss of Tk 226.6 crore from this, he said in the report, seeking an explanation for this mismatch. But the authorities did not respond.  

However, his calculation does not add up because the difference between the two figures is over 1.02 lakh tonnes.

Also, Salam calculated the loss at the rate of Tk 26,150 a tonne whereas the average import rate was Tk 35,000 ($438) in the last eight years.

Fertilisers also vanish from factories. For instance, Chittagong Urea Fertiliser Limited (CUFL) in its report on June 30, 2015, showed it had a stock of 53,500 tonnes. In another report just 13 days later, it said the stock was 43,331 tonnes, around 10,000 tonnes less, although no fertiliser left its warehouse in the meantime.

THE SYNDICATE

According to BCIC's own investigations since 2009, Bulk Trade International, Nabab and Company, Poton Traders, M Trading, Nur Trading and Gramsico Limited have made it a practice to show thousands of tonnes of urea in transit.

But as the Corporation had no trader- or carrier-wise accounts of fertiliser in transit until recently, it faced difficulties in realising those.  

On April 21 last year, BCIC's marketing department chief raised the issue in a letter to Md Nur Nabi, who used to look after fertiliser in transit when he was in BCIC's marketing department. Nabi is now posted as the additional head of marketing at the CUFL.          

Over the years, the BCIC also wrote to the traders, asking them to provide the detailed accounts of the fertilisers in transit with little success. 

STEALING, SMUGGLING, FAKE BILLS

Some of the biggest allegations are against Bulk Trade International, a Chittagong-based importer and carrier.

In a July 2016 letter to the BCIC, Bulk itself acknowledged that it did not deliver 2.14 lakh tonnes of urea to the buffer warehouses between November 2014 and January 2016. It claimed the product, worth about Tk 750 crore, was in transit but said nothing about the location. 

Earlier in January last year, Bulk submitted two transport bills. The BCIC later found them to be forged. It then stopped payment on the bill and recommended legal action against the trader. But nothing was done. 

Another trader, Chittagong-based M/s Nabab and Company, “took/smuggled” 21,500 tonnes of urea from MV KKAN JEBUH and 6,608 tonnes from MV OCEAN MELODY without BCIC's approval. In a letter on July 12 last year, the BCIC asked the company to return this 28,308 tonnes worth around Tk 100 crore or face legal action.

The trader returned the volume, but faced no action.

There are other ways of stealing though. Under the rules, traders are supposed to import fertilisers in 50kg sacks. But sometimes they import in bulk and bag locally. Hundreds of thousands of such locally packed sacks contain only 40, 30 or even 10kgs of fertilisers. This makes huge unearned profit for the traders and shortchanges the farmers in the end.

On October 17 last year, the agriculture ministry wrote to the BCIC chairman about such sacks and requested him to ensure the right weight.

Sources said the syndicate is so powerful that the BCIC could not take any action against it as some top officials in the purchase, marketing and management are involved.

Over the last two years, a joint general secretary and an organising secretary of the ruling Awami League tried to start fertiliser business. Both of them told The Daily Star that they had to back away because of this “powerful syndicate”. 

In an August 8 letter last year, the industries ministry asked the BCIC Chairman Mohammad Iqbal of any actions taken against such officials.

When contacted, the BCIC chairman said, “I have heard about this after joining here. We are working on it.

“On the assumption of involvement in the syndicate, in the meantime, two officers of the relevant factories have been transferred.” 

He admitted that there are various irregularities in the name of transporting fertilisers. “I will bring changes in the distribution system by involving railway and BRTC, and bring down the delivery time to five days from 21 days.”

But he had no satisfactory answers as to how this syndicate can operate year after year with no heads rolling, including in the last two and a half years under his watch. He also dismissed any notion that he gets undue financial benefits from the syndicate.

NO ONE TAKES RESPONSIBILITY

The BCIC operates under the industries ministries.

Dilip Barua, during whose tenure the volume of fertiliser in transit started going up like never before, blamed mismanagement for this. Asked why he did not address this, he said neither the ministry officials nor any journalists had brought it to his notice.

He said the BCIC alone was responsible for this and denied allegation that he received any financial benefits.  

Nabab Khan, owner of Nabab and Company, claimed they delivered all the fertilisers about 15 days ago.  He also said they wrote several letters to the BCIC to receive the fertilisers, but it did not do so.

Echoing his comments, Aminur Rashid Khan Mamun of Bulk International said there was no syndicate in the fertiliser business, which he has been doing for 35 years.

“Some 50 or 200 tonnes of fertilisers maybe missing sometimes,” he claimed, contradicting BCIC reports.

He also squarely blamed the BCIC for importing surplus fertilisers, which the BCIC chairman defended, saying additional fertilisers are imported to make sure there are no supply shortages.  

Kamrul Ashraf Khan Poton, owner of M/S Poton Trader and also chairman of Bangladesh Fertiliser Association (BFA), said it was not “completely true” that the fertilisers in transit have been stolen.

Except for one incident by Nur Trading, other local carriers, including Bulk Trade International, have kept the fertilisers in the open due to space shortage, he added. 

Claiming they have nothing to do with the misappropriation, Poton advised that The Daily Star sits with the traders along with the officials who made such “nonsensical comments”.

The BCIC Chairman said, “I am taking action against them [the syndicate]. Initially, I am going soft so that the supply chain of the fertiliser is not hampered. I will take tough actions against the defaulter gradually.”

Between January 2 and 4 this year, the BCIC sent warning letters to three such defaulters -- Bulk, Poton and M/s Surama Banijjik Sangstha.

According to the letters, Bulk has not yet delivered 1.28 lakh tonnes allotted against it in FY 2015-16; Poton has not delivered 7,626 tonnes allotted against it in FY 2014-15; and M/s Surama has not delivered 5,827 tonnes allotted in the same FY.

The letters asked them to inform the latest whereabouts of the fertilisers.

Transparency International Bangladesh Executive Director Dr Iftekharuzzaman said the Anti-Corruption Commission should take actions against the persons involved in corruption in this sector. At the same time, the industries ministry and the parliamentary standing committee on the ministry should probe the anomalies.   

Terming the corruption a partnership between the BCIC officials and traders, he said as the BCIC officials benefitted financially, the wrongdoers continue to operate with impunity.

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