Two separate investigations by the Criminal Investigation Department (CID) and the Auditor General’s Department over the controversial organic fertiliser deals with China and India are currently underway, The Sunday Morning learns.

Meanwhile, the Ministry of Foreign Affairs is discussing the matter with its counterparts to rectify the matter without damaging the longstanding ties between the two countries, it is learnt.  

Nevertheless, both of the investigations into the controversy, which have been conducted for over a year, are yet to reach a conclusion.

Earlier, the State reported that Sri Lanka had incurred a loss of around $ 6.9 million from the fertiliser deal with the controversial Chinese organic fertiliser company Qingdao Seawin Biotech Group Co. Ltd. 

The Indian nano liquid nitrogen fertiliser scandal reportedly caused losses estimated at Rs. 7 billion, Opposition Leader Sajith Premadasa said in Parliament last week. 

Both issues caused a spirited exchange in Parliament, with Premadasa blaming the Government for incurring a loss of over Rs. 7 billion by paying a high price for the nano liquid nitrogen fertiliser that was obtained from Gujarat, India through the Indian Farmer Fertiliser Corporation. 

He also raised questions about the loss of $ 6.9 million for the shipment of organic fertiliser sought from China, which never arrived. 

When contacted by The Sunday Morning, Agriculture Minister Mahinda Amaraweera said negotiations were currently being carried out by the Foreign Affairs Ministry, and the investigations over the incident were being separately carried out by two institutions.

The matter had been handed over to the Foreign Ministry as further communications had to be conducted bilaterally between the two countries, he added. 

It is also learnt that Sri Lankan authorities had already communicated to the controversial Chinese company of their requirement of either receiving chemical fertiliser or money as compensation, but the respective Chinese company is yet to communicate with the relevant authorities on what it is willing to agree to.

Instead, the company had stated that it could supply another shipment of organic fertiliser of the same type as the company was not handling chemical fertiliser. 

The advice from the Attorney General’s Department was to act as per the instructions of the Cabinet and therefore the ministry had already forwarded a Cabinet paper to get its instructions, it is learnt. 

It is also learnt that earlier the company had agreed to provide chemical fertiliser for part of the transaction.

In November 2021, the Sri Lankan Government rejected a consignment of organic fertiliser from China’s Qingdao Seawin Biotech Group Co. Ltd. citing quality issues – a claim the firm disputed, demanding third-party tests. Thereafter, the Government paid $ 6.9 million to the Chinese fertiliser company.

Last year, the Attorney General provided advice on recovering the losses from the organic chemical fertiliser procurement.

The shipment was rejected by Sri Lanka while en route to the island following claims of quality issues. 

Sri Lanka’s National Plant Quarantine Service (NPQS) had claimed that samples of the fertiliser contained harmful bacteria, prompting the Chinese company to demand $ 8 million from the agency in early November.

The Chinese company subsequently sought arbitration in Singapore and Sri Lanka later decided to settle the matter by paying $ 6.9 million to the fertiliser company, on terms purportedly agreeable to both parties.

Sri Lanka’s State-run People’s Bank made the payment on a Letter of Credit it had issued after a court order barring the lender was removed.

In the meantime, the fertiliser issue was discussed at the Committee on Public Enterprises (COPE) and at the meeting, Education Minister Dr. Susil Premajayantha has proposed to the committee that a special investigation into the importation of organic fertiliser from China and nano liquid nitrogen from India should be conducted.

The proposal was made in response to queries raised by the Opposition regarding the lack of a probe into the matter. 

Opposition Leader Premadasa emphasised that the blame for this situation lay solely with Sri Lankan individuals involved in the importation, rather than China and India.

Concerns have also been raised about the absence of audit reports on these questionable transactions.

Meanwhile, the Government has proposed assigning COPE the task of conducting a special investigation into the issue.