By: Staff Writer
April 29, Colombo (LNW): Former Additional Secretary to the State Ministry of Agriculture, Mahesh Gammanpila, has been arrested over his alleged involvement in a major financial fraud linked to the 2021 import of organic fertilizer from China’s Qingdao Seawin Biotech.
Gammanpila was taken into custody by officials from the Commission to Investigate Allegations of Bribery or Corruption. He stands accused of causing a massive USD 6.9 million loss to the state by authorizing the reopening of suspended Letters of Credit (LCs) to purchase a shipment of contaminated organic fertilizer. This move triggered the release of 75% of the payment for the first fertilizer consignment, despite serious quality concerns.
Following his arrest, Gammanpila was produced before the Colombo Magistrate’s Court, where the Magistrate ordered him to be remanded until May 5, according to Ada Derana reports.
The controversy dates back to 2021, when Sri Lanka abruptly shifted toward organic agriculture under the directive of then-President Gotabaya Rajapaksa. As part of this strategy, the government banned chemical fertilizer imports and contracted Qingdao Seawin Biotech to supply 99,000 metric tonnes of organic fertilizer valued at around USD 63 million.
However, trouble began when Sri Lanka’s National Plant Quarantine Service (NPQS) tested the imported fertilizer and found it contaminated with harmful bacteria, notably ‘Erwinia,’ a pathogen that poses a significant threat to crops. In response, the government suspended the import and refused entry to the fertilizer shipment, citing biosecurity concerns.
Qingdao Seawin Biotech strongly contested the NPQS findings, claiming the tests were rushed and unscientific. The Chinese firm insisted its products met international safety standards through high-temperature sterilization and certifications. Nevertheless, Sri Lankan authorities refused to reconsider the decision or allow a second round of testing.
Tensions escalated when the Chinese Embassy blacklisted Sri Lanka’s People’s Bank after it failed to honor a related letter of credit. Qingdao Seawin Biotech demanded USD 8 million in damages for the shipment’s rejection. To defuse the diplomatic and financial crisis, Sri Lanka eventually agreed to a settlement, paying USD 6.9 million to Qingdao Seawin Biotech in December 2021.
This fertilizer debacle exposed the significant risks tied to Sri Lanka’s rushed transition to organic farming without sufficient groundwork. The resulting fertilizer shortages contributed to lower crop yields, deepening the country’s agricultural and economic woes. Furthermore, the incident underlined the need for thorough scientific testing and transparent communication in international trade dealings to avoid costly disputes and diplomatic fallout.
Gammanpila’s arrest marks a significant development as Sri Lanka continues to grapple with the fallout from the controversial fertilizer saga.
