The ventilators never came: How graft hampered Brazil's COVID-19
response
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[September 25, 2020]
By Gram Slattery and Ricardo Brito
RIO DE JANEIRO (Reuters) - As COVID-19
patients flooded Rio de Janeiro's public health system from early April
to late May, Dr. Pedro Archer found himself making gut-wrenching
decisions.
People struggling to breathe needed ventilators, he said, but there
weren't enough to go around; those with a slim chance of recovery were
passed over.
"Every shift it was like that," said Archer, a surgeon at a municipal
hospital in Rio de Janeiro, a metropolis of 6.7 million people anchoring
a state of the same name. "Sometimes, I would give them sedatives just
so that they didn't suffer. Eventually, they would pass away."
Some of those deaths, state and federal prosecutors now say, may have
been avoidable. They allege that top officials here sought to pocket up
to 400 million reais ($72.2 million) via corruption schemes that steered
inflated state contracts to allies during the pandemic. The deals, they
said, included three contracts for 1,000 ventilators, most of which
never arrived.
Rio state Health Secretary Edmar Santos was arrested July 10 and charged
with corruption in connection with those contracts. A lawyer for Santos
did not respond to a request for comment. Santos admitted to
participating in various illicit schemes involving rigged public
tenders, according to confidential court documents prepared by federal
investigators laying out the alleged scams, which were reviewed by
Reuters. He is now a cooperating witness in the probe, the documents
said.
Separately, a federal judge suspended Rio state Governor Wilson Witzel
from office on August 28 out of concern he might interfere with the
investigations. Witzel is also facing impeachment proceedings over
alleged graft.
He denied wrongdoing in a statement to Reuters. Vice-Governor Claudio
Castro, who took over for Witzel in August, did not respond to a request
for comment.
Latin America has been hit hard by the pandemic, with over 8.9 million
confirmed coronavirus cases as of September 24, according to a Reuters
tally. Brazil alone has registered over 139,000 COVID-19 deaths, second
only to the United States.
If the city of Rio were a country, its per capita mortality rate from
the coronavirus would rank as the world's worst, according to a Reuters
calculation based on John Hopkins University data. More than 10,000
people have died from COVID-19 in this postcard city of sea and sand,
and more than 18,000 statewide.
The region's response to the pandemic has been hobbled by various
factors, experts say, including poverty and crowded urban living
conditions. Some leaders, including Brazil's right-wing President Jair
Bolsonaro, have played down the pandemic's severity.
But the virus has also been aided by greed.
Similar to Brazil, investigators in Bolivia, Ecuador, Colombia and Peru
have likewise alleged that officials there lined their pockets through
pandemic-related graft schemes.
In court documents detailing the alleged scams in Rio, Brazilian
prosecutors describe a series of inter-related criminal enterprises, in
which emergency contracts for masks, coronavirus tests - even hand gel –
were allegedly rigged.
Reuters reviewed hundreds of pages of prosecutors' allegations, many
confidential and not previously reported; and it interviewed more than a
dozen medical professionals and good-government experts who condemned
the opportunism they say has compounded coronavirus misery in Rio.
"The pandemic allowed governments to spend significant resources very
quickly while internal controls were relaxed due to the emergency," said
Guilherme France, research director for Transparency International in
Brazil. "It ended up creating a perfect storm for corruption."
A representative of Witzel said the suspended governor increased
internal controls in the Rio state government, adding that he had fired
many public servants accused of "irregularities" during his time in
power.
GHOST HOSPITALS
Rio state's pandemic response called for seven field hospitals to treat
COVID-19 patients. Officials at the state health ministry, known as SES,
awarded contracts worth 836 million reais ($151 million) to a nonprofit
health organization named IABAS to build the structures, which were to
open by April 30. Just two have opened so far, one in mid-May, the
other in late June, well after the initial COVID-19 surge.
In late July, as the pandemic eased in Rio, one of those structures
located in the working-class city of São Gonçalo was dismantled amid a
lack of patients. All that remains is a large field, stripped of grass
and littered with debris.
The IABAS contracts are part of an alleged kickback racket spearheaded
by Mario Peixoto, a local entrepreneur arrested in May for reputedly
defrauding the Rio state health system. Federal court documents
submitted by prosecutors describe a complex scheme in which associates
of Peixoto allegedly arranged for bribes to be routed to government
officials to secure a variety of public health contracts, including the
field hospitals.
Lawyers for Peixoto said he is innocent and did not participate in the
field hospital deal. His trial is pending.
Federal prosecutors have not charged IABAS. But in confidential court
documents they filed asking a judge to authorize the arrest of
additional suspects, they said there was no "room for doubt" that IABAS'
winning bid was tainted by graft. Among the various irregularities cited
by prosecutors: IABAS drafted its winning proposal before SES solicited
offers.
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The Maracana campaign hospital is seen next to the Maracana stadium
amid the coronavirus disease (COVID-19) outbreak in Rio de Janeiro,
Brazil September 16, 2020. REUTERS/Pilar Olivares
IABAS told Reuters it won the hospital contracts by offering the
lowest price. It said SES made frequent changes to the agreement,
which slowed construction. IABAS said six of the seven structures
were either completed or nearly finished in early June, when Rio
state canceled its contract and took control of all the project
sites.
In a statement to Reuters, SES disputed IABAS' characterization of
the progress it had made. It said four of the seven field hospitals
were far from complete when the state took over.
SES declined to comment on IABAS' allegation that the health
ministry made frequent changes to the construction agreement. SES
said it had saved more than 500 million reais ($90.3 million) by
suspending payments to IABAS following the corruption allegations
made by prosecutors. The ministry said it is cooperating with the
investigation.
MISSING VENTILATORS
Prosecutors say Rio's state government also rushed out ventilator
contracts to three companies that had little or no relevant
experience.
According to court documents summarizing prosecutors' findings, Rio
on March 21 awarded a little-known firm, Arc Fontoura, a contract
worth 68 million reais ($12.3 million) to provide 400 ventilators
for immediate delivery. State auditors have since determined Rio's
health ministry paid a nearly 200% markup from the market price.
Arc Fontoura had not previously contracted with the state, and tax
documents indicated the firm's annual revenue was no more than 4.8
million reais ($870,000), prosecutors said. The company's registered
address, Reuters found, is a small residence in a working-class part
of the city.
When Rio received a small batch of the ventilators from the company
at the end of March, hospital workers complained to SES that the
machines lacked key components, prosecutors said in the court
documents summarizing their findings. The documents did not make
clear in which hospital the health workers were stationed.
Arc Fontoura did not respond to phone calls or e-mails or receive
Reuters at its listed address.
On April 1, SES awarded contracts worth a combined 116 million reais
($20.9 million) to two other firms - MHS Produtos e Servicos and A2A
Comercio - to supply 300 ventilators each.
Rio prosecutors quickly identified irregularities, according to
court documents, starting with the timing of the companies' bids.
The little-known enterprises submitted their proposals less than an
hour after SES opened the tender, which was not advertised
beforehand, a sign the firms had been tipped off, prosecutors said.
By May 8, Rio's state health department said publicly that of the
1,000 ventilators it had ordered, just 52 had been delivered, all
from Arc Fontoura. SES said in early May it had canceled its
contract with A2A because of "the company's inability to deliver"
the ventilators. A2A did not respond to requests for comment.
MHS owner Glauco Guerra denied wrongdoing. He said in an email that
his company had significant experience providing services to federal
agencies. He said he submitted his bid a day after the tender was
opened, not within a few hours, as prosecutors had alleged. Guerra
said SES entered his bid documents into its computer system in a way
that led prosecutors to misinterpret the timeline.
He said 97 ventilators were delivered to SES on June 6, and that the
agency later canceled the contract for the remainder. State
prosecutors confirmed in public documents seen by Reuters that 97
ventilators ordered by MHS had arrived at a Rio airport in early
June.
SES said in a statement to Reuters that all contracts signed "during
the pandemic are being audited and revised," adding that any
irregularities will be punished. The ministry declined to comment on
MHS' claim that its bid documents were entered into the SES system
in a misleading fashion, citing ongoing investigations into the
matter.
Archer, the surgeon, says his experience battling COVID-19 without
enough ventilators has left him bitter.
During the peak of the pandemic in April and May, he said as many as
30 patients in his care were waiting for the machines. Many were too
unstable to move to hospitals elsewhere and ultimately died, he
said.
How many patients could have been saved, he wondered. How many did
corruption kill?
"It's very difficult to accept things you know are wrong," Archer
said.
(Reporting by Gram Slattery in Rio de Janeiro and Ricardo Brito in
Brasília; Additional reporting by Rodrigo Viga Gaier in Rio de
Janeiro; editing by Stephen Eisenhammer and Marla Dickerson)
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