INVESTIGATION: “Confidential” Expenses in the COVID-19 Crisis Emergency Response

INVESTIGATION: “Confidential” Expenses in the COVID-19 Crisis Emergency Response
07 November 2021 | 12:25

The COVID-19 pandemic has had a profound impact on Moldova’s economy and has shown the true face of the healthcare system. To overcome the situation, the Government negotiated with the Council of Europe Development Bank a loan of 70 million euros, of which 30 million euros are loans to micro, small and medium enterprises affected by the pandemic and 40 million euros – non-refundable money for medical purchases.

ZdG found that part of the money intended for economic agents affected by the pandemic went to those who were not affected. At the same time, there are arrears on the purchase of oxygen generators, as well as on the purchase of communication services and vaccination against the COVID-19 promotion campaign, which is essential in a context when the vaccination rate among the population is one of the lowest in Europe.

ZdG failed to obtain information on the costs and the beneficiaries of the project, so the data remained under the “screen” of confidentiality.

On July 29, 2020, amid the pandemic crisis that hit Moldova and the whole world, the Chișinău authorities managed to negotiate and sign a Loan Agreement with the Council of Europe Development Bank (CEB). The project “Emergency Response to COVID-19 and Support for Micro, Small and Medium Enterprises” has two components, one is Health and the other is Support for Micro, Small and Medium Enterprises. The total amount of the external loan is 70 million euros. According to the agreement, the financing share of CEB represents 90%, and the Government of Moldova should cover the remaining 10%.

How much money and how was it spent on the “Support for MSMEs” component?

The component Support for MSMEs is provided with 30 million euros, i.e. the equivalent of about 610 million lei from the project account. Re-crediting takes place through the Office for the Management of External Assistance Programs (OMEAP), as well as through the eligible participating financial institutions, which assume all credit risks. Specifically, the Ministry of Finance signed contracts with nine commercial banks in the country, to mediate between state-owned enterprises and economic agents interested in contracting loans from the project.

According to OMEAP, the first tranche of 10 million euro loan for MSMEs was disbursed on November 23, 2020. Thus, from October 2020 until the end of June 2021, 144 sub-projects were funded.

Trade agents received 39% of the total amount of loans granted. According to information provided by OMEAP, 25% of the total amount was offered to agricultural companies, and 22% went to companies in the manufacturing industry. Most beneficiaries, 87%, chose loans amounting to over 1 million lei.

The largest loans were contracted for the purchase of the real estate. Thus, a loan worth 9 million lei was granted to a company from Chișinău, whose field of activity is trade. Two other loans, worth about 7 million lei each, were also granted to two economic agents from Chișinău, dealing with the trade and food industry.

Information regarding loan beneficiaries is confidential

ZdG requested OMEAP the list of loan beneficiaries from the project. Although the loan agreement is public and involves expenditures from the state budget, the institution refused to give us the names of the companies that received the money, claiming that “this information can be requested from participating mediating financial institutions (commercial banks, ed. note).”

In addition, OMEAP representatives explained that after the Ministry of Finance signs financial mediation agreements with commercial banks, the institution’s only task is to approve the applicant’s file for a loan, and providing information about it is subject to the Laws on financial institutions and on trade secrets.

At the same time, after we clarified that we need the list of beneficiaries to make sure that the loans were granted correctly, OMEAP representatives assured us that “all beneficiaries are simple“. Moreover, they mentioned that, according to a response letter from CEB, beneficiaries do not have to register losses as a result of the pandemic crisis, although this was initially one of the conditions for granting loans.

ZdG sent requests for information to commercial banks that issued loans to MSMEs but again received a refusal. Representatives of the banks invoked “financial secrecy”.

ZdG sources within the commercial banks confirmed to us that there are companies among loan beneficiaries that were not directly affected by the coronavirus pandemic.

40 million euros for the Health component

The parties agreed to allocate 40 million euros for the Health component of the project. So far, CEB has disbursed only 10 million euros, and, according to the public procurement plan, most of the money has been allocated for the purchase of vaccines against COVID-19.

Authorities directly negotiated the purchase of a batch of 700,000 doses of vaccine, and bids were sent to COVID-19 vaccine companies Pfizer / BioNTech, Moderna, and Johnson & Johnson. Pfizer / BioNTech was the only company to submit a tender. The supply contract was signed in June, and the first batch of vaccines was delivered on July 29.

Vaccines against COVID-19 purchased through negotiations. The cost is confidential.

This batch of serum was purchased for 97,7 million lei. However, the Ministry of Health declined to tell us the total value of the purchase contract or the price of a vaccine dose, citing contractual clauses.

Given that a No Disclosure Agreement has been signed between the Ministry of Health and the vaccine manufacturer Pfizer, we inform you that information on the price per dose of vaccine (purchase value) cannot be provided,” reads a signed reply by Ala Nemerenco, Minister of Health.

A company with hundreds of contracts with the state won the supply of syringes

The authorities proposed, according to the procurement plan, to procure syringes and NaCl solvent (0.9%) for the administration of the COVID-19 vaccine. The purchase of syringes was divided into three lots, and Dita EstFarm SRL, which offered the lowest price – about 780,000 lei, won two lots. In recent years, the company managed by Iurie Chirtoacă, who owns 10% of Farmacia Familiei SRL and Dita Estfarm SRL, owner of the other 90% of Farmacia Familiei SRL, has won hundreds of contracts worth tens of millions of lei.

Labromed Laborator SRL, managed by a certain Alexandr Ermicev, got the third lot. The company’s bid (114,800 lei) was the second most expensive, and there were four other operators who offered lower prices, the lowest being 68,264 lei. The representatives of the Ministry of Health told us that “following the evaluation of the bids, it was found that the other offers did not match the required technical specifications.” Also within this project, a tender was organized for the NaCl solvent, and Distrimed SRL won it, bidding about 110,000 lei.

Delayed purchases

The tender for the purchase of express tests, for which 24,5 million lei were allocated, is at the stage of analyzing the offers. Representatives of the Ministry of Health say that they recently sent a request to OMEAP to tender the purchase of oxygen generators, for which about 44,9 million lei are provided. Another 6,4 million lei are provided for the procurement of communication services and promotion of vaccination against COVID-19; so far, however, the specifications have not yet been agreed upon.

Carolina Ungureanu, an expert at the Institute for Development and Social Initiatives Viitorul, claims that when commercial banks are involved, not all data is open, although she believes that when public money is targeted, there is room for more open and transparent procedures.

Disclaimer: This investigation is carried out with the support of the Soros Foundation Moldova, within the project “Increasing the effort of civil society in the Republic of Moldova to monitor funds provided by international financial institutions, in COVID-19 crisis”, implemented by the Institute for Strategic Initiatives. Soros Foundation Moldova and IPIS do not intervene in the editorial policy of the editorial office.



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