When officials in his home state began giving food boxes to families hit by Colombia’s coronavirus lockdown, lawmaker Ricardo Quintero was struck by the exorbitant prices being paid to the vendors. So he armed himself with pictures of the coffee, pasta and other goods and went down to his local grocery store.
There, he bought the same products for roughly half the supposedly bulk-rate prices being paid by the government of Cesar state. The comparison shopping prompted one of what is now 14 coronavirus-related criminal probes in Colombia. The South American country is one of many around the world now seeing a surge in corruption allegations.
“You can always find corruption,” Quintero said. “But what hurts the most is that we see it now, at a time like this.”
Countries large and small are shelling out trillions of dollars to combat both the coronavirus outbreak and its brutal economic fallout in what analysts are calling the largest financial response ever to a single global crisis. As governments race to source everything from food aid to face masks, they are prioritizing speed over transparency, dropping competitive bidding and other safeguards to keep pace with the pandemic.
Most have no choice. Given the speed of the still unfolding crisis, it’s either buy quickly or put millions at risk. But concern is rising about the percentage of the taxpayer dollars – and euros and yen and pesos and more – lining the pockets of corrupt bureaucrats, crony contractors and crime syndicates.
“There are cases that are happening now, in real time,” said Max Heywood, the head of advocacy for the anti-corruption watchdog Transparency International. “Looking at the gaps in the systems and the amount of money that is correctly being thrown at the problem, it’s fair to say we are very concerned.”
Food aid for struggling workers locked out of their jobs is proving to be a particularly juicy target. When the government of Bangladesh launched an effort this month to distribute rice to its most vulnerable citizens, nearly 600,000 pounds disappeared.
About 50 people, including bureaucrats and local officials, were accused of trying to resell the rice at higher prices. The Bangladeshi government has overhauled the relief plan with the aim of bypassing bureaucrats.
“Such a national crisis was expected to bring out the best of human virtues – empathy and solidarity – which we see around in many ways,” said Iftekharuzzaman, the executive director of Transparency International Bangladesh, who, like many in his country, goes by only one name. “But most regrettably and shamefully, the worst of human vices have also come out.”
Fernando Carrillo, Colombia’s inspector general, said coronavirus-related investigations, most related to blatant overpricing, have been launched in 14 states. In Cesar state, Quintero forced the issue of lucrative food contracts struck under Gov. Luis Alberto Monsalvo Gnecco.
The local station Radio Guatapuri ran stories on Quintero’s complaint, and state officials released an itemized list detailing the costs of the goods in the food boxes. It turned out, for example, the state was paying $2.81 for 250 grams of coffee that retailed for $1.20 at Quintero’s grocery.
Monsalvo Gnecco declined to comment.
“I don’t have to report any of this to you,” he wrote in a WhatsApp message. “I have spent years doing this, I’m not improvising. This is my second time in office, because I was re-elected.”
Premium prices for items such as masks and ventilators can be explained in part by market economics: Scarcity amid high demand causes prices to rise. It is the extent of those hikes in state contracts, coupled with the backgrounds of suppliers, that is being called into question across the globe.
In Romania, where normal bidding processes have been suspended to accelerate procurement, critics are raising red flags about backdoor deals. Romwine and Coffee SRL, a small company located 32 miles south of Bucharest, sells tobacco and liquor. But it scored two state contracts worth $12.6 million to provide specialized medical masks at more than twice the market price.
That deal came together after Sanimed International, a medical supplier precluded from direct contracts with the state because it owes back taxes, struck a partnership deal with the tobacco and liquor seller, Sanimed’s owner, Catalin Hideg, told reporters. He insisted the deal was not unusual.
“Everywhere in the world, all big companies use other companies for bids. They use consortiums, associations, partnerships,” Hideg told Romania’s B1 TV. “There are companies with three employees and three laptops which have won bids worth hundreds of millions of euros for streets, highways, bridges and so on.”
Sorin Ionita, a Romanian expert in public administration reform, called the competition for coronavirus contracts “a gray area.”
“It’s a gray area, whether it’s corruption or not,” Ionita said. “People are laying their hands on what they can.”
The U.S. Federal Emergency Management Agency awarded a $55 million contract for masks to a Delaware-based company with no history of manufacturing or procuring medical equipment, The Washington Post reported last week. Selected without competitive bidding, Panthera Worldwide – whose parent company filed for bankruptcy last fall – is receiving $5.50 per mask, several times more than other government providers.
James Punelli, a company executive, told The Washington Post that his company had done Defense Department medical training “over the years” and was now tapping its military contacts to obtain the masks, which, he said, would be of “high-quality.”
Anti-corruption fail-safes have been built into the $2.2 trillion coronavirus bailout passed by Congress and signed by President Donald Trump. The legislation includes a rule that no business in which the president or any White House official owns a majority stake can receive funds, and it sets ups a committee of inspectors general to oversee the spending. But observers remain concerned about the potential for White House meddling, particularly following Trump’s decision this month to fire the inspector general overseeing the U.S. intelligence community.
“The president can remove any inspector general in the oversight process if they point out anything he doesn’t like,” warned Liz Hempowicz, the public policy director for the Project on Government Oversight.
Asked to comment, White House officials pointed to “at least $100 million” in funding for congressional oversight as evidence of the transparency written into the legislation.
More broadly, Hempowicz and others worry about U.S. coronavirus spending becoming a bonanza of graft: “This is a perfect opportunity for fraudsters.”
History suggests a lack of oversight can mean massive losses to fraud. The U.S. Government Accountability Office reported in 2014 that up to 22 percent of the money spent by FEMA in the wake of Hurricanes Katrina and Rita in 2005 was at risk of being improperly or fraudulently spent.
FEMA adopted more rigorous standards, and the amount fell to 2.7 percent after Hurricane Sandy in 2012.
In some instances, corruption-busting regulations are flagging suspect deals. In Buenos Aires, the city government must make public procurement contracts available in searchable form online, even during the coronavirus crisis.
That has brought at least two questionable deals to light. In one, 15,000 medical masks were sourced for more than $40 each from a company that had only $1,500 worth of working capital. The other involved a lucrative agreement to house coronavirus patients in a hotel where the sister of the mayor of Buenos Aires – Horacio Rodríguez Larreta – sits on the board.
The emergence of the deals in the Argentine press led to the cancellation of the contracts and the resignations of two city officials.
“We need to find a balance between easing controls to fight the pandemic and good administration,” lawmaker Graciela Ocaña said.
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Faiola reported from Miami. Herrero reported from Caracas, Venezuela. The Washington Post’s Azad Majumder in Dhaka, Bangladesh, Joanna Slater in New Delhi and Alison Mutler in Bucharest, Romania, contributed to this report.