The European Public Prosecutor’s Office has decided to open an investigation to see if there was prevarication and embezzlement of European funds in the purchase by the Ministry of Health of 500,000 disposable gowns to a Chinese textile company at the beginning of the pandemic for a price “that would be markedly higher than the market price”.
In the letter, the delegated European prosecutors Laura Pellón and Olga Muñoz explain that this purchase was made from the Weihai Textile Group Import & Export company by the Directorate of the National Institute of Health Management (INGESA) of the Ministry of Health on March 27 of 2020.
The matter has been claimed by this prosecutor’s office after the Anti-Corruption Prosecutor’s Office learned that this purchase was carried out entirely with European funds, FEDER funds. This was one of the emergency contracts of the Executive of Pedro Sánchez that the Popular Parliamentary Group of Madrid took to Anticorruption in April 2022.
Now, the prosecutors recall that the object of the initial complaint and the investigation “are the alleged irregularities committed in the award of the contract for an apparently much higher price than the market price generating the payment of an alleged unjustified surcharge, the amount of which has been identified in detail by the complainant“.
€16.70 per gown
In the prosecutors’ brief, advanced by ABC, it is recalled that the irregularities denounced by the PP would consist, on the one hand, in the failure to verify whether the company was related to the object of the contract –the gowns– and whether had sufficient financial solvency and, on the other hand, in the existence of an extra cost since each unit was paid at a price of 18.50 dollars (16.7 euros), a price much higher than that paid on the same dates for the same product and the same contracting entity to the Spanish companies Mediline International Iberia SL (0.3263 euros) and Suministros Hospitalarios SA (0.2783 euros).
According to the PP of Madrid, this meant paying an extra cost of between 52 and 60 times in relation to the market price. Health allocated the amount of 10.1 million euros to the purchase of these gowns, while if it had given the contract to one of the Spanish companies, the price would have been between 139,150 euros and 163,150 euros (VAT included). For this reason, the prosecutors explain, “the existence of an extra cost of more than 10,000,000 euros (more than 625%) is expressly denounced”.
In addition, the European Public Prosecutor’s Office puts the magnifying glass on the justifying report of the emergency contracting to explain that Another amount of 842,364.08 euros was added to the price of the gowns for “fees, tariffs and another 10%”so the total paid to the Chinese company was more than 11 million euros. “There is no justification, clarification or documentary support in the report on this last amount, therefore not allowing to determine what specific services were included in that payment,” the prosecutors point out.
The location of the company
The prosecutors also indicate that at the time of awarding the contract, any circumstance regarding the Weihai company was omitted, including its address, “reflecting only that it would be located in Spain”. But, they emphasize that, “examining the digital file sent, it is clear that the Administration knew all the identifying data of the company since the pro-forma invoice was sent by it (…) in which its address in Shichang was identified Road 16, Weihai City, Shandong, China.”
They point out that this address was not published until May 4, 2020 in the BOE, when it was corrected, and they add that on that date “not only had the contract been formalized, but the price would have already been paid in full Y, according to the invoice, the contract should have been executed in full (delivery of 100,000 gowns per week from April 2)”.
Another detail of the contract that calls the attention of the prosecutors is that it was signed by the company and Health on March 30, 2020 without INGESA being recorded as the awarding body, despite the fact that at that time it was the one that materialized and concluded the purchase procedure.
Competence of the European Public Prosecutor’s Office
In its brief, the European Public Prosecutor’s Office dedicates an extensive point of the legal grounds to explain why considers that the matter is within its competence and not of Anticorruption. He recalls that in the European ‘PIF Directive’ the crime of embezzlement of EU funds falls within the criminal offenses that affect the financial interests of the Union.
And regarding the possible crime of prevarication, it indicates that if both are “inseparably linked”, as it considers to be the case, the European Public Prosecutor’s Office can exercise its competence as long as the embezzlement is sanctioned with a greater penalty.
“In short, given that the crime of embezzlement carries with it a penalty that is notoriously higher than that corresponding to the crime of prevarication and that both are inextricably linkedthe European Public Prosecutor’s Office is materially competent to hear all the facts and crimes investigated in the Investigative Procedures 13/2022″, he points out.
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