Brazil suspends $324 mn Covaxin deal on corruption allegations; Bharat Biotech denies allegations

Brazil has decided to suspend the $324 million COVID-19 vaccine contract with Bharat Biotech for Covaxin as there were allegedly irregularities in the invoices — particularly a $45 million upfront payment to a Singapore-based company. It was done on the recommendation of the federal comptroller, the CGU.

"According to the preliminary analysis of the CGU, there are no irregularities in the contract but, for compliance, the Health Ministry chose to suspend the contract," read a statement from Brazil’s health ministry. It is likely to take two weeks to examine the entire contract, after which the CGU will decide whether to terminate the contract or not. The Brazil Health Minister Marcelo Queiroga said that his team would probe the allegations during the suspension.

The contract between Brazil and Bharat Biotech, mediated and signed by a local company called Precisa Medicamentos, has been in the eye of a political storm for days as it became the main target of the parliamentary commission of inquiry (CPI) investigating the government’s handling of the pandemic.

Last week, after a health ministry official, Ricardo Miranda, testified at the senate that he and his brother, federal deputy Luis Miranda, had informed the president about the serious irregularities in an invoice sent by Madison Biotech, an offshore company from Singapore, the CPI turned its focus towards Bolsonaro and Bharat Biotech, whose owner Dr Krishna Ella is also the founding director of the firm which operates from the ground floor of a two-story house in Singapore.

In the 11-page official report, as per CNN Brasil, the focus of the investigation is the invoice from Madison Biotech. “Five points are listed to justify the suspension: Attempt to make advance payment, without contractual provision; possible payment through a company not a signatory to the contract; non-compliance with contractual deadlines; non-justification of price; and breach of contract by Bharat/Precisa as reported by ministry of health,” said the report, which largely seem to put the blame on Bharat Biotech, its offshore partner and its Brazilian representative.

Bharat Biotech signed a pact with Precisa Medicamentos on January 12, 2021. Just 40 days later, on February 25, Precisa Medicamentos signed a contract with the Brazilian government for the sale of 20 million doses. At the time of signing of the contract, Covaxin had not been approved by Brazil’s National Health Surveillance Agency (ANVISA). The purchase price was agreed at $15 a dose, the highest paid by Brazil for any of the six vaccines contracted so far.

Bharat Biotech has denied any allegation of wrongdoing with respect to vaccine supply, saying in a statement that it adheres to the highest standards of compliance. The company’s press representative didn’t respond when asked why a payment would be routed through a Singapore-based company.

“In the specific case of procurement of COVAXIN by Brazil, since the first meetings with MOH Brazil during Nov 2020, until June 29, 2021, a step by step approach has been followed towards contracts, and regulatory approvals, during this eight-month-long process. EUA was received on June 4, 2021. As of June 29, 2021, Bharat Biotech has not received any advance payments nor supplied any vaccines to MOH Brazil. Bharat Biotech has followed a similar approach towards contracts, regulatory approvals and supplies in several countries worldwide, where COVAXIN is being supplied successfully,” said Bharat Biotech in a press release.

Brazil President Jair Bolsonaro has been mired into controversies due to the deal to buy 20 million doses of Covaxin, including a recommendation to slap criminal charges against him. Brazilian federal prosecutors have opened an investigation into the deal, citing comparatively high prices, quick talks and pending regulatory approvals as red flags.

It is also being probed by a Senate panel investigating the government's handling of the pandemic. One of the leading opposition senators on that panel, Randolfe Rodrigues, filed a formal criminal complaint against Bolsonaro in the country’s Supreme Court. Bolsonaro, on Saturday, said the committee has “seven scoundrels” among its members. He has denied all wrongdoing and knowledge of possible corruption.

Any committee recommendation for indictment would need to be accepted by the prosecutor-general, a Bolsonaro appointee, then approved by Congress before an investigation could begin.