As Brazil’s coronavirus cases surge by the tens of thousands each day, the country is contending with a parallel outbreak – a flurry of corruption investigations into the alleged misuse of public money rapidly shelled out for Covid-19 emergency procurement.
The investigations have reached all levels of government, including three state governors who have come under federal scrutiny in the past two months. Nearly 1,500 federal criminal judicial proceedings have also been opened into coronavirus-related cases, including investigations into misuse of federal funds, fraud, overpricing, and money laundering, according to a summary the federal prosecution office shared with CNN. The data provided to CNN does not specify what portion of the probes relate to corruption.
Meanwhile, cases of coronavirus are soaring across Brazil, and the healthcare system in several states has been stretched to its limit. Brazil is second only to the United States in the number of infections and deaths, and on Tuesday, bombastic president Jair Bolsonaro was also diagnosed with Covid-19.
On the state level, investigations into Covid-19 emergency purchases have been reported in at least 11 of Brazil’s 26 states and the federal district, according to the Federal Police. At least seven high-ranking state health officials have been fired or resigned during the pandemic.
Two health officials in Rio de Janeiro were arrested in a probe known as “Operation Merchants of Chaos,” into an alleged scheme to pilfer millions of dollars from a contract for ventilators that federal authorities say were never delivered.
In São Paulo, Brazil’s most populous state and the epicenter of the country’s coronavirus outbreak, a large purchase of imported ventilators is under investigation.
State prosecutors and an accountability court are reviewing a $100 million contract signed by the state government at the beginning of the pandemic for some 3,000 ventilators from China. Sao Paulo officials paid as much as $40,000 each for some ventilators, while the cheapest were bought for $20,000, according to the Brazilian Office of the Comptroller General, which notes that the average price per ventilator paid across Brazil is around $16,000.
The state government has said the purchases complied with legal requirements. But in June, the state canceled the contract after receiving only a small number of the ventilators. Attorneys for the São Paulo state government have filed a lawsuit against the middleman company seeking a refund and fines for the unfulfilled delivery. It was a highly publicized debacle for São Paulo’s government, which is listed in the middle of a ranking published by Transparency International Brazil of states’ transparency in Covid-19 emergency contracting.
Globally, the rush to obtain urgent medical supplies has led to hastily negotiated contracts and sometimes exorbitant prices. Spiking demand for medical equipment has also forced legitimate costs up as suppliers ramp up production and compete for raw materials.
Expeditious emergency contracting is useful in order to meet the need of the pandemic, acknowledges Guilherme France, research coordinator for Transparency International Brazil – however, doing so “also implies a loosening of controls that exist precisely in order to prevent corruption.”
He says that the frenzied circumstances of the pandemic have opened the door to abuses. “In this moment of inflated prices and limited offer, opportunistic businesses arise to take advantage of these vulnerabilities and to increase profits in an unscrupulous way,” he said.
Federal investigations across the country
On the federal level, probes into suspected misuse of federal funds have touched officials across the country, from a mayor and city officials in the remote northern Amapá to the governors of the Amazonian states of Pará and Amazonas and down to the southeastern beaches of Rio de Janeiro.
Federal agents searched the home of Amazonas Gov. Wilson Lima in late June as part of an investigation into an alleged no-bid contract for the purchase of ventilators by the state government from a wine importer in the capital Manaus. Lima has denied any wrongdoing. “I am absolutely calm and am certain that these facts will soon be clarified,” he said.
In the state of Pará, federal agents searched the home of Gov. Helder Barbalho, who is suspected of involvement in a ventilator contract that delivered equipment with glaring technical defects, such as the lack of an internal battery which means it could shut off if power went out, flaws in the breathing cycle that could cause lung damage and problems with the machine’s ability to be cleaned and sterilized.
Federal prosecutors allege that Barbalho was aware of the flaws in the equipment and had a close relationship with a businessman who brokered the sale. But the governor has denied any wrongdoing. “I clarify that I am not a friend of the businessman [involved in the sale] and, obviously, I did not know that the ventilators would not work,” Barbalho wrote on Twitter in early June.
In Rio de Janeiro, Gov. Wilson Witzel had his cell phones and computers seized by federal agents who entered his official residence on May 26 as part of a probe investigators dubbed “Operation Placebo” into alleged embezzlement of public health funds. Rio state lawmakers, responding to the federal investigation, have now launched an impeachment investigation of Witzel over Covid-19 procurement, including allegations of graft in a purchase of ventilators and a contract to build field hospitals. Witzel has denied any wrongdoing.
The investigations into the three governors are ongoing and no charges have been made against them.
However, the probes have already deprived Witzel’s government of the high-ranking health officials who would have otherwise led Rio de Janeiro through its pandemic response. Fernando Ferry, Rio de Janeiro’s health secretary for a matter of weeks, resigned his post in late June after three other top state health officials had lost or quit their jobs amid wrongdoing and corruption accusations during the pandemic. His resignation came a week after federal agents indicted 17 people in Rio de Janeiro, including a former state lawmaker, for alleged involvement in a scheme to misappropriate funds meant to be spent on medical equipment.
Ferry later testified to lawmakers on an oversight committee probing public health expenditures during the pandemic that he feared “dirtying” his personal record. He told Brazil’s TV Record: “In order to make the machine work, I would have to sign off on things without being covered by a contract. And this legal imbroglio would spill over to my CPF,” a reference to a Brazilian identification number that tracks one’s creditworthiness.
‘You could have saved more lives and helped more people if resources were not diverted’
President Bolsonaro rose to power promising to clean up corruption and to change “all that is there,” as he frequently said on the campaign trail. But France, from Transparency International, says that Bolsonaro’s performance before and during the pandemic is hardly fulfilling the anti-corruption rhetoric that drew voters.
“Now, after a year and a half of governing, the Bolsonaro administration is responsible for a series of setbacks in the fight against corruption,” France said. Those setbacks include instances of blatant political interference in institutions responsible for fighting corruption, such as the Federal Police, the Federal Prosecution Office, and the Council for Financial Activities Control.
In April, Bolsonaro replaced Justice Minister Sergio Moro with an ally, André Mendonça, who in turn named a new head of the Federal Police. This comes as two of Bolsonaros sons are under investigation for alleged wrongdoing unrelated to the pandemic.
Christian Lynch, political scientist and professor at Rio de Janeiro State University, says local corruption scandals and investigations could prove beneficial to Bolsonaro politically, as he outsources the responsibility of handling the pandemic.
“The scandals that appeared in Rio de Janeiro and Pará, states whose governors were the opposition, were very useful because they associated the independence of their opponents from the federal government with corruption,” he said.
The country’s flurry of corruption investigations come amid crushing poverty and unemployment in the country, as the pandemic caps off years of economic decline. According to a new projection from the International Monetary Fund, Brazilian GDP is expected to shrink 9.1% this year.
For Micaella Melo de Paula, a respiratory physiotherapist in a Rio de Janeiro public hospital who intubates Covid-19 patients, the allegations of misused funds and backroom deals are an indignity. Employees at the hospital where she works went unpaid for more than a month during the pandemic, the Rio de Janeiro state health secretariat has confirmed to CNN. A probe is now underway in order to settle payments. Melo de Paula herself says she is owed more than a thousand dollars in unpaid wages from work during the pandemic.
“But it gives you a feeling of impotence and anger to know that you could have saved more lives and helped more people if resources were not diverted, if supplies were not overpriced,” she said.
“The pandemic comes to expose all these dirty politics and its schemes – and we are the ones who are the frontline suffering from their actions.”