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Sao Paulo: As the parliamentary commission of inquiry (CPI) into the Covaxin deal enters its final phase, Brazilian senate investigators say they may implicate President Jair Bolsonaro for corruption even as they ramp up efforts to trace a missing agreement between Bharat Biotech International Limited (BBIL) and its former partner, Precisa Medicamentos, to find how much money was to be paid to the Sao Paulo-based firm in the $300-million deal.
On Friday morning, several black SUVs rolled into a building that houses many fancy offices in the Alphaville area of Sao Paulo. Getting down from the vehicles were the agents of Federal Police (PF), who took the elevators to the 28th floor where the main corporate office of Precisa Medicamentos is located. At the same time, another set of cars reached a warehouse in the Itapevi region of Sao Paulo and a PF team entered the facility owned by the pharma company. As television crews stationed themselves at two locations, officers were seen carrying stuffed bags to their vehicles throughout the day. After 12 hours at the premises, the officers flew back to Brasilia with bags full of papers and equipment.
The raid on Precisa Medicamentos, which had represented Bharat Biotech in the contract for 20 million doses of Covaxin, was the first search-and-seize action sought by the commission which has been probing the irregularities in the deal. Ordered by a Supreme Court judge at the request of CPI, the police were told to search and seize any document, smartphone, computer, notebook, hard disc, pen drive, DVD and other electronic objects that may have a copy of an agreement about payments and commission between two firms.
The panel, which is looking into the failures of Bolsonaro’s government in tackling the pandemic that has infected more than 21 million people and killed almost 5,91,000 so far, may submit its report in early October and cause a political earthquake. On Monday, Senator Renan Calheiros, the CPI rapporteur, said Bolsonaro committed corruption in the Covaxin deal by pushing for the vaccine. “I understand that the president committed corruption and his fingerprints are on the phone call he made to the Prime Minister [Narendra Modi] of India, asking him to reserve 20 million doses of the vaccine. And then [he committed] the obvious crime of malfeasance when he promised to take action regarding the allegations [of corruption] but did not,” Senator Calheiros said in an interview with UOL, the biggest news portal in this country.
A letter to India
Since the scandal involving the Indian vaccine, known here as CovaxinGate, broke out in June, the Brazilian leader has been under the scanner for taking unusual interest in Covaxin, the most expensive serum which was not approved by the Brazilian health regulator and for not acting on a complaint about corruption in the deal. The investigators, tracking the money trail in the deal, believe Bharat Biotech’s former partner were to be paid huge commission because the company used its links with politicians close to Bolsonaro to get the contract done in a jiffy. As the elusive agreement, according to CPI investigators, is the main link in proving the irregularities, the panel asked the cops to fish out the document. “The most important information we needed was the agreement between Precisa [Medicamentos] and Bharat Biotech. It was requested since the beginning of the CPI but was not submitted. We were left only with the option of asking the Supreme Court for a search-and -seize operation,” says Senator Randolfe Rodrigues, the vice-president of the inquiry panel.
The contract for the purchase of Covaxin, signed between Brazil’s ministry of health and Precisa Medicamentos on behalf of BBIL, has been available publicly since it was signed on February 25. Several other documents, including a Memorandum of Understanding (MoU) between the two companies, along with a third company called Envixia, has also been given to the panel. But they are silent about the money to be paid to the Brazilian firm. As the probe pointed to corruption in the deal, the health ministry blocked the senate investigators from accessing its system, deepening the mystery about the missing agreement. “At some point, we were told that this agreement does not exist. But we are convinced that it exists and there is a lot of precious information about who would benefit from this agreement and how these irregular benefits would be provided. Our expectation is that this agreement will shed light on many hidden things in this relationship between Precisa [Medicamentos], ministry of health and Bharat Biotech,” says Senator Humberto Costa, a senior member of the commission and former health minister of Brazil.
Since the beginning of the probe there has been a lot of speculation about the commission to be paid to the Brazilian firm by the Indian company. A number of government officials and all three executives of Precisa Medicamentos, who have appeared before the panel, were asked about it but most of them refused to give a straight answer. According to Senator Rodrigues, the commission tried all possible avenues, including the diplomatic route, to get hold of the agreement. “This contract was requested from the ministry of health and Precisa Medicamentos, but we did not get it. We tried to talk with the embassy of India [in Brasilia] but without success. So, there was no other alternative but to request a search-and-seize action at the company headquarters,” the senator said in an interview to Band News.
Though Bharat Biotech has never stated it publicly and it has not been reported in the Indian media, the Brazilian commission has actually asked the Indian firm directly to share all the agreements made with its Brazilian partner. In a letter sent to the Hyderabad-based company, the CPI president, Senator Omar Aziz, had asked the company to “provide a true copy” of all agreements with Precisa Medicamentos, “in particular the documents that establish the participation and payment of commissions for the sales of vaccine to Brazil…” The letter, dated August 5, 2021, was sent to Bharat Biotech’s export division, which is responsible for sending vaccines out of India. But the reply to the Brazilian request came from the company’s legal department some 13 days later. Signed by Abhishek Chakraborty, who is named as a legal associate in the legal department, the Indian firm’s reply, seen by The Wire, listed four different pacts between the two firms signed on four different dates, but none of them deals with the payment issue. To a pointed question from Senator Aziz about what “compensation” the Brazilian company would be entitled to, Chakraborty replied: “No agreement was arrived at between BBIL and Precisa [Medicamentos] on the issue of compensation.”
While the word “compensation” does not necessarily mean “commission” and may have a different meaning in different contexts, it is rather unusual for a company to not put in black-and-white the amount and terms of payment to its partner in a multi-million-dollar contract. According to a diplomatic source, an agreement of this nature was indeed signed between the two firms within days of Covaxin getting the emergency use authorisation in India on January 2. In a statement on January 12, Bharat Biotech had announced the signing of an “agreement with Precisa Medicamentos for supply of Covaxin to Brazil”. The announcement had come after a team from Precisa Medicamentos visited Hyderabad on January 7 and 8, having flown to New Delhi within days of Covaxin getting a nod from the Indian drug regulator. As none of the four accords mentioned in the company’s response to Senator Aziz’s letter – all seen by The Wire — were signed during the January visit of the Brazilians, a separate agreement was presumably signed during that trip, as announced by the Indian company.
A confidential clause
CovaxinGate became a huge scandal in mid-June when it was revealed by a ministry of health whistleblower, Luis Miranda, that a Singapore-based firm, Madison Biotech, had sent an invoice of $45 million in advance payment for the supply of Covaxin doses. As the offshore firm was not part of the vaccines contract, the revelation opened a pandora’s box of irregularities in the whole process. The situation became more complex as the two partners often presented different answers to the same questions. Though the payment clause of the contract with the ministry says that money would be paid to the “contractor”, which is Precisa Medicamentos as per the official document, the Brazilian firm repeatedly claimed that payment would have gone directly to Bharat Biotech.
The entry of Madison Biotech into the scene raised serious suspicions that payment to a third firm was part of a scheme to evade tax by moving the money to Singapore, a known tax haven. At the senate hearing of Emanuela Medrades, the Brazilian executive who had signed the contract on behalf of Bharat Biotech, panel members pushed her to answer how her company would receive its commission. In response to a question from Senator Tasso Jereissati who asked how would Precisa Medicamentos get its remuneration if it did not have a branch abroad, Medrades replied, “It would be a foreign exchange operation, obviously, but it remains confidential information that I do not know either.”
That was the closest a top executive of the Brazilian firm came to admitting that the payment and commission were part of a confidential arrangement between the two firms. Two other executives of the company who also appeared before the panel refused to answer all questions about the payment process and commission by exercising their right to “not self-incriminate” while answering questions, as allowed by the Supreme Court.
Fake bank, big guarantee
Bharat Biotech terminated its MoU with Precisa Medicamentos and Envixia, a shadowy firm in Dubai, on July 23, citing the company’s conduct before the Brazilian authorities and the senate investigation as the reason for the cancellation. It sparked a war of words between the two firms. On August 27, the Brazilian health ministry cancelled its contract with Precisa Medicamentos. It gave a major shock to the reputation of both the companies. While Bharat Biotech kept quiet even after losing a $ 300-million deal in a big market like Brazil, the Sao Paulo firm did not even try to appeal the termination, though it asked the ministry not to impose any fines. The Brazilian company also requested the ministry to refund the guarantee amount of $15 million paid for the contract.
That request opened another dramatic chapter in this swirling scandal as it was revealed that FIB Bank, the institution which stood guarantee in the contract, was not a bank or an insurance firm. This was admitted in as many words at his senate hearing by the company CEO, Roberto Pereira Junior, who claimed that the institution was actually a “micro-company” that provided “personal guarantees” in business deals. The testimony by the bank official, who is suspected of having political connections, had outraged the chief investigator of the panel. “We may be witnessing here the most shocking testimony of this commission. A monumental fraud is being revealed in the $300 million contract here,” Senator Calheiros had said in the middle of the testimony.
The CPI probe, which has kept this country engrossed since late April, is now in its final phase. But its report, expected next month, can open many new investigations besides causing serious political problems for Bolsonaro, as said by Senator Calheiros who has also hinted at extending the probe because of the search for the missing agreement. After his September 7 rallies, which were supposed to be a show of strength against the Senate and Supreme Court, Bolsonaro looks shrunk as he is getting a massive pushback from the judges and senators. The decision by a Supreme Court judge to send federal police in search of the agreement at the heart of CovaxinGate is a major shot in the arm for the senate investigation.
Shobhan Saxena and Florencia Costa are independent journalists based in Sao Paulo, Brazil.