Bharat Biotech founders and managing directors Krishna Ella and Suchitra Ella. Photo: Bharat Biotech
São Paulo: The swirling scandal around the purchase of Covaxin by Brazil took another serious turn on Wednesday as it became the target of two criminal investigations.
While the organised crime unit of the federal police (PF) began a probe into the $300-million deal between Brazil’s ministry of health and Bharat Biotech of India, it was also announced that the federal district attorney’s office will be conducting a separate criminal investigation into suspected irregularities in the case that has boxed the government of President Jair Bolsonaro into a corner. Besides these two probes, the scandal is also being investigated by the comptroller general’s office and by a parliamentary commission of inquiry (CPI) being conducted by a 11-member committee of federal senators.
Till now, the federal attorney’s office was looking into the sale of 20 million doses of Indian vaccine to Brazil as a case of “administrative improbity”. But after Luciana Loureiro, the federal prosecutor, found some elements of “criminal evidence” in the contract for the purchase of Covaxin, the department opened a case for criminal liability. Though more details of the investigation will emerge later, it has been revealed that the prosecutors are looking at the high price of the vaccine, why it was not delivered and why several clauses of the contract were not fulfilled, with focus on the “irregularities” which are already in the crosshairs of the CPI, especially the revelations made by Ricardo Miranda, the ministry of health official who is the main whistleblower in the case.
As reported by The Wire, the probe into the scandal – being called ‘CovaxinGate’ here – is focused on the invoice for $45 million payment, raised on March 19, by a Singapore-based firm called Madison Biotech. Since Ricardo Miranda went public with his story about being pressured to clear the invoice, the Brazilian president has been in a tough spot. After the brothers’ testimony at the CPI last Friday, Bolsonaro’s position has become even weaker, as his ratings sink and calls for his impeachment grow louder.
But the Brazilian leader is not the only one facing a crisis. The allegations have also singed Bharat Biotech. With its image in tatters, the Indian firm may face more scrutiny here as the ongoing probes look for criminality in the contract.
A startling claim
On Wednesday, a day after the Brazilian government suspended its contract, Bharat Biotech came out with an “Announcement on Procurement Process” to give some “clarification”. Stating that the company has followed “a step by step approach” towards contracts, and regulatory approvals in negotiations with Brazil, the company claimed that it has received the emergency use authorisation (EUA), an important step for releasing a purchase order. “EUA received on 04th June 2021,” says the announcement in a paragraph about the company’s contract with Brazil.
This is a tall claim which raises a lot of questions.
Describing the “common process which is widely accepted”, the first point in the clarification note says the process begins with a letter of intent (or MOU) for procurement. “The company then proceeds to apply for emergency use authorization (EUA) in the respective country,” says the next point. The country in question here is Brazil. A thorough probe of the official reports and statements of the Brazilian Health Regulatory Agency (ANVISA), which is the sole authority to give emergency use authorisation, shows that the Indian company is far from receiving such a certification.
On June 4, the date mentioned in the announcement, ANVISA had “authorised the exceptional import of Covaxin” for distribution and use under “controlled conditions” in Brazil. In its official release on June 4, the agency called it “partial authorisation” under a new law. In the statement, the ANVISA rapporteur had also highlighted that “the aspects of quality, safety and efficacy of the Covaxin vaccine were attested through the emergency use authorisation granted by the health authority of India”.
From ANVISA’s June 4 statement, which sought complete analysis of phase-3 trials in Brazil before Covaxin is used, it is clear that the Indian company has not been given the EUA certificate by Brazil. “The import and use of vaccines may be suspended if the request for emergency use under analysis by ANVISA or the World Health Organization (WHO) is denied,” said the official document, making it clear that such a request would be analysed separately.
On Wednesday, just a few hours after Bharat Biotech released its statement, the company got a jolt as ANVISA suspended the “deadline to complete the evaluation of the request for emergency use of Covaxin”. The regulator took this decision, as per the official statement, after it found that “mandatory and essential documents for the evaluation of the efficacy and safety” of the vaccine were “not complete or missing” from the application. It has also been reported that the Indian company filed its application “for emergency use, on an experimental basis, of the Covaxin vaccine” only on Tuesday (June 29), a few hours before its contract was suspended.
As per the ANVISA guidelines, for a vaccine that is not made in Brazil, the deadline for the evaluation of application is 30 days. With its application missing important documents, which ANVISA has asked for from Bharat Biotech’s local representative, it could be weeks before the application is analysed and approval given. Back on March 31, when ANVISA had rejected the import of Covaxin into Brazil, the agency had made it clear that the Indian serum was being considered for “exceptional importation” and its evaluation was not about the “authorisation for emergency use or health registration of the vaccine, which would include a robust assessment of quality, safety and efficacy…”
Also read: Brazil Suspends Covaxin Contract as Scandal Becomes Too Hot for Bolsonaro
Whether Covaxin will ever be approved for use in Brazil depends on its phase-3 trials, which were cleared on May 13. But the status of these trials is unclear. An email sent to ANVISA by The Wire came back with the response that the “clinical tests is the responsibility of the company and its partner”. An email, seeking details of the trial, sent to Precisa Medicamentos (Bharat Biotech’s Brazilian representative) by The Wire last week has remained unanswered so far.
Already mired in a huge controversy, the company may face more questions about its EUA claim.
Three invoices, same date
Bharat Biotech’s clarification about the invoice for advance payment is also bound to create more confusion. Though the company says, as of June 29, 2021, it “has not received any advance payments nor supplied any vaccines to Brazil”, the note doesn’t answer the question why its partner in Singapore, Madison Biotech, sent an invoice to the Brazilian government. In its note, the Indian company has described a “three-step process for advance payment”, which it says is the norm in the industry.
This point puts the Indian company at odds with Onyx Lorenzoni, the chief of presidential secretariat here, who last week claimed that the invoice seeking advance payment was a forgery by Ricardo Miranda and his brother. Displaying two different invoices at a press conference, the Brazilian official had claimed that the real invoice was the one which had asked for $45 million “as per agreement”. “As you can see this paper, photograph it and enlarge it, the differences are evident,” Lorenzoni exhorted the reporters at his high-voltage meeting.
An investigation by O Globo newspaper last week revealed that there were indeed three different invoices but none were forged as they were all in the computer system of the ministry. The details of the invoice, seen by The Wire, raise more questions for Bharat Biotech. In the first invoice, sent on March 19, Madison Biotech is shown as the exporter of the vaccine to the ministry of health. The terms of payment in the invoice clearly say “100% advance payment” for the consignment to be “dispatched by FCA Hyderabad in the month of April 2021”. The signature in the “authorised signatory” column reads “K Sekar”. There is no name or designation below the signature.
In the second version of the invoice, also dated March 19, Bharat Biotech is mentioned at the manufacturer and Madison Biotech as the exporter. The terms of payment remain as “100% advance payment”. The number of doses in the new version changes from 300,000 boxes to three million doses but all other details, including the bank account and address, remain the same. In the third version, the terms of payment changes to “according the agreement”.
In its exposé, O Globo revealed that the three invoices were sent on three different dates, with the last version being mailed on March 23. But all the three versions carry the same invoice number and date. On March 20, Ricardo Miranda had already met, as per his testimony, the president with the first invoice, complaining about the invoice coming from the company which was not in the contract.
In its clarification, Bharat Biotech has not stated why the invoices were sent by Madison Biotech which has an account in a Singapore bank. The firm has also not clarified why the invoice was changed three times. The Wire showed the three invoices to a senior partner in a law firm which works with some Indian corporations in Sao Paulo. Finding it “highly problematic”, the lawyer said a company which is not in the contract can’t raise an invoice. “The law here, as in other nations, is quite clear. If your name is not in the contract, you can’t get any money directly. Period,” says the lawyer who doesn’t want to be named. “This kind of irregularity doesn’t happen even between small companies. Here, we are talking about a contract of hundreds of millions of dollars involving the federal government and a multinational. It is astonishing.”
A questionable declaration
Since he went public with his complaint, Ricardo Miranda has maintained that he objected to the invoice from Madison Biotech. Till now, the Brazilian government or Bharat Biotech have not explained how and why the Singaporean firm, which shares its address with 10 other companies, came into the picture.
In his address to the media, Onyx Lorenzoni had claimed that Madison Biotech is a “subsidiary” of Bharat Biotech, responsible for all of “Bharat Biotech contracts in international trade”. To back up his claim, he had shown an image of a Letter of Declaration from Bharat Biotech International Limited (BBIL) which pledges and undertakes that: “BBIL and Madison Biotech PTE Limited (MBPL), a company incorporated as per laws of Singapore having its registered office at 31, Cantonment Road, Singapore, entered into a Supply Agreement authorizing MBPL to supply and distribute BBIL’s Manufactured Products to various channel partners and entities in different regions and territories.”
In its note on Wednesday, Bharat Biotech stated that since 1996, the company owner Dr Krishna M. Ella “has also founded or acquired 13 other organisations. This includes Madison Biotech, which he founded in 2020 for the purpose of external R&D and sales and marketing of vaccines”.
The statements by Lorenzoni and the Indian firm don’t establish that Madison is a subsidiary of Bharat Biotech or owned by the company. The business details of Madison Biotech, as already revealed by The Wire, show it to be a private limited company founded by Dr Krishna Ella on February 14, 2020. One of the directors of this company, Krishnamurthy Sekar, who also has an office at the same address, is probably the person who has signed the invoices.
The Sao Paulo lawyer finds the whole arrangement dubious. “One may own many companies but you can’t sign the contract in the name of one company and raise the invoice from another. It is illegal,” says the lawyer. “The letter of declaration, in English, showing their partnership is not even worth the paper it is written on. Anyone who has done business in Brazil knows that all documents have to be translated into Portuguese, notarised and attached with the contract. If not, it is not valid here.”
Calls for impeachment
Questions about the validity of the invoice are being asked daily on television and newspapers, so much so that even ordinary folks are now sharing it on social media with #CovaxinGate. Sitting at the heart of the scandal, the invoice is now the focus of multiple probes; it is also fuelling public anger and uniting political opponents against Bolsonaro. On Wednesday, leaders of various ideological hues and civil society organisations handed over to the Speaker of the Chamber of Deputies a “super petition” for the impeachment of Bolsonaro. The petition joins together more than 120 impeachment requests made since the first year of Bolsonaro’s government.
“I congratulate the opposition forces against Bolsonaro and the social movements that managed to unify the more than 120 impeachment requests to put pressure on the Speaker. I hope that the street demonstrations will convince him to put it to a vote,” said former president Lula de Silva on Wednesday.
On Saturday (July 3), big street protests against Bolsonaro are planned in many cities across the country. Unions and parties are working overtime to make it as big as possible. In the past few days, Bolsonaro has kept rather quiet. As the probe comes to close to him and voices from the street grow louder, he smells trouble.
Shobhan Saxena and Florencia Costa are independent journalists based in Sao Paulo, Brazil.
This work by The Wire Science is licensed under CC BY-ND 4.0
