Hungary bought thousands of useless ventilators during the COVID-19 pandemic. But documents about a deal signed with a Malaysian company would have already been shredded by authorities.
In March 2020, the government of Hungary spent 300 billion forints (900 million dollars) on 16,000 ventilators to fight the COVID-19 pandemic. The worst-case scenario predicted the country would need 8,000 ventilators, but the authorities wanted to ensure they had at least 10,000 machines.
The ventilators proved to be useless. Most of these Chinese-made ventilators didn’t meet Hungarian and European Union standards. Moreover, Hungary, which had 2,000 ventilators before the start of the pandemic, didn’t have enough specialists to use them at the same time. Some were not adapted to the COVID-19 symptoms either.
The largest supplier of these ventilators was a Malaysian company, GR Technologies, that sold nearly 6,300 ventilators to Hungary at a high price, for 176 billion forints (530 million dollars). They won the contract without any public tender as it was part of an emergency procurement allowed by the country’s state of emergency to fight the COVID-19 pandemic.
But the owner of the company, Datuk Vinod Shekar, is a Malaysian businessman already prosecuted in his home country on suspicion of money laundering, according to Transparency International.
Suspecting irregular use of public funds, the anti-corruption non-profit therefore requested access to data about the purchase by the Ministry of Foreign Affairs and Trade. Authorities denied it, and Transparency International sued for more information about the public procurement process.
In October 2022, Transparency International won an appeal forcing the Ministry of Foreign Affairs and Trade to disclose certificates of the transparency examination of the Malaysian company, as per Hungarian law passed by the governing party stating that public procurement contracts are only awarded after a check on the supplier’s transparent ownership background.
Documents about the deal would already be shredded
The ministry also needed to provide information on how the company was selected, who signed off the contract and details of the payments. According to Transparency International, the ministry paid organizations based in Hong Kong and Singapore that were not contractually involved in the purchase.
But the ministry argued that amendments to the Public Finance Act during the state of emergency shortened the procurement process by making all companies involved in emergency medical procurement transparent. The Kúria, Hungary’s Supreme Court, ruled in favor of the ministry’s explanations.
Authorities also said the negotiations were all managed orally, and there was no text, email or even note about the deal approval.
Consequently, the ministry has now sent a note to Transparency International that it could not share documents with them because any written record surrounding the deal was already destroyed on November 2021, only 20 months after it was signed off, Népszava reported.
According to the left-leaning Hungarian media, 2.8 billion forints (9 million dollars) were also transferred directly to Mr. Vinod Shekar’s personal bank account.
Miklós Ligeti, Legal Director of Transparency International Hungary, told Népszava he considers “suspicious” that the ministry would have shredded all documents related to the purchase, and “inconceivable” it successfully argued in Court there was not a single word written mentioning the use of 176 billion forints of public money. The anti-corruption non-profit emphasizes an individual needs to keep a bill for five years in Hungary and that shredding official documents is done following strict procedures.
Transparency International suspects that the government tries to trick the Court’s decision to avoid sharing data or that no transparency investigation was conducted in the first place.
The country ranks last in Europe in Transparency International’s Corruption Perceptions Index.
During the state of emergency, several companies involved in public healthcare procurement to fight the pandemic have been reported to be closely connected to government officials.
Hungarian business news website Menedzsment Fórum reported in December that Fourcardinal Ltd, a company close to Viktor Orbán’s foreign policy adviser Zsuzsanna Rahói – her brother was the company’s managing director – shut down only a few months after being profitable selling ventilators for 17 billion forints (51 million dollars) during the pandemic and after having distributed generous dividends to company owners.
In the end, about 1,600 ventilators were needed at the peak of the pandemic in Hungary. The country has been storing the ventilators in a warehouse since then, struggling to sell them to avoid storage costs. Hundreds have been donated to other countries.