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Procurement in Times of Corona – Part 1
Before I start with the topic, I want to return for a moment to the topic I covered in Gambled Away. Up to now there was always a reason to build a new stadium, no matter whether there protests of citizens or there was no money for the important things a state has to pay for, or how useless it has been. Now during the holidays the arena, planned for a 2nd class club in Pécs, has been cancelled ►HU! Things must be really bad!
Public procurement is a structural problem since Orbán took power. Bad enough we got used to the fact that corruption is part of our lives and our taxes as well as EU funds are not used for the benefit of the people, but to the benefit of the elite ruling our country. But as always Orbán decided to prove that he can do worse and in the pandemic he went into a higher gear.
We all might remember the purchase of 16 863 ventilators at inflated prices, whereof we still don’t know exactly how many arrived in Hungary at which time. 13 404 should be in storage ►HU last June for monthly costs of 15 000 000 Forint (40 700 €), 3 288 distributed. During the 3rd wave were the most Hungarians using ventilators, about 1 530. This means that in fact the more than 2 000 ventilators already in Hungary before the pandemic were enough. Of course it is better to be prepared, better to have all hospitals to be equipped at the maximum of their individual need than transporting material or even patients, but 16 863 is completely out of all proportions, especially since the worst case scenario expected not more than 8 500 totally needed ventilators. Germany planned to double the intensive care units if needed, Hungary bought ventilators for eight times more. Not to forget the extremely bad prices Hungary paid. Direkt36 has shown with data based on Eurostat import statistics ►EN comparing the weight and price of imported goods that Hungary has imported a only a little less weight than the Netherlands, while Germany imported nearly twice that freight. However, Hungary paid more than 15 times more than Germany, although they imported twice of their goods, the Dutch paid about half the German value, which is pretty fair seen the fact that they bought half the weight only. So effectively Hungary paid roughly 30 times more per kilogram than Germany or the Netherlands did. Of course there is a difference between the quality of goods.
Just before the holidays direkt36 published a very interesting article about the quality of the ventilators purchased ►EN. There were ventilators that started smoking when connected to the grid, others were not brought to work at all, some hospitals decided it would be the best to leave them in storage, others just open another box when a ventilator doesn’t function. It was already in May 2020 clear to the responsible authority that the ventilators bought are mostly useless. Some can’t be used by wrong connectors for oxygen and vacuum – and missing adapters. Even the ventilator regarded as the best choice among those bought by the regime has controversies in the manual and needed software problems to be solved. Usable, but not good an expert said.
But not only the quality of the ventilators was terrible bad, the conditions of the purchase were as well. While other public purchases included the usual measures to guarantee usability and a warranty, a penalty if not met and so on, the purchases made by foreign affairs lacked these conditions, payment in advance, including waiving penalties for defect machines. From a jeweller company ventilators were bought with only mentioning the brand Shangrila. One contract clearly stated that the product is missing CE certification for technical safety, which makes import into the EU illegal. Maintenance? There are contracts stating that no maintenance is available in Europe.
It is typical for products coming from China that some are good and many are crap. Obviously medical equipment is no exception on this rule. The UK bought Shangrila 510 ventilators (remember, the jeweller sold the Shangrila brand as well, type 510 arrived in Hungary as well) and in opposite to Hungary the NHS tested the ventilators before use and decided not to use them at all, because the life of the patients could be at risk. The Guardian reported ►EN already in April 2020 about this fact and in Hungary this has been hidden until now.
It took also half a year to reveal that there were Hungarian companies involved in the most shady deals, the company with the worst deal had direct connections to the centre of power ►HU. This company had a 216 times higher turnover in 2020 and the profits exploded from 47 000 000 Forint in 2019 onto a bit over 17 000 000 000 Forint (from 128 000 € to 46 195 000 €,) more than a third of the turnover! 90 % of the profit has been paid to the owners, 13.8 billion alone to a single private person. Now this company is in liquidation ►HU. Other companies saw such an explosion of profit ►HU as well, all with a return on sales beyond imagination. The ministry of foreign affairs and foreign trade did not reveal all information in the accounts of 2020, there is an amount of 517 billion Forint (1.4 billion Euro) left out, the purchase of ventilators is not included in the accounts, although paid on expense of the ministry ►HU. The missing amount is about 72 % higher than the earlier known amount of 300 billion.
How does the government solve the problem with the unused and unusable ventilators? Everywhere minister Szijjártó flies to he tries to give the country a couple of ventilators as present to dispose them. Last August he even travelled to Mongolia with 3 planes, one Airbus was used for transporting his present of 33 ventilators ►HU.
The other remarkable procurement of the Orbán regime is the vaccine procurement. The newest developments in part 2.