Federal prosecutors investigate fraud in the acquisition of Covid-19 tests

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In the early hours of Thursday morning, federal prosecutors launched an investigation into the alleged fraudulent acquisition of rapid Covid-19 tests by state and municipal health administrations in eight states, as news first broke during today’s Daily Briefing.

Operation “False Negative” is investigating overpriced deals for unreliable, poor-quality rapid Covid-19 tests acquired by Brasília’s health authorities. Among the main suspects are Deputy Health Secretary Iohan Struck and Central Lab Director Jorge Chamon Jr.

Poor-quality tests

In total, the operation is carrying out 74 search and seizure warrants across 23 cities, including Rio de Janeiro, São Paulo, and Brasília. Law enforcement believes that at least BRL 30 million (USD 5.65 million) was lost due to overpricing and money laundering, which is almost half of the original BRL 74 million originally allocated to the purchase of rapid Covid-19 tests.

The authorities also suspect that the tests delivered were from a lower-quality brand than the one originally listed on the contract, causing concerns over a higher risk of false-negative results among patients.

Brasília’s Health Secretary claims that all tests have been subject to rigorous verification and control testing by the National Sanitary Surveillance Agency (Anvisa) prior to use. They also say the tests purchased are of the same brand as listed on the original order and that the high prices follow standard market costs during the pandemic.

A worrisome trend

The latest allegations against health administrations start to form an appalling trend of overpriced deals in the acquisition of vital health materials to combat the Covid-19 pandemic in Brazil. These deals are widely suspected to be part of large kickback and money laundering schemes that divert public funds from their intended destinations to officials’ private accounts.

In early June, the Federal Police began an investigation into an alleged kickback scheme involving Rio de Janeiro Governor Wilson Witzel, which could lead to his impeachment.

Last week, the Federal Police launched another probe involving Amazonas Governor Wilson Lima in a similar kickback scheme, linked to the overpriced purchase of 28 ventilators from a wine import company — at a value 133 percent higher than the top-end market price for ventilators in Brazil.

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