Amid the coronavirus emergency, the government committed more than $40 million in purchases of rapid tests to detect the disease to companies with no experience in handling medical products, but led by people with close ties to the New Progressive Party (PNP), at costs apparently well above its market value and without any guarantee that the United States government would authorize its use in Puerto Rico.
As a result of these actions, the largest order – a purchase of $38 million rapid tests made to a small construction company in Puerto Rico that had never sold medical products – was canceled because the shipment did not arrive on the promised date, nor had endorsement from the federal government. The government had already deposited half the amount and is now waiting for the return.
The president of the company, Robert Rodríguez López indicated that on Saturday he made the transaction to return the money to the government of Puerto Rico.
In addition, the Health Department has had to invest time and resources by re-labeling those that did arrive, and agency officials are under administrative and criminal investigation, according to Health Secretary Lorenzo González.
As a result of this, weeks after Governor Wanda Vázquez Garced promised hundreds of thousands of tests capable of determining in minutes if someone has or has recently suffered from COVID-19, just on Saturday only 7,000 were distributed.
“Those who have tried to profit from the country’s pain and sorrow, at a time like this, which is the greatest crisis of the century, will definitely be held accountable,” said Secretary González, in an interview with news sources.
The largest purchase was made by the Bureau for Emergency Management and Disaster Administration (NMEAD) to the small construction company Apex General Contractors, owned by a regular PNP donor who debuted this monumental transaction in the field. of medical products. Salud made two other purchases from a company that, until a few days before making its first sale, had the objective of a certificate of incorporation to provide IT, technology, construction, infrastructure rehabilitation and maintenance services.
When the coronavirus began to wreak havoc in Puerto Rico, this company, 313 LLC, changed its objectives to add the area of medical services, as recorded in the State Department Registry of Corporations. Less than a week later, he was selling millions of rapid tests to detect the coronavirus to the government of Puerto Rico, according to multiple documents examined by news sources.
Both companies, Apex General Contractors and 313 LLC, have been related to Grupo Lemus, a firm of consultants and lobbyists founded in 2018 by Juan Suárez Lemus, a PNP activist closely linked to high figures of that community, according to the investigation by news outlets.
The two companies made the sales to the government for prices substantially higher than these tests cost in the market and even at a cost up to three times higher than that made by another Puerto Rican company with extensive experience in the field of medical products that also carried out business with Puerto Rican authorities in the past few days, according to documents examined by news sources.
The tests at the heart of this controversy are those of the serological type, also called “rapid tests”, which can detect the antibodies produced by the coronavirus and thus indicate whether the person has or has recently suffered from the disease.
Apex General Contractors purchased the test that it intended to sell to NMEAD for $38 each from Promedical, an Australian company. General José Burgos, NMEAD commissioner, explained to news sources that he authorized the purchase at the request of Adil Rosa, who was in charge of purchases at the Health Department until she was removed these days by Secretary González. Before making the order, he said, he consulted with the Office of Management and Budget (OGP), whose director, Iris Santos Díaz, approved the disbursement.
“I didn’t know at this point how much a ‘rapid kit’ was worth, whether it was $1, $10, or $20. They told me, I have this supplier who says he can sell us a million tests and I need to check if I can order them. I said to him, ‘I can’t give you that order because what I do here is that I take the Health input and convert what Health asks of me into a purchase order. So I’LL check with OGP,” said Burgos.
The order was made with the promise that the shipment would be delivered on March 31. The government disbursed Apex half of the $38 million of the total purchase amount. The shipment never came. On Friday, Secretary González ordered in writing to cancel the order, and that the return of the deposit be required, because the tests did not have the endorsement of the United States Food and Drug Administration (FDA).
Although the Secretary of Health and Commissioner Burgos maintain that, at the time the purchase order was made, there was no approval from the federal agency, the owner of the company insisted that, at that time, he did have the approval of the FDA and that was part of the documentation that was delivered to the government.
The owner of the company, Robert Rodríguez López, told news sources that he had the idea to sell the quick tests when his other businesses – such as the construction company – were unable to continue operating due to the quarantine. He claimed to get in contact with the government through his lawyer, Juan Maldonado, a former undersecretary of Transportation and Public Works who was fired in February last year as director of the Maritime Transport Authority after the scandal that broke out when it became known that he had authorized one of the Service boats to Vieques to transport equipment for the celebration of a wedding.
Rodríguez López did not specify how much the tests cost him. He admitted that he had never worked with medical products, but, he added, he had never dedicated himself to coffee until he set up his roaster. He noted that he could still bring the test kits if the government changes its mind. “The provider still has the test and is willing to supply it if the opportunity arises,” he said.
Maldonado appears on the social network LinkedIn as a partner of Grupo Lemus, but told news sources that he has not worked with that group since last December.
Apex General Contractors had contracts for $4.2 million during the governments of Luis Fortuño and Ricardo Rosselló Nevares, all in the construction area. Rodríguez López, for his part, made contributions between 2015 and 2017 to the campaigns of Rosselló Nevares, former resident commissioner and candidate for governor, Pedro Pierluisi, and Senate President Thomas Rivera Schatz, according to records from the Office of the Election Comptroller .
The other tests were sold directly to the Health Department by the 313 LLC, whose agent, Ricardo Vázquez, is also an agent for Grupo Lemus. On March 20 and 24, 313 LLC sold 1,500 test units for $45 each and 100,000 units of test for $36 each, for a total of $3.6 million, according to invoices released by TV news journalist Nuria Sebazco.
313 LLC registered in 2018 to do business in the areas of computing, technology and construction, infrastructure rehabilitation and maintenance. On March 18 of this year, it changed its objectives to add the area of medical services, as recorded in the Registry of Corporations of the State Department. Just a few days later, he was selling test kits of coronavirus to the government of Puerto Rico.
Grupo Lemus had until Saturday a website in which, in addition to offering its services, it showed multiple photos of the directors of the firm, which is based in Guaynabo, with PNP leaders. The page was closed in the afternoon of Saturday. Suárez Lemus, the founder of the group, was a collaborator of the PNP platform committee for the 2008 elections, according to a document from that political organization.
In addition, he is a regular donor of the campaign committees of various PNP leaders, such as Rosselló Nevares, Rivera Schatz, Senator Eric Correa, Representative José Enrique “Quiquito” Meléndez, former candidate for mayor of San Juan, Leo Díaz, and the exaspiring representative, Carlos Flores Vega.
It was not possible to locate Suárez Lemus for an interview.
On May 4, 2017, the then governor Rosselló Nevares posted a photo on his Twitter account with Suárez Lemus, the then head of government information, Luis Arocho; and the secretary of Transportation and Public Works, Carlos Contreras. “Reunited with Juan Suárez Lemus, from Grupo Lemus”, said the photo. Maldonado, Apex’s lawyer, was then undersecretary of Public Works under the command of Contreras.
In normal times, serological tests are available on the market for between $1 and $7. The very high demand that the coronavirus pandemic has generated has pushed prices in some cases up to $16. Sources from news sources with knowledge of this field did not find any site with prices close to the $38 where Apex General Contractors wanted to sell them, nor the $36 and $45 where 313 LLC sold them.
A source to news outlets show a copy of a quote from NOVA, the Chinese test that 313 LLC sold to the Health Department: 500,000 of those tests were offered for $2.30 each. The secretary said he is concerned that Health has been sold test kits at a premium. “One could assume that at the time when demand will be higher than supply, that there would be some kind of increase (in price). But it is not a 1,000% increase.
On the same days that the government bought the companies related to Grupo Lemus at these prices, it bought 50,000 molecular tests, which are more complex and usually more expensive, from Castro Business, which has been in the product business since 1975 doctors, at $13 each test, for a total of $650,000.
When the purchases were made, the government had no guarantee that the FDA would authorize their use in Puerto Rico. Last week, the Health Department met with FDA officials, established the rules of the game, and from now on, tests will only be purchased from companies that have been pre-authorized by the United States government.
“All these people who were selling solar heaters, for example, cannot now be experts in rapid testing of COVID-19,” said the NMEAD commissioner.
Secretary González said that he referred to the Health Legal Division all agency officials who participated in these transactions “in order to see if there is anything out of the ordinary and then proceed with the relevant referrals.”
González noted that the FBI and the Office of the Inspector General of the United States Department of Health continue to continuously request information from the agency. “They are asking for information. They have not said why. But they have requested information from email accounts of people who worked in the Department,” he said.
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