Corruption and Covid 19


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Marc Tassé

By Marc Tassé 

Published on Monday January 25, 2021  

 

Times of social, political, and economic stress present opportunities for corrupt actors to act corruptly, and the crisis caused by the novel coronavirus will be no exception.

Lessons learned from corruption in the health sector show that procurement and contracting malfeasance could lead to deadly consequences — inflated prices or poor-quality goods, perhaps in exchange for bribes. Pharmaceutical supply chains are very susceptible to corruption and medical supply chains highlight another concern over corruption as the coronavirus spreads.

Corruption may compromise containment efforts, such as when corrupt actors use petty bribes and other favors to avoid quarantines, roadblocks, and safe body collection procedures. Even ventilators and other medical oxygen-related equipment may be the subject of bribes and kickbacks, sometimes leading to the tragic deaths of patients. These examples demonstrate the worst case of what can happen without resilient anti-corruption policies.

History has shown that in times of global crises, the worst and the best in human behaviour will be in full display. Where we are witnessing many heartwarming selfless and generous actions from people and businesses helping their neighbors and community, we are also seeing some people and businesses taking advantage of a serious global pandemic to feed their greed through price-gouging ( price increases to a level much higher than is considered reasonable or fair) and defrauding a scared and vulnerable population. This unethical and corrupt conduct has a devastating effect not only on people but on the supply chain and must not only be called out, but organisations must increase their due diligence and compliance measures to prevent and detect such practices.

A case in point is that of  Martin Shkreli, an American former hedge fund manager and convicted felon. He was also the founder and past CEO of Turing Pharmaceuticals. In late 2015, Shkreli received widespread criticism when Turing obtained the manufacturing license in the USA for the antiparasitic drug Daraprim and raised its price by a factor of 56, leading him to be referred to by the media as « the most hated man in America » and « Pharma Bro ».

With new disbursements expected to top hundreds of billions, oversight and accountability would be a challenge even in the best of times. In the case of the covid 19 pandemic,  unique challenges make oversight even more difficult. Officials may be unavailable for public duties due to quarantine requirements, their loved ones falling ill, or falling ill themselves. Meanwhile, quarantine requirements also make it more difficult for regulators to physically inspect supply chains, visit pharmacies and public health providers, or conduct detailed investigations. Likewise, other oversight officials will have difficulty following the disbursement of funds and other resources as part of the pandemic response. Law enforcement agencies have their hands full with demands to assist their fellow citizens, so crime and corruption cases may drop in priority. While expediency is necessary in times of crisis, maintaining an adequate level of due diligence to prevent corruption, profiteering, fraud and other similar unethical practices is critical to ensure the viability of the supply chain.

The flow of money and the contracts associated with new funding should have the highest levels of transparency. This includes making contracts publicly accessible. The use of anonymous companies in any contracting or subcontracting should be expressly forbidden as the lack of beneficial ownership information facilitates crime and corruption. Contractors should be required to include anti-corruption clauses in their contracts and claw back clauses so that money already doled out to firms can be more easily returned to taxpayers in the event of malfeasance. Those contracts should also guard against profiteering and fraud. Proper due diligence should be conducted to ensure warranties on quality and value.

Price-gouging laws are being enacted in various jurisdictions throughout the world to prevent pandemic profiteering. Fraudsters, corrupt actors and other unethical players are also being identified and shamed on social media. While some bad actors will undoubtedly pay a heavy price when the dust settles for their corrupt and unethical conduct during this crisis, the potential damage they can do can be devastating. Ethical behaviour can not be mandated or assured in any business transaction. However, those businesses that are ethical and are actively involved in helping us navigate this unprecedented crisis will benefit from doing the right thing. It is in moments of crisis that the true character of people and organisations are displayed. Reputations will be made and destroyed as a result of the actions being taken through this global pandemic.

 

Readers of this article may also be interested to read Marc Tassé’s remarks on Questions of Conflict of Interest and Lobbying in Relation to Pandemic Spending (here) before the Canadian House of Commons Standing Committee on Access to Information, Privacy and Ethics on 30 November 2020.

 

 

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One Comment

  1. Thanks for the article Marc, all very true. One aspect that many procurement functions do not have is independent complaint mechanisms if tenderers feel aggrieved in losing a tender and have information which points to cronyism or collusion.

    If they did, a lot of issues with fraudulent procurement would surface.

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