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Jun 30, 2009

K.H.M.H. audit reveals details of overpricing

Story PictureThe preliminary audit into allegations of corruption at the K.H.M.H. has been released and it primarily confirms the allegations made by doctors of glaring inconsistencies in the prices of medical supplies procured by the K.H.M.H. For non-comparative bidding between April first 2008 and June fifteenth 2009, for instance, pharmaceuticals and medical supplies were procured directly from local suppliers at prices far higher than those offered through the Ministry’s comparative tender/contract process. Marion Ali has a look at the report.

Marion Ali, Reporting
The investigative team found that on several occasions, K.H.M.H. breached the common practice of procuring pharmaceutical and medical supplies from the Central Medical Stores and instead, purchased directly from local entities. But the team did not have time to determine whether the Central Medical Stores had the supplies on hand at the time of the purchases.

The report revealed that the K.H.M.H. purchased this drug Hydralazine, from three companies. It did so from Commerce Limited for fifteen fifty; from Bradley’s Imports for eleven fifty four, and from De la Fuente Pharmacy for a whopping sixty seven and sixty nine cents! Here is the chart showing the break-down of the sales of the same medicine, acquired from the different suppliers. It shows that the purchases from them resulted in an additional expense of four thousand six hundred fourteen dollars and fifty cents. The requisitions for the four purchases were approved by the Director of Medical Services at the K.H.M.H., Dr Khalid Ghazy and this man, the Director of Finance at the K.H.M.H., Carlos Perrera, who himself has come under heavy scrutiny and criticism by the doctors for transactions just like these ones shown.

Turning to the De la Fuente Pharmacy, this is business is located on Main Street in Orange Walk Town. It is owned and operated by Antonio De la Fuente, and was first exposed three weeks ago when the B.M.D.U. revealed procurement invoices showing the vast disparity in prices for supplies. Remember on June nineteenth when the same Antonio De la Fuente told News Five this?

Antonio de la Fuente, Owner, De la Fuente Pharmacy (via phone: 19th June, 2009)
“I am not the recipient of a contract to supply those items. I supplied them under crisis situation because the contract winner obviously did not have those items at the moment.”

Marion Ali
“Your prices seem to be much higher than the other suppliers.”

Antonio de la Fuente
“Okay, well then maybe that is the reason why I did not win the contract for those particular items; because my prices were high.”

The report cites several other instances when drugs like Dopamine, Omeprazole injection, and Salbutamol Respiratory Solution were all purchased directly from private suppliers at higher prices. Here again is an example of De la Fuente’s prices for Salbutamol. The unit price of other suppliers is one dollar and seventeen cents. De la Fuente’s is seven dollars and fifty cents, and on one occasion, it was as expensive as eleven dollars and fifty five cents. This brought on an additional expense of fourteen hundred and eighty dollars and forty one cents. In almost all the cases De la Fuente’s prices were more than three times the price of other suppliers. And because K.H.M.H. made these more expensive purchases, a total of ninety four thousand four hundred and forty three dollars and seventy two cents was paid by the public purse.

But in interviews which the investigative team conducted with K.H.M.H. Finance Director, Carlos Perrera, said he changed the purchasing method, which took away total control from him and gave now included the Director of Medical Services, Dr. Khalid Ghazy. Perrera told the investigators that it is the Purchasing Clerk who does the due diligence on prices and quantity before forwarding them to him for review and approval. The Purchasing Officer, Virginia Carrillo told the team that there were no references to prices on the forms. She also mentioned that purchases would be made, regardless of the price, if the item was needed and was not in supply at the C.M.S. But Chief Pharmacist, Eugene Echegi told the investigating team that the hospital would maintain at least one month safety stock. He said that when Perrera changed the purchasing format, the Chief Pharmacist was no longer the person who identified the suppliers. For his part, Dr. Khalid Ghazy told the team that purchases over a thousand dollars required the signature of the C.E.O. and anything under that would require the signature of the Finance Director. All be told, at this preliminary stage there is evidence, that in particular the de la Fuente Pharmacy of Orange Walk was favoured over other suppliers even though its prices were scandalously higher.

The preliminary audit is available on Channel Five’s website at www.channel5belize.com.

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