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The government corroborated last Sunday that the $19 million advanced to Apex for testing was returned to its account. (GFR Media)
The government corroborated last Sunday that the $19 million advanced to Apex for testing was returned to its account. (GFR Media)

Doubts continue to cloud the purchase of COVID-19 rapid tests that a group of bureaucrats at the Health Department managed to make, paying more than $40 million in public funds to two businessmen with no experience in the medical field, but with close ties to the New Progressive Party (PNP.)

Wanda Vázquez said late Sunday that she has no relationship with the contractors nor participated in any way in the transaction, for which she blamed only the Health Department, although the agreement involves three other agencies: the National Emergency Management and Disaster Administration (NMEAD), which bought $38 million in tests that had not been authorized by the U.S. government; the General Services Administration (GSA), which was the liaison with at least one of the contractors; and the Office of Management and Budget (OMB), which authorized the disbursement of the funds.

However, La Fortaleza spokesman Osvaldo Soto did not answer yesterday who, if anyone, authorized or was aware of the monumental transaction at the governor´s mansion.

The Oversight Board said it was never informed of the purchase, as it is required for all contracts and agreements with a value of $10 million or more, so it declared the contracts null and void and asked for the “immediate reimbursement of all public funds disbursed in connection thereto.”

Also, OMB Director Iris Santos, who authorized the use of the funds, said yesterday that her role is limited to certifying that the money is available, not to evaluating the quality of the suppliers or products that the other agencies choose and that she was not aware of the enormous purchase.

It was still unknown yesterday, how a transaction of such magnitude and under such dubious circumstances - contractors with no experience in this field,  testing kits highly overpriced, and without the U.S. government authorization to be used on the island - passed through the entire bureaucratic structure of the Commonwealth, apparently, without setting off a single alarm.

The new Health Secretary, Lorenzo González, who was not at the agency when these contracts were made, said he referred the officials who participated in the transaction to the Legal Division so that they could make the necessary referrals. He also confirmed that the Federal Bureau of Investigation (FBI) and other U.S. government agencies are investigating these and other transactions.

There is no further information so far regarding the origin of this transaction nor about who knew about it before El Nuevo Día revealed this Sunday night.

OMB director said that they are not “responsible for the purchase process of the agency. The agency must evaluate that its supplier complies with all the required specifications. What we do is confirm that the funds are available," she said.

José Burgos, NMEAD commissioner, said he assumed that Adil Rosa, administration assistant secretary at the Health Department, had already verified the companies she proposed to buy the rapid testing kits from. Rosa was removed from her position and went back to the agency where she originally worked, the Family Department, González said Sunday.

There are three contracts, so far, at the heart of the controversy. One was signed with Apex General Contractors, a small construction company with no experience in medical products, which on March 26 was awarded a $38 million contract to sell one million rapid testing kits to NMEAD, at $38 each.

The other two contracts were with 313 LLC, a technology and maintenance company founded in 2018 that a few days before selling coronavirus tests to the Health Department changed its corporate interests to the medical field, according to the State Department's Registry of Corporations.

313 LLC signed two contracts - on March 20 and 24 - to sell 1,500 tests for $45 each and 100,000 for $36 each to the Health Department, for a total of $3.6 million.

The contract with Apex General Contractors was canceled last Friday because it did not meet the delivery dates and because the federal government did not approve the use of these tests in Puerto Rico.

Yesterday, company owner Robert Rodríguez López showed evidence that on Saturday he returned the $19 million the government advanced him for the purchase, he did it through a wire transfer from his account at Oriental Bank to the Puerto Rican government account at Banco Popular.

Profits

The tests from 313 LLC are being distributed by the government, but Secretary González said the agency had to invest time and resources re-labeling them to use them and that they will charge the company for the investment. The tests that these companies sold to the government for $36, $38 and $45 are available in the international market for less than $10.

None of the businessmen have said how much they invested in the tests. Yesterday, for the second day in a row, spokespersons for 313 LLC were unavailable for interviews. Both companies have been linked to Grupo Lemus, a consulting and lobbying firm with close ties to top PNP figures.

Rodríguez López is also a frequent donor to PNP politicians and his lawyer, Juan Maldonado, who got him the contacts to sell half-million testing kits to the government, was Transportation and Public Works deputy secretary and director of the Maritime Transport Authority during this administration.

Oversight Board Executive Director Natalie Jaresko said in a letter she sent yesterday afternoon to Governor Vázquez that she learned of these transactions through the press and pointed at her for not submitting the agreement to the Board as required by PROMESA, which gives the Board control over Puerto Rico's finances when it comes to transactions of $10 million or more.

"The Government did not submit the agreements to purchase the aforementioned rapid testing kits to the Oversight Board. The fact that the Oversight Board allowed the use of the emergency fund without prior approval, does not mean that purchases made in response to the emergency with those funds can be made without complying with the corresponding due process consistent with fiscal governance, accountability, and internal controls," Jaresko said in the letter to the governor.

"This state of emergency does not present grounds to disregard fiscal governance, accountability, and internal controls. Rather, it is especially during such times that the Government must continue to adhere to such principles to build and maintain confidence of all the stakeholders in the Commonwealth," Jaresko added.

Jaresko said that because the purchases were not consulted and thus violated the provision that requires seeking authorization from that entity for transactions of $10 million or more, the contracts are null and void and must be canceled and the public funds should be reimbursed. It was not clear whether, given that the largest of the contracts - the $38 million contract with Apex General Contractors - were canceled last week, the order applies to the other two purchases made to 313 LLCs, which total $3.6 million.

OMB director said yesterday that the Health Department should have had to ask for the Board's authorization.

David Cordero Mercado collaborated with this story.