Findings on failed ventilator procurement highlight urgent need for reform

On 25 March, the chairperson of the Public Accounts Committee, Mas Ermieyati, reported that Pharmaniaga Logistics Sdn Bhd had agreed on a repayment of RM16.8m to the Ministry of Health (MoH).

This was in relation to the disastrous procurement of ventilators by Pharmaniaga Logistics in which they were paid RM30m to conduct.

The botched operation ultimately resulted in RM13.1m in losses and the under-delivery of the intended amount of ventilators, from a contracted 500 units to only 32 usable units.

The Center to Combat Corruption and Cronyism (C4 Center) covered this issue when it first arose, demanding accountability and reforms to the procurement process. We are relieved to see that some action is being taken on this matter, but more must be done.

The procurement process as implemented by the government during emergencies lacks sufficient oversight and procedural mechanisms.

The present case exemplifies this state of affairs. The procurement of ventilators was organized almost entirely through WhatsApp. It lacked a formalized contract stipulating the exact role and duties of Pharmaniaga Logistics and was decided entirely through a cabinet meeting that took place on 25 March 2020, with the RM30m disbursed to the company on the very same day.

Remember, at the onset of the Covid pandemic, then Prime Minister Mahiaddin Yasin invoked power under the Emergency Ordinance to shut down Parliament and empower the executive branch to unilaterally control government spending during emergencies.

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These weaknesses have not been addressed by any government since the pandemic. In anticipation of more frequent crises due to the climate emergency and global political instability, there is an urgent need to reform emergency procurement procedures to avoid the repeated waste of public funds and to address its vulnerability to corruption and abuse.

It is pivotal to realize that any mismanagement or abuse of emergency procurement by the government has a direct impact on the safety and well-being of the people it is supposed to benefit in precarious times.

Our key recommendations include outlining the limits of “emergency procurements” in the proposed government procurement act while also introducing controls through some form of parliamentary oversight of related expenditure. This may take place through a bipartisan parliamentary committee empowered to approve emergency procurements in the absence of full parliamentary sittings.

As for the recommendations by the Public Accounts Committee to the MoH to reclaim the losses sustained from Pharmaniaga Logistics’ failures – if the committee is of the opinion that the amount requested is adequate to recover the losses sustained by the company’s failures, C4 Center has no objection to this.

The same is true for the committee’s additional recommendation that the refunded amount be used to supplement the Ministry of Finance’s budget to ensure the availability of ventilator equipment in all government hospitals.

However, the recommendations made by the Public Accounts Committee are not exhaustive and do not provide long-term solutions to a problem that may arise again.

There is no mention of the maladministration of the executive, which circumvented all standard procurement practices in procuring the ventilators during the pandemic. Again, a contract was not even written up.

The Public Accounts Committee is empowered to summon ministers who were present at the cabinet meeting where the procurement was decided.

In the interests of transparency and accountability, the committee should have comprehensively investigated the maladministration and provided concrete solutions to the matter.

Instead, only one minister was summoned to the investigative proceedings, with no satisfactory explanation regarding the culpability of cabinet members in this issue arising from them.

By the Public Accounts Committee’s own admission, Pharmaniaga Logistics lacked experience and expertise to carry out medical procurements. If so, why was it even selected?

This selection is especially questionable as the selection was made by ministers who probably did not themselves have the requisite knowledge to decide on procurements – an exercise usually carried out by experienced procurement officers and evaluation boards.

This leads to a larger question of whether Pharmaniaga should even have a monopoly over medical procurements, considering its abysmal performance and financial troubles.

The Public Accounts Committee’s failure to raise these issues does not offer confidence in its ability to provide oversight of government spending in areas where ministers have had a direct role to play.

It is disappointing that the response to this issue has boiled down to the rhetoric of numbers, where the losses sustained are simply supplemented with repayments later on.

However, it would be an abject failure to forget that these procurements were integral to the preservation of lives during a global health crisis. It is not enough that these problems are simply glossed over at a later time, when medical supplies did not reach people who needed them most.

We will never know what the human cost of this failure was, but it is imperative that such a disaster never repeats. – C4 Center

The views expressed in Aliran’s media statements and the NGO statements we have endorsed reflect Aliran’s official position. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran’s official position.

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