Explained: The Bharat Biotech Deal That's Shaking the Brazil Govt

A probe has been launched into the deal between Brazil and Bharat Biotech for 20 million doses of Covaxin.

Bharat Biotech's Covaxin.

(Photo Courtesy: The Quint/Shruti Mathur)

Amid allegations of corruption that have rocked the Brazil government, Brazil Health Minister Marcelo Queiroga on Tuesday, 29 June, announced that the country will suspend its $324 million contract with India's vaccine maker Bharat Biotech, a deal which is currently being investigated for discrepancies.

Brazil federal prosecutors had previously initiated an investigation into the contract between the Brazil government and Bharat Biotech for 20 million doses of Covaxin, as doubts of discrepancies within the contract had surfaced.

The multi-million dollar scandal, which has been popularly dubbed as CovaxinGate in the social media lingo, has embroiled the Brazilian President Jair Bolsonaro into a controversy, with his government being investigated for corruption.

What Was The Deal?

Brazil Health Ministry on 25 February had signed a deal with Bharat Biotech for 20 million doses of Covaxin, which were slated to be delivered in March-May 2021.

Earlier this year, the Indian drugmaker had announced its collaboration with Brazilian distributor Precisa Medicamentos to supply COVID-19 vaccines doses to Brazil.

Why Was The Contract Investigated?

Brazil federal prosecutors on 22 June launched an investigation into the contract of $320 million between the Brazil government and Bharat Biotech for 20 million doses of Covaxin.

Pending regulatory approvals, steep prices, and hastened negotiations in relation to the deal have been stipulated as the reasons behind the need for scrutiny over the contract finalised in February.

The contract also drew the scrutiny of the Brazil Senate. The head of Precisa Medicamentos, the drugmaker's partner in Brazil, was called upon to testify before the Senate as part of the investigation on 23 June.

The prosecutors had furthered a document indicating the negligence of the pharmaceutical company Global Saude, a partner of Precisa Medicamentos, in delivering the COVID-19 vaccine bought from the firm by the Brazil Health Ministry, as grounds for examination of the Covaxin contract.

“The history of irregularities involving partners at Precisa and elevated price paid for the doses under contract require deep investigation in civil and criminal aspects," the prosecutors stated, as per a Reuters report.

Moreover, the Senate had also indicated that it had received the testimony of a public health official over the inconsistencies in the deal, which had further heightened its doubt.

How did Claims of 'Internal Pressure' Come to the Fore?

A Brazilian Health Ministry official on Wednesday, 23 June, said that he had apprised President Jair Bolsonaro of the internal pressure he was encountering to buy Covaxin.

According to a Reuters report, the logistics department official, Luís Ricardo Miranda, testified during a Senate probe that he was being coerced by Alex Lial Marinho, an associate of one of Bolsonaro's closest aides, the former Health Minister Eduardo Pazuello.

The official also indicated that the government had received an invoice that required the payment of an advance of $45 million for 30 lakh vaccine doses from Madison Biotech, an offshore company located in Singapore that had no mention in the original contract.

Miranda, who had refused to clear the payment due to the inconsistency in the vendor name, further indicated he was receiving 'atypical, excessive' pressure to confirm the payment, as per a Financial Express report.

Miranda said that he had conveyed the details of the affair, along with documents, to Bolsonaro on 20 March 2021.

The president had assured the official he would speak with the head of the federal police regarding the issue.

Testifying before the parliamentary panel on 25 June, Miranda and his brother, Congressman Luis Miranda, highlighted that Bolsonaro and his ally, Roberto Barros, who heads the government coalition, had bought the Bharat Biotech vaccine at a considerably higher price, even as it had lacked local regulatory approval at the time of the deal.

Former Health Minister Eduardo Pazuello, who has also been implicated in the coercion, is currently undergoing civil and criminal investigation over his handling of the COVID-19 pandemic while in office.

"According to the preliminary analysis of the CGU, there are no irregularities in the contract but, for compliance, the Health Ministry chose to suspend the contract for a more in-depth analysis," the ministry said in a statement, Reuters reported.

What Has Brazil's Opposition Alleged?

Three senators, including the CPI vice president Omar Aziz, moved the Brazil Supreme Court to file a criminal case against the president on Saturday, a day after the Miranda brother testified before the parliamentary panel.

Following the suspension of the Covaxin contract on Wednesday, a few senators also called out the government's ill-hidden attempt at damage-control.

“I think they suspended the contract to buy some time and then cancel it," Senator Omar Aziz, president of the parliamentary commission told a local channel, as per a The Wire report.

"They will try to negotiate with the company and say that they have reached a limit because there is a great distrust among the Brazilian population and there is a very deep investigation by the CPI. The plan is to get rid of this contract because the investigation into the Covaxin case is now reaching the president’s office,” he added

However, Randolfe Rodrigues, the vice-president of CPI – a parliamentary commission of inquiry instituted to look into the Brazil government's expenditure during the COVID-19 pandemic – has said that the suspension of the deal clearly confirms the government's implication.

"If nothing was wrong, why would they suspend it? This only has one name! Confession!" the senator said in a tweet.

What Has President Bolsonaro Said?

Following the allegations that were levelled against the federal government, President Bolsonaro defended the government against the charges of corruption.

"We didn't spend one cent on Covaxin. We didn't receive one dose of Covaxin. What sort of corruption is this?" Bolsonaro said, as per a Reuters report.

The Health Minister further voiced the sentiment expressed by the president as he took to Twitter to announce the contract's suspension on Wednesday.

"It is noteworthy that the @govbr did not pay ANY CENT for the Covaxin vaccine. The measure does not compromise the pace of the vaccination campaign against #Covid19 in Brazil, since there is no approval from Anvisa for emergency or definitive use of the immunizing agent,"

Brazil Health Minister Said in a Tweet

The president had also implied that the Miranda brothers are part of the effort to blemish his government's reputation, which had been elected on an anti-corruption promise, as per an FE report.

What Has Bharat Biotech Said?

Bharat Biotech has denied allegations of inconsistency within the contract.

"In the specific case of procurement of COVAXIN by Ministry Of Health, Brazil, since the first meetings with MOH Brazil during November 2020, until 29 of June 2021, a step by step approach has been followed towards contracts, and regulatory approvals, during this 8 long month long process. EUA received on 4 June 2021. As of 29 June 2021, Bharat Biotech has not received any advance payments nor supplied any vaccines to MOH Brazil," the company clarified.

The pharmaceutical company also slammed the allegations of inconsistency in the vaccine price – $15 per jab – offered to Brazil.

The cost of Covaxin has been set as $15-20 per dose for governments outside India, the drugmaker indicated.

The company further asserted that "Bharat Biotech has followed a similar approach towards contracts, regulatory approvals and supplies in several countries worldwide, where COVAXIN is being supplied successfully."

(With inputs from Reuters, The Financial Express and The Wire)