Fraud in the procurement of medical equipment.

Who is behind this and why international companies turn a blind eye – the example of Dnipro city

Medical procurements have always been in sight of those wishing to line their pockets. The procurement of a conventional tomograph or X-ray is tens of millions of hryvnias. Such equipment is produced by huge corporations. And the sale in Ukraine is carried out by regional offices. As it turned out, in an effort to sell equipment, they are not ashamed of dirty schemes, and in the main offices of manufacturers they turn a blind eye to such a thing. 

This material is partly based on insights that we received from those familiar with the tender pecularities but everything stated is confirmed by open data, the reliability of which can be verified by anyone.

An example of one story. Why "Big Brother" often sees with half an eye

There is a widespread belief in society that large companies deserve more trust. Big business is a big responsibility, a lot of attention and always publicity. But in reality, such a principle does not work, and rather high-profile schemes can work for years if they bring profit to all interested.

Suffice it to recall the languidly smouldering scandal with Siemens turbines in the Crimea. The public found out the supply of gas turbines by a German company to the Sevastopol port back in July 2017.

Then Siemens said that the responsibility for deliveries lies with the regional representative. Only 4 years after the incident, the company decided to stop selling equipment for power plants to Russia and to break off relations with Russian representatives. In Ukraine, it is not uncommon for regional representatives to take on “dirty deals”. The case, which will be discussed below, is a vivid illustration of this.

The point is that the equipment for cancer centres is very complex and expensive. This means that the taxpayer, most likely, does not understand its real value and purpose.

So, probably, they thought in Dnipro when they tried to pull the scheme for buying a tomograph for the Dnieper Cancer Center. Rumor holds that the idea was to create tender conditions for one specific tomograph, and to pull the deal "in one gate". But this plan was not realized. More precisely, it failed for a number of reasons. But this is what makes it remarkable, because more often such deals goes without awry.

Start briefly with the history of the tender:

1. All starts with the fact that in May the Dnipro Cancer Center places a call for bids for the procurement of equipment for a hospital – a tomograph. (Now its details can be acquainted with at the link, do not waste time to provide them here).

2. A minimum of two participants are required to hold the tender. And now two companies – KIND INTERSLUKH KYIV LLC and ARTEK MEDIKAL GROUP LIMITED LIABILITY COMPANY – are entering the tender. If you look closely – the companies have the same equipment, both correspond to very specific conditions of the tender, and it can be assumed the tender should be played between them (later this assumption will be supported by a number of facts).

4. But something goes wrong. UkrMedServis LLC and FORAMED LLC with equipment made in Chine are entering the auction. A little later IDEA TEKH LLC with the equipment of the Ukrainian production joined.

5. These companies are attacked by the organizer, as if someone really does not want another participants. And... the proposals of the representatives of the Chinese and Ukrainian manufacturers are removed by the organizers of the tender from participation in the tender. (Although the grounds for that were clearly fabricated.)

That is, it happened what had to happen. At the proposal stage, all participants, except two Siemens representatives, were removed. And, in particular, KIND INTERSLUKH LLC.

Here we need to figure out for what INTERSLUKH is so well known. The name of this company sounded in the journalists’ investigations but not so in connection with its legal director Alexander Pilipenko as in relation to its patron Nikolai Kuzma. Pursuant to this  (https://blogs.korrespondent.net/blog/business/4376949/) material, the director of Interslukh participating in the auction is only Kuzma’s representative.

With the influence of secret patrons or without them, but Interslukh moves further, and the participants in the auction expressed their dissatisfaction with what was happening in the form of complaints to the organizers. In particular, the requirement to use tubeless injection systems was found to be discriminatory (that is, as described above, disadvantaging certain participants).

«The requirement is discriminatory since only one manufacturer, Ulrich, offers flaskless injection systems,” the participants write in letters, indicating that the use of similar systems will not affect the quality of the use of the device.

Nobody knows how this story would have ended if the Antimonopoly Committee had not interfered, responding to the complaint of Foramed. The AMCU's interference ended... with the removal of one of the only two participants admitted to the tender. That is, the trades were paused.

Who's who in this story and how the UAH 27 million conspiracy works

There are always interesteds parties in such stories. It turned out to be no problem to get the recordings of conversations between the persons involved in this story.

The general package of the received audio recordings allows us to confidently assert that there is a clear conspiracy between the representatives of INTERSLUH and Dnipro Regional Cancer Center.

(Probably, such collusion exists between Siemens’ suppliers and other cancer centers but now we shall focus on Dnipro). Briefly, what are the main recordings from the audio array to which we had access, but which, in the interests of the investigation, cannot be published so far:

1.      A person whose voice is similar to the voice of Siemens Ukraine official Gennady Podkopaev is negotiating with a person whose voice is very similar to the voice of the chief radiologist of the Dnipro Regional Cancer Center Alexander Nikolaevich Petrichenko.

2.      A woman whose voice is very similar to the voice of the head of the tender committee Svetlana Alekseeva asks “Alexander Petrichenko” for the number of Sergey Pilipenko, the deputy director of KIND INTERSLUKH (and in fact, extremely close to Nikolai Kuzma, about whom journalists have written more than once). She explains her desire by the reason to eliminate the inconsistencies that prevent Siemens to enter the auction.

3.      A person whose voice is similar to Alexander Petrichenko’s voice calls “Alekseeva” and discusses how to properly draw up a protocol and appraise the data of KIND INTERSLUKH in order to admit them to the auction.

4.      “Aleksandr Petrichenko” calls “Svetlana Alekseeva” and informs that KIND INTERSLUKH has no data on equipment. In the same conversation, it is mentioned that FORAMED will be removed from the auction for a minor mistake.

5.      The repeated call from “Petrichenko” to “Alekseeva” is specifically dedicated to the removal of FORAMED from the auction.

To convey easier the general spirit of the negotiations, we publish a transcript of a rather delicate part – the discussion of the parameters of the tender. Let us remind you that this part is the actual proof of the conspiracy which is unambiguously interpreted by the law as a crime.

The participants in this conversation, as reported by our source, are Alexander Petrichenko, the responsible representative of the Dneprovsk Cancer Center, and Gennady Podkopaev, the representative of Siemens. They discuss that the apparatus they plan to sell does not work in a proper way.

Gennady Podkopaev: I spoke with our girl about the documents, she says, you need to withstand 10 days for signing the agreement. 10 days pass just today.

Alexander Petrichenko: She said that today the documents will be signed and the seal should be fixed tomorrow, right?

Gennady Podkopaev: Today.

Alexander Petrichenko: Today? Fine. Gena, why I am calling. Doesn't work. At the calibration stage, there is a breakdown, then we turn it on as usual, it works but this error has become a systemic one.

Gennady Podkopaev: This is a detector problem.

Alexander Petrichenko: But this does not affect the quality.

Gennady Podkopaev: You may not see it but the device understands it.

Alexander Petrichenko: I understood…

Gennady Podkopaev: It checks the air and evaluates so that the indicators are the same. If anything is different, it enters a correction coefficient. If it determines that something is out of tolerance, it breaks the check-up.

Alexander Petrichenko: I thought that I would just call and tell you to understand. I think it is self-clearing fault.

Gennady Podkopaev: Or we shall find the reason.

In a conversation in which, as stated by our source, Alexander Petrichenko communicates with Svetlana Alekseeva, the participants are unceremoniously discussing how they could expel FORAMED – the undesired participant of the tender. For this purpose, according to the conspirators, it is necessary to write out violations to the company on a number of items at once, in order to immerse the participant in the struggle for justice and to draw it away so far as possible:

Alexander Petrichenko: Слушай, я не знаю, вот первый пункт по «ФОРАМЕДу», но может и второй написать? Listen, I don't know, here is the first item on FORAMED, but may I write the second one too?

Svetlana Alekseeva: I’ll write, write.

Alexander Petrichenko: So, look, let’s indicate that they specified incorrect information? That the place they indicated as a service center is not.

Svetlana Alekseeva: Aha.

Alexander Petrichenko: Well, if you point out only one item, they may start to fight for it, it’s better to indicate a little bit here, a little bit there. Look, you can work out somewhere else.

For what to create fly-by-night firms and how international companies react to violation

In this situation, the world manufacturer Siemens, or rather not the company itself but its regional representatives turned out to be at the center of the scandal.

KIND INTERSLUKH, in favor of which the auction was planned to be organized in this story, is like a lizard’s tail. Being bitten off now, growing back then.

As journalists repeatedly investigated, Alexander Pilipenko, indicated in the transcripts of the wiretapping, is not an independent figure. The director of KIND INTERSLUKH is actually a close friend and longtime partner of the informal “king of medical procurements” Nikolai Kuzma. The investigation relating to their close relations is here.

Experts say that by registering companies for close people, the author of the "net" manages to constantly avoid responsibility. If tomorrow the company turns out to be involved in a dirty story, and its director becomes a participant in a criminal case, no one will be seriously hurt, the puppeteer will simply start pulling new strings.

We sent a request to Siemens office in Palo Alto, United States, attaching many investigations pointing to Kuzma's role in machinations like this one, and received a response with the same lengthy references to "partners."

“In order to serve our customers in the best possible way, we sell our equipment in Ukraine, as in many other countries of the world, both through direct sales and with the help of business partners. Our business partners undergo rigorous compliance checks before we do business with them and they are continuously monitored thereafter. (These measures include intensive review, approval and monitoring, including comprehensive inspection and database searches). Whenever we identify or suspect misconduct, we analyze the facts. If misconduct is confirmed, we terminate relations with the relevant business partner. We kindly ask you to understand that we do not comment on individuals,” replied Siemens Healthineers.

Returning to the beginning of this text, it is difficult not to recall the company's position during the "Crimean scandal". It is not a civilized move to hold the mask of a solid reputation with one hand, and with the other hand to unleash your greedy dogs on gains. And as in the case of the sale of products to the Crimea, all the secret becomes known.

Perceiving Ukraine as a site for technological waste is probably convenient for all sides of this complex tangle. Except for ordinary Ukrainians. Those who paid for the purchase of the device with their own taxes, and those who have to use the device of poor quality, bought with huge kickbacks.

But traditionally, these categories are mentioned only before the elections.