Ecuador Ministry of Public Health draws from CDB credit line to purchase medical equipment worth USD 20.9 million from Sinopharm (Linked to Project ID#92930 and #91328)

On April 10, 2020, the Ministry of Public Health of Ecuador and China Sinopharm International signed a Framework Agreement, in which both parties agreed the Ministry of Health could purchase up to USD 40 million in medical supplies from Sinopharm, and that these purchases would be funded via an unspecified line of credit from Chinese Development Bank (CDB). Then, on May 4, 2020, the Ministry of Health and Sinopharm signed two separate procurement contracts. The first was for the Acquisition of Personal Protective Equipment (PPE) for the COVID-19 Sanitary Emergency (Contract No. 00053-2020), and was worth USD 7,585,000 (captured via Project ID#92930). The second was for the Acquisition of Equipment for the COVID-19 Sanitary Emergency, and was worth USD 20,954,285 (captured via Project ID#91357). The materials were purchased by the Ministry of Public Health with the aim of strengthening hospital capacity to treat COVID-19. Materials were to be distributed to all hospitals in Ecuador, prioritizing the Sierra region. In addition to the materials themselves, the contracts provided for the transportation and delivery of the goods to the cities of Guayaquil and Quito. China Sinopharm also agreed to provide on-site technical assistance for all products delivered to Ecuador. This technical assistance component is captured via Project ID#91328. The USD 7.585 million contract included the purchase of 500,000 medical protection respirators (PFE>95%) for USD 1.825 million (USD 3.65 per unit); 2,500,000 surgical face masks for USD 1.725 million (USD 0.69 per unit); 100,000 medical protective coveralls for USD 2.948 million (USD 29.48 per unit); 500,000 pairs of latex surgical gloves for USD 575,000 (USD 1.15 per pair); 100,000 medical goggles for USD 486,000 (USD 4.86 per unit); and 100,000 sample swabs for USD 26,000 (USD 0.26 per unit). The USD 20.9 million contract included portable ventilators worth USD 1.430 million total; two varieties of ventilators with integrated turbines worth USD 1.325 million and USD 282,225 respectively in total; advanced vital sign monitors worth USD 2.544 million total; defibrillators with basic monitors worth USD 312,700 total; two varieties of portable ultrasound machines worth USD 2,179,360 and USD 4.664 million respectively in total; and two varieties of portable x ray machines worth USD 4.785 million and USD 3.432 million respectively in total. The delivery of the materials purchased via both contracts took place in three batches. On June 24, 2020, the first batch arrived via airplane at Quito's Mariscal Sucre International Airport, containing 71 tons of medical supplies and equipment. This batch reportedly included x-rays, monitors, respirators, and defibrillators. It is unknown how much personal protective equipment also arrived on this flight. On June 30, 2020, the second batch arrived at Quito's Mariscal Sucre International Airport. This flight contained 31 tons of supplies including 685 sets of ventilators, monitors, and other medical equipment, as well as 3.8 million pieces of personal protective equipment. A handover ceremony was held following the arrival of this batch of materials, attended by representatives from China Sinopharm International Corporation, the Vice Minister of Governance and Health Surveillance of Ecuador, the Minister of Finance of Ecuador, and the Chinese Ambassador to Ecuador. Per reports from Sinopharm, the two chartered flights arrived 9 days prior to the delivery date in the contract, and the process of gathering the purchased materials took 14 days. The third batch was sent to Ecuador via cargo ship, and was expected to arrive in Guayaquil on July 25, 2020. Reports only indicate that this batch contained 20 mobile x-ray units. The acquisition contracts signed on May 4, 2020, were the subject of controversy in Ecuador. This prompted the Ministry of Health to release a statement on May 17, 2020, which, among other defenses of the decision, stated that the CDB credit line used to make the purchases carried specific conditions for use. One of these conditions was contracting with a Chinese company. On September 30, 2020, Ecuador's Council for Citizen Participation and Social Control began the process of opening citizen oversight proceedings regarding the USD 20.9 million contract. A call for citizen participants ran from February 22 to March 12, 2021. As of February 2023, no updates on these proceedings were available.

Additional details

1. In press releases regarding the arrival of the second batch of materials, Ecuador's Ministry of Public Health reported the purchase involved a total investment of USD $26,686,000. However, the combined value of the two contracts signed May 4, 2020, is USD $28,539,285 according to a document published by Ecuador's Official Public Procurement System. Other sources verify the value of the contracts individually, including official Government of Ecuador sources for the 20.9 million USD contract and images of official source excerpts published by investigative journalists. The 20.9 million and 7.5 million USD numbers have therefore been reported as the contract values. It is unknown if the USD $26,686,000 represents just the value of the materials on the second flight (31 tons of supplies), the materials on the first two flights combined (31 + 71 tons of supplies), is simply an inconsistency, or something else. This issue warrants further investigation. 2. The specific China Development Bank credit line that financed these purchases is unknown. Investigative journalists from Periodismo Investigación published a letter from Carlos Julio Jaramillo Vintimilla of Ecuador Development Bank (BDE) to CDB representatives dated March 21, 2020 (Oficio Nro. BDE-BDE-2020-0136-OF). This letter requested the use of the B Tranche of a credit line signed with CDB on October 20, 2017 for "areas of prevention, diagnosis and treatment of the COVID-19 virus; allowing us to acquired [sic] and distribute several medical supplies and equipment in an urgent manner according to our clearly defined territorial needs". This credit line is captured via Project ID#91971. However, these is no evidence presented that the funds specifically from the October 2017 credit line Tranche B were (1) released as requested and (2) applied to this project. This claim is also not made by investigative journalists at Periodismo Investigación. Further, according to Project ID#91971, only USD $1.63 million had been actually disbursed through this credit line by the end of 2020 (although $71.08 million had been approved/formally committed). Full versions of the May 4, 2020 contracts may include reference to the specific CDB credit line used for the purchases, but even this is not guaranteed. These full contracts are, further, not currently available. This issue warrants further investigation. 3. Other recent CDB credit lines to Ecuador that may have financed this project are captured via Project IDs: #59015, #59014, #62782, #58842, and #58839. This is a non-exhaustive list of possible funding sources, and this issue warrants further investigation. 4. A transaction amount has not been included on this project in order to avoid double counting because it is very likely the CDB credit line used to finance this purchase is already captured in AidData's database, either via Project ID#91971 or one of the other records capturing CDB credit lines to Ecuador. 5. While a full version of neither the April 10, 2020 Framework Agreement nor the two May 4, 2020 Sales Contracts are available, investigative journalists published parts of the documents here: https://twitter.com/VillaFernando_/status/1262098461803118593 and here: https://periodismodeinvestigacion.com/2020/05/20/china-enfermedad-y-mal-remedio/. Further, a summary document from the Ministry of Health Ecuador, published on the Official Public Procurement System of Ecuador website, contains details regarding the May 4, 2020 contracts. This document can be downloaded from here: https://www.compraspublicas.gob.ec/ProcesoContratacion/compras/PC/bajarArchivo.cpe?Archivo=A2BY73my_TdsvGWGbOOUEP7hygbtfIHPIuETtMA5yxI, 5. The date on which the CDB credit line funds were officially committed or approved to fund these purchase contracts is unknown. Thus, the date the contracts were signed (May 4, 2020) has been used as a proxy for the commitment date. 7. Intent for this project has been set to Mixed insofar as the CDB credit line that financed it carried the provision that proceeds be used to contract exclusively with Chinese companies. This indicates a combined commercial - development intent.

Number of official sources

12

Number of total sources

16