Procurement Nightmare: The Wasted Weeks Of Ukraine's Coronavirus Response
By Katya Gorchinskaya April 08, 2020
KYIV -- When the coronavirus began bearing down on Ukraine in early March, Arsen Zhumadilov was in a key position to take action -- and he thought he was ready.
As director of the country's new national medical-procurement company, it's his job to ensure that Ukraine's hospitals are well-stocked with tests, ventilators, and protective gear to cope with the COVID-19 pandemic.
But he says he has been unable to do that job, stymied mainly by a now-dismissed health minister who seemed more interested in getting a chosen candidate installed as a deputy head of the procurement company -- despite a recent conviction for shoplifting caviar, Snickers bars, and other items -- than in launching efforts to obtain crucially needed supplies.
The result, Zhumadilov and others say: As coronavirus cases mount weeks into a lockdown in a country already facing economic pressures and the effects of a six-year war with Russia-backed separatists in the Donbas region, the state company designated to procure supplies for the fight against COVID-19 has not ordered a single thing.
That leaves supplies that have come through private initiatives, humanitarian aid, and the efforts of local governments -- a drop in the bucket compared to Ukraine's real needs. On April 7, Prime Minister Denys Shmyhal said that $35 million has been spent on coronavirus-related procurement by other state agencies, but that the country would have to spend 10 times that amount to "fully implement the steps" needed to fight the pandemic.
Many governments around the world face accusations of potentially fatal foot-dragging, amid concerns that measures ranging from lockdowns to procurement of supplies could have saved lives if implemented earlier. The story Zhumadilov tells fits squarely into the post-Soviet history of Ukraine, whose development over nearly 30 years of independence has been hampered by the hurdles of corruption and cronyism.
As the coronavirus crisis spread far beyond its origins in China, Zhumadilov said, he began trying on March 13 to get the Health Ministry to sign off on three documents that would kick-start the work of his state-owned company, Medical Procurement of Ukraine, including its financial plan for 2020. That was two days after the World Health Organization declared the coronavirus a pandemic with cases in 114 countries including Ukraine.
But instead of getting a green light, he said, he was told that he needed to hire a new deputy director recommended by the health minister at the time, Ilya Yemets -- despite the fact that there was no formal vacancy at the time and that hiring at the procurement company is subject to stringent rules aimed to prevent graft.
"We have an anti-corruption policy, an HR policy, a code of ethics -- all of this is part of our complex approach to preventing corruption," Zhumadilov said in an extensive telephone interview. "The agency was created to be the gold standard for both quality and anti-corruption standards."
A background check conducted by the company found that the ministerial candidate, Volodymyr Hryshkovets, was convicted of theft in 2019 for stealing items -- including Milka and Snickers bars, canned cod liver, cheese, red caviar, cured meat, and a pot lid -- from a large supermarket in Zhytomyr, a city west of Kyiv, on four different occasions.
A court in Zhytomyr in April 2019 convicted him of theft and fined him the equivalent of about $70.
In response to questions posed for this article, Hryshkovets said that he did not seek the job. He could not explain why he was at the Health Ministry on March 13, when he was introduced to Zhumadilov and when his resume landed at Medical Procurement of Ukraine.
"I did not submit my documents or send my resume anywhere. I don't know why I was proposed," Hryshkovets said by phone.
On March 19, according to Zhumadilov, Yemets reiterated to him that Hryshkovets was his "trusted person" -- a term that can imply formal representation -- and said he was disappointed that there was no progress on hiring. Zhumadilov said the minister threatened him with repercussions and filed a police report the same day, accusing him of financial crimes in office, despite his office spending next to nothing at this point.
A spokesman for Yemets and the Health Ministry's press service were contacted repeatedly with requests for comment, but they have not commented for this article.
Ukraine reported 1,668 confirmed cases of COVID-19 as of April 8, and 52 deaths. The number of new cases recorded has increased daily since the first coronavirus diagnosis on March 3.
The government has been testing people only sporadically, mostly using tests that have arrived from China as humanitarian aid. Although Deputy Health Minister Viktor Lyashko said Ukraine had 250,000 polymerase chain reaction (PCR) tests in stock as of April 7, only 5,779 people had been tested for COVID-19 by April 6 in the nation of 37.3 million -- a government figure that does not include Russian-controlled Crimea or the parts of the Donbas held by Russia-backed militants.
The peak of infections is expected in mid-April, and the government's lockdown measures appear likely to be extended by several weeks beyond the current end date of April 24.
The nation's health-care system, which is poorly prepared for the pandemic, will face delays of at least four to six weeks for deliveries of gear once the procurement starts through the national agency, according to Zhumadilov.
Doctors are already struggling, and patients suffering.
"I get calls, people say 'Come and check if my mom has coronavirus.' I comfort them the best that I can," said Yaroslav Semchyshyn, chief doctor in a town of 5,000 people in the Ivano-Frankivsk region in western Ukraine.
"As far as I know, there are no tests even at the district level. I don't know about the region, there is very little communication," Semchyshyn, who did not want the name of the town published for fear of repercussions, said on March 27.
Medical Procurement of Ukraine is a new company. It was created from scratch in 2018 as part of an effort to fight graft. Last year, it conducted test purchases of drugs through a tender, and this year it planned to gradually take over the medical-procurement function from international organizations, the United Nations Development Program (UNDP), the United Nations Children's Fund (UNICEF), and Crown Agents, an international development company based in London.
International agencies had temporarily stepped in to ensure that public money is spent efficiently and transparently when, in 2015, Ukraine made a long-awaited attempt to reform and clean up a health-care system plagued by corruption and inefficiency.
The practice of appointing a "trusted person," or confidant, to potentially lucrative state procurement jobs was common in Ukraine for decades. A former health minister, Raisa Bogatyryova, was charged by the national anti-graft authority with multimillion-dollar corruption, for allegedly arranging procurement deals for her son's firm. Her case is still dragging through courts.
Dmytro Sherembey, head of Ukraine's largest patient-advocacy group, 100 Percent of Life, said he believes that Yemets was trying to reestablish personal control over purchase of medical supplies because it can be very lucrative. Ukraine plans to spend more than $1.1 billion on drugs and medical supplies this year -- not including emergency spending to fight COVID-19 -- and Sherembey said that kickbacks could potentially run into tens or even hundreds of millions of dollars.
"He thought that he would do it just like before, many thousands of years ago, when cavemen were running through the ministry," Sherembey said. "He wasn't thinking in the categories of helping people."
Yemets was fired on March 30 after 26 days in the job -- a record in a country where cabinets and ministers often do not last long. He had been appointed as part of an abrupt government shake-up conducted by President Volodymyr Zelenskiy on March 4.
The new prime minister, Shmyhal, told an online meeting with the American Chamber of Commerce on April 2 that Yemets lost his job because of failure to deal with the pandemic.
"With the new minister things have moved further and much quicker. In the nearest time the state order will be created and we will move much faster," Shmyhal promised dozens of business leaders who listened in on the call -- many of whom have launched their own initiatives to buy equipment for hospitals.
Limited national-level procurement has commenced in recent weeks through Crown Agents, but the first batch of medical equipment coming through that channel is not expected until next week, according to Iryna Lytovchenko, a former director of the department for strategic planning at the Health Ministry.
New Health Minister Maksym Stepanov, appointed on March 30, said on his first day on the job that Ukraine was lagging in terms of its response to the coronavirus.
"I don't want to blame anyone for anything, but we have wasted a certain amount of time from the point of view of preparation for the pandemic," he told ministry staff. "We can no longer afford to waste time."
Semchyshyn, the Ivano-Frankivsk region doctor, agrees. He said he received a supply of seven surgical masks in the last week of March from the national health-care system. It was the only equipment the central government provided for his facility that week, even though his region is the third hardest-hit by the pandemic in Ukraine.
With a staff of 14, the hospital needs dozens of such masks a day, he said, and also badly needs test kits for COVID-19.
Businesses, local governments, and hospitals themselves have been trying to pick up the slack left by the central government. Multiple initiatives have sprung up across the nation to buy ventilators and tests, as well as to design tests and produce ventilators domestically.
On March 16, Zelenskiy gathered a group of big business owners, asking them to step up the effort in their regions -- and some did.
Oleksandr Yarovslavskiy, a businessman from the eastern city of Kharkiv with investments in industries ranging from mining to real-estate development, made a deal with Asia's richest man, Jack Ma, to ship $80 million worth of COVID-19 tests to Ukraine.
Andriy Stavnitser, the owner of a port in the Odesa Oblast on the Black Sea, now buys and coordinates deliveries of supplies for hospitals across the region. He said that he was acutely aware that there has been no central procurement, and that hospitals were critically under-supplied.
At an emergency meeting on March 31 with Zelenskiy and Stepanov, the new health minister, several regional governors complained that they have money for medical supplies but cannot spend it due to difficulties navigating complex international searches for suppliers and negotiating procurement -- a role that should be played by Medical Procurement of Ukraine.
"We understand that locally it's very difficult to negotiate with producers and regulate supplies," Stepanov said. "And we see that there is money, but it's impossible to spend it."
He said that he had reached out to Medical Procurement of Ukraine and that he hoped the state company would step in and do its job.
As of April 7, however, its efforts were still paralyzed, said Zhumadilov. According to Lytovchenko, a Health Ministry "working group" that is supposed to support the procurement company's operations had not convened for more than a month, and Zhumadilov said some of the required documents related to procurement had not yet been signed off on by the ministry.
Copyright (c) 2020. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.
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