Corruption in Honduras once again shows its talons during the country’s quarantine and demonstrates the incompetence of government policies to deal responsibly with the pandemic; purchases and acquisitions of supplies and medical units are wrapped up in a network of corruption that involves diverse actors and families tied in distinct ways to the government of Juan Orlando Hernández.
Corruption in Honduras once again shows its talons during the country’s quarantine and demonstrates the incompetence of government policies to deal responsibly with the pandemic; purchases and acquisitions of supplies and medical units are wrapped up in a network of corruption that involves diverse actors and families tied in distinct ways to the government of Juan Orlando Hernández.
The government of Honduras has adopted a series of measures used to untie funding from the national budget and access financial resources from multilateral finance organizations and bilateral international cooperation in order for the country to confront the Coronavirus in the country.
On February 10, 2020, Juan Orlando Hernández Alvarado approved the Executive Order PCM-005-2020 at the Council of Ministers, The executive order ultimately declared a national emergency due to Covid-19 and authorized the use of direct purchases by the State, evading in this sense the legal framework for tendering established by the Government Contracting Law.
The execution of resources to contain the Covid-19 emergency has ascended to some 219 million dollars as of August 14, 2020. However, in the middle of this crisis, there has been some irregular activity, specifically overvalued medical purchases and equipment, events reported by the National Anti-Corruption Commission and other sectors.
Hospitals without space
Expediente Público toured the public hospitals in the northern zone of the country and documented testimonials of patients and family members affected by the pandemic. Other accounts have appeared in the media and social networks. These documented experiences with public hospitals evidence that national recourses are not reflected in health care services nor in the social policies directed at the most affected sectors. Moreover, a corrupt network active at all levels of the Honduran state has been responsible for the national response.
The historically deficient health care system in Honduras has complicated the response to Covid-19. As a result of the pandemic, accessing a medical consultation is now more complicated due to the saturation of 90% of hospital beds. According to official data published on September 14, 2020, Honduras registers 2,079 deaths and a little over 67,779 infections.
Medical personnel and health care workers have repeatedly pointed to the weaknesses of the health care system and the government’s inability to respond effectively to the pandemic. Civil society has also been an active voice in exposing government failures.
A recent report from the civil society organization Transformemos Honduras reveals that 5 out of 10 Hondurans receiving medical attention in a public care center had to buy their own medicines, and more than half of doctors and nurses personally had to cover the expenses of medical supplies to cope with the spread of Covid-19.
The results are part of a national survey carried out from June 12 to June 16 of 2020 on the perceptions of patients, doctors, and medical personnel that sought medical attention or worked in outpatient clinics, peripheral practices, and hospitals part of the Honduran Institute of Social Security (IHSS), comprehensive health centers (CIS), and public hospitals at the national level.
According to the survey, 52% of patients had to pay for their own medications, since these drugs were not available in the care center where the patient had sought medical assistance. Only 21% of patients considered that the health care institution possessed the medications prescribed, and 52% of patients said that some of the drugs were not available.
For Doctor Carlos Umaña, president of Medical Association of the Honduran Institute of Social Security, located in the industrial zone of the country, hospitals are at 95% operational capacity.
«We can consider this as a collapse of the health care system because these figures mean that practically each hospital can provide 10 to 15 beds maximum.»
Private clinic diagnoses justify deaths in homes
Official figures published by national institutions in charge of the emergency caused by the crisis of Covid-19 do not account for the severe cases of underreporting in Honduras.
Official data gathered by the National System of Risk Management (SINAGER) only capture victims diagnosed through testing. In this sense, Covid-19 data do not reflect victims that did not undergo testing, receive medical assistance, or pass away in route to the hospital or in their homes. Given the scale of underreporting, the number of Covid-19 cases in Honduras could be significantly greater than the current figures.
Honduran Medical Examiner Valdimir Núñez points to the quantity of bodies collected in the streets of San Pedro Sula and its suburbs. He states that local morgues in these cities have been unable to establish a cause of death and indicates that there are many cadavers waiting to receive polymerase chain reaction (PCR) tests, which are used in Honduras and other countries to verify if the person has been infected by Covid-19.
According to findings, the victims of these cases were destitute community members and citizens that sought medical attention, but died in route to a care center, an Expediente Público source explains.
The examiner reveals that if someone passes away in their home, the State registers the death as having occurred naturally, since it is unknown whether or not the death was caused by Covid-19. Nuñez also shares that families sometimes appear with medical diagnoses from private clinics so as to avoid burial issues. Nuñez states, «…here, it is clear that the [national] data is imprecise, as the actual number of Covid-19 deaths is unknown, making it difficult to achieve epidemiologic control and reliable statistics.»
Núñez expands that the country is not reporting suspected Covid-19 deaths, as it could take months before the PCR test results arrive at Medicina Legal and the death certificate diagnosis is given.
Irregular purchases
In light of the large-scale corruption connected to direct purchases made by the Health Ministry, Honduran authorities determined that all purchasing processes would be carried out through a trust established with Banco de Occidente. In 2014, following recommendations from national and foreign organisms, authorities established this mechanism that permitted higher levels of efficiency and transparency in the acquisition of medicines and medical equipment.
This approach integrated the participation of the United Nations Office for Project Services (UNOPS), whereby, according to its own regulations, the international organization would coordinate the different processes of acquisition and citizen oversight.
Executive decrees, which are legal instruments approved by the president of the republic in the Council of Ministers, divided the acquisitions made by the Health Ministry into three managing parts: The Permanent Commission for Contingencies (COPECO), Honduras Strategic Investment (INVEST-H), and the Banco de Occidente Trust.
Dark transactions
On March 18, 2020, the State of Honduras, through INVEST-H, paid an advancement of 47 million dollars to the American suitcase company, Elmed System Medical to facilitate the treatment of Covid-19 patients. Specifically, payment went to the acquisition of seven mobile hospitals and seven facilities for the treatment of hospital waste. The equipment would not arrive from Turkey until the end of May.
Different entities denounced the transaction and discovered eventual irregularities with the million-dollar acquisition. On April 21, 2020, the Embassy of Turkey in Guatemala released a public statement warning that no company in Turkey was manufacturing mobile hospitals for Honduras.
Moreover, on June 21, 2020, the Turkish Company, SDI Global LLC publicly denounced that the American company, ELMED Medical, supplier of mobile hospitals, falsified and utilized its company’s stamps and logos to conduct business deals with the government of Honduras.
On July 10, 2020, after four months of waiting, the first two isolation hospitals arrived at Puerto Cortés, located in the northern zone of Honduras. However, to date (September) the hospitals are not authorized to treat Covid-19 patients.
Due to a series of inconsistencies in the invoices remitted by IVEST-H, the Public Prosecution Service had to intervene in order to avoid issues with the customs clearance, as there had not been an adequate supervision of the container contents.
Thus, the investigation, involving oversight from the National Anti-Corruption Commission, the High Court of Auditors, and the customs authority, began.
The Public Prosecution Service revealed that, among the first findings in the containers, there were disused and deteriorated medical equipment, undesirable for use with Covid-19 patients.
At the end of June, Marco Antonio Bográn Corrales was still the director of INVEST-H, previously named the Implementation Unit of the Millennium Challenge Account Program Honduras (MCA-Honduras). Corrales left his position after the accusations regarding his mismanagement of public funds supposedly allocated toward the public health crisis of Covid-19.
The Public Prosecution Service is investigating Corrales for three alleged corruption offenses: fraud, abuse of authority, and embezzlement of public monies. However, Corrales argues that his acquisition of the mobile hospitals was an act in good faith. He also assures that no one intervened in this process and that he localized the supplier after conducting an internet search.
Before the government of Honduras tested the resource allocation decree, Marco Bográn bought seven mobile hospitals with funds allocated for the construction and maintenance of road infrastructure, according to a report from the Integrated Financial Administration System (SIAFI).
The government advanced the payment of 47 million dollars to a company with a doubtful reputation in the United States.
More expenditures
In addition to the million-dollar acquisition of the seven hospitals, INVEST-H paid some 2.3 million dollars for the construction and supervision of the portable care facilities to treat Covid-19 patients.
The companies set to oversee this labor are Technical Construction and Consulting Services, S.R.L. (SETCCO); The Technical Cabinet of S.A. Companies (GATESA); Asociados de Honduras Consulting, S.R.L. (CONASH); The Association of Engineering Consultants (ACI); Engineering Consultants (INCONSUL); and Consultants in Engineering, S.A. (CINSA).
Conflict of interest
While the commitment of Guatemalan owner of Elmed System Medical, Axel López was to send a group of ten experts to Honduras to aid in the installation process of the mobile hospitals, INVEST-H had planned to finance close to 121 thousand dollars for the food, lodging, and security services necessary for these ten experts over the course of 15 days.
Instead, Axel López had outsourced the installation process of the first two hospitals brought in from Turkey to the Honduran company, ECOMAC. Expediente Público has detected the owner of ECOMAC, Luis René Eveline Hernández, as having a potential conflict of interest for been favored by the State through his participation in another company, Maintenance and Construction Services S.A. (SERMACO).
SERMACO participated in business dealings worth some 933 million dollars for the preparation of the grounds where three of the five hospitals would be installed. Mr. Eveline is a former public servant that has been tied to the Honduran political and corporate elite.
Same partners, different contracts
Documents in the possession of Expediente Público also evidence that the companies contracted for this installation process form part of three consortiums that favor each company separately, despite being interrelated, which is prohibited by the Government Contracting Law.
Politicians and their families, closely tied to the government of Juan Orlando Hernández, actively participate at various levels of the companies. Expediente Público managed to put together evidence that unequivocally leads to the conclusion that all of the companies contracted for the supervision and construction of the mobile hospital installations are interconnected and present conflicts of interest and corruption that are in violation of the contracts established.
The maze of contracts and close relationships with the government maintained by the companies show that the acquisition of mobile hospitals goes beyond contractual good faith.
The National Anti-Corruption Commission, in the report titled «Corruption in the Time of Covid-19, Part 1», establishes that some 3.6 million Honduran lempiras (146 thousand dollars) represent the damages caused by the overvalued purchase of gloves and masks.
Regarding the national emergency, this CNA has also denounced other irregularities and found that public servants supervising the acquisitions form part of a plot to plunder the resources set aside to combat Covid-19. For example, children and friends of high-level officials are hoarding business activities and attaining contracts for the national emergency.
The Bográn Family: their transactions and businesses
Marco Bográn, the former director of INVEST-H, was also in charge of the Implementation Unit of the Millennium Challenge Account Program Honduras (MCA), created in 2005 after Honduras became a recipient of grant funds from the U.S. Government’s Millennium Challenge Corporation (MCC).
The Bográn family is of the nationalist drift and, according to the political establishment and press, reaps the privileges of being connected to government bureaucrats.
The nephew of Arturo Corrales Álvarez, former Minister of Security and Chancellor of the Republic, is proprietor of the companies, Ingeniería Gerencial S.A. and shareholder of Consorcio de Servicio Medición de Energía Eléctrica de Honduras (SEMEH). Both companies have obtained million-dollar contracts from the government. In Honduras, Corrales stands out as an important figure within the nationalist movement led by Juan Orlando Hernández Alvarado and Porfirio Lobo Sosa.
María Antonieta Guillén de Bográn, wife of her uncle, Roberto Bográn, was the vice president of the government of Porfirio Lobo Sosa.
Bográn also has political and family ties with the President of the High Court of Auditors (TSC), José Juan Pineda Varela, responsible for establishing administrative, civil, and criminal liabilities for public officials involved in government fraud schemes.
His sister, Cinthya María Bográn is married to José Alejandro Pineda Moncada, son of the President of the TSC, José Juan Pineda Varela.
The Foreign Corrupt Practices Act
Public officials implicated in the case of the seven mobile hospitals in Honduras should be sanctioned by the United States Government, applicable under the Foreign Corrupt Practices Act (FCPA).
Analysts consulted by Expediente Público explain that when government officials are involved in corrupt acts with United States companies, there is a mechanism in place to inform authorities of violations to the United States legal framework. This framework includes FCPA.
FCPA sanctions United States companies that negotiate with, make payments to, or engage in bribery with foreign public officials.
In this instance, Expendiente Público concludes that there was corruption involved in the acquisition of the mobile hospitals and that the United States Justice Department could sanction the proprietors of ELMED Medical, along with the Hondurans involved in the alleged fraud. Matteson Ellis, FCPA lawyer specializing in Latin America, explains that countries with higher levels of impunity are those that opt to participate in bribery, while «countries with strong government institutions find efficient ways to criminalize corruption in the public arena and sanction those responsible, because when the risk of being apprehended rises, behavior tends to change». In a case termed FIFA Gate, a similar scenario occurred with Alfredo Hawit and a defunct Honduran President, Rafael Leonardo Callejas.
Callejas was accused of 16 corruption crimes while serving as the president of Honduras, but the Honduran justice system exonerated him from all charges and allowed him to continue occupying important positions in the public administration and other entities, such as the National Football Association (FENAFUTH), until The United States Justice Department eventually caught up with him on the basis of international corruption charges.
In this context, corruption and impunity have had disastrous tendencies in Honduras, reducing the capacity of the Honduran State to respond to the public health crisis, excluding the most socially vulnerable sectors of the economy from access to state resources, and, ultimately, putting Honduran lives at risk.
