India-Brazil Chamber of Commerce on Senate Radar as CovaxinGate Probe Goes Beyond Brazil

Sao Paulo: Just before going on a two-week break, starting on Saturday, the Brazilian parliamentary commission of inquiry (CPI) investigating the handling of the COVID-19 pandemic by the Brazilian government opened new lines of probe into the Covaxin contract. With the scandal around Bharat Biotech’s vaccine getting bigger, it was revealed this week that a transaction of one million Brazilian reals ($2,00,000) by the Indian firm’s representative to the India-Brazil Chamber of Commerce (IBCC) is on the radar of the commission, which is mainly focused on the contract for 20 million doses of Covaxin. The panel is looking at the transfer of money to the chamber just ahead of the signing of $300-million deal on February 25, 2021.

First reported by O Globo newspaper on Wednesday, the day Emanuela Medrades, the executive director of Precisa Medicamentos, the Indian firm’s representative in Brazil, appeared at the Senate, the revelation has raised many questions – especially because the two top office-bearers of the chamber also hold the posts of honorary consuls of India in two cities here. While Leonardo Ananda Gomes, the chamber’s president, is honorary consul of India in Rio de Janeiro, his father, Elson Gomes Junior, occupies the same position in Belo Horizonte in addition to being IBCC’s honorary president. The chamber also has Suchitra Ella, the joint managing director and co-founder of Bharat Biotech, on its board besides having Precisa Medicamentos as an associate.

The chamber, which describes itself as a “private non-profit organisation”, has denied any role in the deal between the Indian company and Brazilian government. “As a policy, the chamber refrains from commenting on its business relations with members or associate members. However, in this specific case, it may be mentioned that any transfers made from Precisa Medicamentos to IBCC correspond to its contributions to the institution as part of membership and to the sponsorship of events and initiatives of IBCC in 2021,” the chamber said in response to a question from The Wire.

While in its reply to The Wire, the chamber didn’t elaborate on the events sponsored by Precisa Medicamentos, in its response to O Globo, the private organisation had listed them as “Pharmexcil [Pharmaceuticals Export Promotion Council of India] business roundtables; Celebration of the International Day of Yoga; Special Mission for the BRICS 2021 (to be held) and others”, which are all, in fact, organised by India’s official missions in Brazil. India has an embassy in Brasilia and a consulate-general in Sao Paulo. The posts in Rio de Janeiro and Belo Horizonte are honorary.

The Asuncion connection

The commission, comprising 11 senators, began its work in April to examine the government’s “acts of omission and commission” during the pandemic. But since June, its focus has shifted to Covaxin, with many revelations about suspected irregularities in the contract, which has already been suspended. As reported by The Wire, the commission has been probing the money trail in addition to looking at the deal between the Indian company and its Brazilian representative. Though the chamber has connections with both the companies, it denies helping in the “initial contact” between them. “Precisa Medicamentos became an associate member of IBCC on December 28, 2020,” said the chamber in response to The Wire’s questions.

While representatives of Precisa Medicamentos had attended the Indian firm’s first meeting with the Brazilian government on November 20, 2020, and the two signed a Memorandum of Understanding (MoU) on November 24, 2020, the formal contract between the two firms was signed on January 12, 2021, days after the Brazilian company had joined the chamber as an associate. The money, under the CPI’s scanner, was transferred to IBCC in two instalments on February 17 and 23, and the contract signed two days later. On March 8, Suchitra Ella joined the chamber’s advisory council. “We are pleased to announce the new member of the India Advisory Board of the IBCC, Ms Suchitra Ella…Furthermore, Bharat Biotech is a partner of Precisa Medicamentos, a company associated with the India Brazil Chamber of Commerce,” IBCC had announced in March 2021.

At the senate, Emanuela Medrades, who had signed both the contracts – with Bharat Biotech and the Brazilian government – was pushed by several senators on the chamber’s role in the deal. “Can you explain why on the eve of signing of the contract there were deposits of one million reals into the account of India Brazil Chamber of Commerce?” asked Senator Humberto Costa, a leading member of the commission. “No, I don’t know why,” said Medrades, who has been part of the negotiations from the beginning and made several trips to India as a top-ranking executive of her firm.

The Brazilian company has been in the eye of a storm since it was revealed in mid-June that a Singapore-based company called Madison Biotech had sent an invoice for $45 million in advance payment to the Brazilian ministry of health. Revealed by Ricardo Miranda, a whistleblower from the ministry, the scandal has bought all aspects of the contract – the price of vaccine, offshore account, multiple invoices, MoU partners and the Brazilian company’s own record – under the scanner.

The investigation into the scandal, called CovaxinGate here, is keeping millions of Brazilians hooked on to the senate hearings. On Friday, before going on recess, the CPI members gave a clear hint of intensifying their investigations into newly-opened fronts by looking at Bharat Biotech’s deals beyond Brazil as they held a virtual meeting with parliamentarians from Paraguay. The Indian vaccine’s deal with Brazil’s neighbour is under probe in that country too. Now, senators from both countries have created a channel for sharing information on the two deals which are linked to the Singapore firm.

Though the Paraguayan story has been known for a while, what triggered the CPI’s interest in that probe is a statement by Medrades at her testimony. When asked about the legality of the invoice from Madison Biotech, which is not part of the contract, the executive cited the example of Covaxin deal with Paraguay as a “normal procedure”. Two days later, Brazilian senators linked up with their counterparts in Asuncion to see the documents obtained by them. The contract has become a hot political issue in Paraguay as the Indian firm faces allegations of “breaching the contract” for two million doses. The focus of the probe in both the countries is the demand for payment into an offshore account in Singapore for a vaccine that is manufactured and exported from India.

Passing the buck

Emanuela Medrades made her appearance at the Senate on July 13. As she entered the chamber, she bumped her fists with CPI president Omar Aziz before taking a seat next to him. With a black mask pulled up to the edge of her lower eyelids, Medrades refused to answer even basic questions, using the right to “not self-incriminate” herself. After a tense day, during which the Supreme Court clarified that it was for the panel to decide which questions could be “self-incriminatory”, Medrades returned to the chamber only to complain that she was “exhausted”. Chastised by Senator Aziz as another senator demanded her arrest, Medrades promised to “answer all the questions” the next day.

On July 14, Medrades returned to the chamber in a new avatar, giving long answers to all questions. With the mask still raised up to the edge of her eyes, Medrades put up a spirited defence of Precisa Medicamentos as she aligned her position with that of President Jair Bolsonaro’s government. When pressed by senators on crucial issues like the vaccine price, offshore firm and invoices, Medrades passed the buck to Bharat Biotech, the company on whose behalf she signed the contract with the government.

Precisa Medicamentos is no stranger to controversies. Earlier this year, the company was probed by the federal police in the purchase of 150,000 rapid test units. More recently, seven days before the signing of the Covaxin contract, the company’s name figured in another scandal in the purchase of condoms by the health ministry. The controversial firm has a majority-share holder called Global, which has been charged with receiving $4 million in advance from the ministry and not delivering the order for rare-disease medicines. A recent report by the Financial Activity Control Council has raised alarm over the company moving a volume of “resources incompatible with its equity” between February and June 2021. When Senator Humberto Costa asked the executive if Bharat Biotech was aware of the investigation into Precisa Medicamentos’s deal for rapid tests and other cases, Medrades replied that the Indian company knew their history. “We were always transparent (with them),” said Medrades in a matter-of-fact manner.

When CPI rapporteur Renan Calheiros tried to corner Medrades on the controversial MoU between Bharat Biotech, Precisa Medicamentos and a third company called Envixia Pharma LLC, the executive again passed the buck to the Indian company. “Envixia was brought by Bharat [Biotech]…we have no relationship with Envixia. It is Bharat [Biotech] who decide who will be their broker in each of their operations,” said Medrades, using the English word “broker” for Envixia in a testimony that was entirely in Portuguese. Again, on the matter of taxes, the executive diverted the question towards Hyderabad. In response to Senator Calheiros’s question on how Brazil would collect taxes from a company based in a tax haven, Medrades was again curt and clear: “The taxes will be paid at source – in India or Singapore.”

With a raging controversy around CovaxinGate, Bharat Biotech has become a household name in this country – albeit in an extremely negative sense. But, despite the row and suspension of its $300-million contract, the company has largely remained mum or issued statements which can be misleading at best. Now, after Medrades’s testimony, it seems the Indian company and its Brazilian representative may not even be on the same page on issues such as the price of Covaxin. The Indian company’s claims that it always proposed to sell its vaccine at $15 a dose, a position which has been challenged by news outlets including The Wire, with reports based on an official document that shows the company made an initial offer of $10 a dose. Dismissing the price in the document as a “mistake”, Medrades held Bharat Biotech responsible for the $15 price as she claimed that her company had “tried to bring the price below $10 in its negotiations” with the Indian firm.

The Brazilian health officials too have maintained the same position, that they tried to bring the vaccine price down, without bothering to explain why they accepted the value – the highest for any vaccine – for a serum that didn’t even have approval from the country’s health regulator.

The devil in the detail

CovaxinGate would not have become such a huge issue if the head of health ministry’s import wing, Ricardo Miranda, had not gone to the media – and then to Senate – with his story that he had informed Bolsonaro about the $45-million invoice and the “extreme pressure” put on him to approve it. In its defence, the government deployed top officials who claimed at a press conference that the first invoice was “fabricated” by Miranda and only its second and third versions were the right invoices sent by the Singapore firm.

If a few had doubts about Miranda’s story, they were dispelled in a brilliant takedown of the second and third invoices by Senator Simone Tebet during a hearing last week. Like a deft prosecutor, the senator put the two invoices on a screen inside the chamber as she pointed out the mistakes, counting no less than 30 – all marked with red arrows – in the invoices. While the first invoice, said the senator who is a lawyer by training, had “no mistakes as it came from Singapore where English is the official language”, the other invoices have many grammatical mistakes. “There are numerous errors, the most glaring of them is the spelling of PRICE, which is correct in the first invoice, but turns into PRINCE in the other two…also the preposition “to” has been dropped from “according the agreement” in the invoice. It seems someone has done a literal translation from Portuguese,” said Tebet, hinting that the two invoices were fabricated in Brazil. “Someone committed a fraud.”

Senator Tebet’s performance, which went viral on social media, had put the government and Precisa Medicamentos in quite a tight spot. But at her testimony, Medrades rescued them both by stating that the invoices came directly from Bharat Biotech in India. “All the changes to the invoices were not done in Brazil, but were made by Bharat [Biotech],” said Medrades, once again passing the buck to the Indian firm. When Senator Eliziane Gama pointed out that the time of delivery of the invoice email shows that it was sent at 6:30 am from India and wondered “if people worked so early”, Medrades was again crisp in her reply: “Yes, they do work so early.”

It may be a bit early to say if Precisa Medicamentos has thrown Bharat Biotech under the bus to save their own skin or if it is a calculated strategy to block uncomfortable questions as the Indian firm and its executives are quite far from the Brazilian panel’s reach. But that may change soon as the senators look determined to dig deeper. Already sitting on more than two tetra bytes of documents, the CPI asked the federal police, ministry of health, Internal Revenue Service and the Brazilian Army for more information and documents about the Covaxin deal on Friday. The senators have also asked Precisa Medicamentos to produce the contract between the company and Bharat Biotech and provide complete information about the partners, shareholders and beneficiaries of the assets of Madison Biotech, the firm located in Singapore. Founded by Dr Krishna Ella in February 2020, the Singapore offshore has among its directors Dr Raches Ella, a US citizen who led the Covaxin clinical trial, and Krishnamurthy Sekar, a Singapore citizen who presumably signed the first invoice but has not accepted or denied it till now.

With Madison Biotech under probe in Brazil and Paraguay and the investigators going after it structure in Singapore, Bharat Biotech definitely has more probing questions coming its way when the CPI resumes its sessions on August 3, with a testimony by Precisa Medicamentos’s owner Francisco Maximiano.

Shobhan Saxena and Florencia Costa are independent journalists based in Sao Paulo, Brazil.

This work by The Wire is licensed under CC BY-ND 4.0