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Corruption revealed in Honduran hospital

ASJ - Honduras

A whistleblower has helped to uncover fraud and abuse of authority in a provincial hospital in Santa Bárbara, a rural district of Honduras.

In November 2015, the whistleblower alerted Transparency International’s Honduran chapter Asociación para una Sociedad más Justa (ASJ) about irregularities in the purchasing arrangements for medicines at the Santa Bárbara Hospital. ASJ launched an investigation that revealed how hospital managers had set up, and overseen, a tendering process involving bids from companies that didn’t exist and payments for medicines that were never delivered.

On 12 November 2013, the hospital published official notice of several private bidding processes for purchasing medicines worth a total of 2,304,325 lempiras (US$111,644). The amount up for tender was divided into seven separate lots, worth between 82,320 lempiras (US$3,988) and 450,000 lempiras (US$21,802). The deadline was set for 14 November, giving interested parties just two days to prepare and submit their offers.

Bids were received from four Honduran companies, including Droguería y Distribuidora Kalyc Honduras (Kalyc). The four members of the hospital’s evaluation committee met two days later to assess the bids and decided to award all seven contracts to Kalyc.

When ASJ’s Advocacy and Legal Advice Centre began looking into the process two years later, it discovered that the other three companies involved in bidding were not registered with either the Honduran mercantile registry or the tax office. As such, they were not eligible to participate in a private bidding process of this kind and ASJ staff suspected that the three companies did not really exist.

The evaluation committee had ignored this fact. What is more, it appeared that both the short timeframe and the design of the bidding process had been manipulated to favour the winning company; by dividing the purchases into seven smaller lots — something forbidden by the regulations — the hospital managers had ensured the value of each lot remained below a minimum threshold. In this way, they avoided the need to launch an open public bidding process that would have involved much more stringent procedures.

On 9 November 2015, ASJ lodged an official complaint with the Honduras Special Prosecutor for Transparency and Combatting Corruption (La Fiscalía Especial para la Transparencia y Combate a la Corrupción Pública (FETCCOP)) accusing the managers of Santa Bárbara Hospital of fraud and abuse of a position of authority.

On 22 and 23 August 2017, the Honduran police carried out a dramatic raid on the hospital seizing documentation and arresting seven of its employees, including the director, the administrator as well as the heads of nursing, purchasing, the laboratory and the pharmacy, who evaluated the bid. When FETCCOP dug deeper, it discovered that at least one signature on the documents awarding the contracts to Kalyc had been forged. Moreover, while on 18 November 2013 three of the accused had signed documents acknowledging receipt of the medicines and authorising payment, the hospital’s inventory showed that the medicines were never delivered.

The spotlight fell on the company Kalyc, which had already managed to win contracts with two other Honduran hospitals. The company had been set up in May 2011 by Karla Tejada Soto and her mother, but at the time of the Santa Bárbara tender had no commercial premises or warehouse. An order for Ms Tejada Soto’s arrest was issued, but she left the country and her whereabouts are unknown. The trial of the hospital managers began in August 2017 and is working its way through the Honduran courts with a verdict expected shortly.

To fight this kind of dishonest behaviour, in 2014 the Honduran government began setting up a centralised system for buying medicine for the public health service. The government plans which drugs are needed, but private bank, Banco Occidente, is in charge of organising the procurement process.

ASJ was invited to help supervise the transparency of this process. Two representatives of the organisation now oversee every step of tendering processes and certify that the decisions taken are fair, while the United Nations Office for Project Services inspects the quality of the medicines delivered.

The new system, which was renewed for a further four years in 2018, has had a positive effect according to Gerardo Sánchez, a researcher at ASJ. “The number of cases involving the health sector has gone down,” he says, “now the big cases we tend to see usually involve infrastructure projects such as building roads.”

Nevertheless in the eyes of many Hondurans, corruption continues to be a problem — 54 per cent believe that levels of corruption increased over the past 12 months. This is according to Transparency International’s latest Global Corruption Barometer (GCB) — Latin America and the Caribbean, which asked more than 17,000 citizens in 18 countries across the region about their day-to-day experiences of corruption. When it comes to accessing health care, 10 per cent of people in Latin America and the Caribbean reported paying a bribe during the past twelve months, but in the case of Honduras, the proportion rises to 15 per cent.

This article was written as part of the Global Corruption Barometer 2019 — Latin America and the Caribbean.

Transparency International’s Advocacy and Legal Advice Centres (ALACs) provide free and confidential legal advice to witnesses and victims of corruption. With more than 100 offices in over 60 countries, ALACs provide an accessible, effective way for people to report corruption and demand action. Learn more at www.transparency.org/reportcorruption.

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