Multi-Billion Ringgit Medicine Monopoly Involving Politicians, Senior Officials

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Details of high-ranking officials and companies linked to politicians allegedly involved in controlling billions of ringgit worth of medical supply to the Government have emerged.

  • Rigging of open tender process – controlled by six main tendering agents
  • Top tendering agents owned by high-ranking officials and/or politicians, or their relatives
  • International pharmaceutical companies bribe high-ranking officials/politicians to obtain/retain business in Malaysia

In a 12-page document emailed to the Health Minister Dr Dzulkefly Ahmad and forwarded to a few parties, including The Star, the document revealed the bid-rigging of open tender process, thus enabling the monopoly of medical supply to the Health Ministry.

From 2013 to 2016, the total medicine tender awards by the Health Ministry which amounted to RM3.7 billion were controlled by six main tendering agents.

It claimed that collectively, the top three tendering agents were awarded RM2.8 billion or 75.9% of the RM3.7 billion; top six were awarded RM3.4 billion or 90.93% of the RM3.7 billion of the total tender contracts value.

The document said that there were many established distributors, resellers and bumiputra tendering agents in Malaysia but the contracts were only appointed to a handful.

“More importantly, the top tendering agents are actually owned by high ranking officials and/or politicians, or relatives of high ranking officials and/or politicians. 

“International pharmaceutical companies collude with official-owned tendering agents to bid-rig,” it said.

According to the document, these drugs supplied are the open tender for medicine not covered under the Approved Product Purchase List (Pharmaniaga concession) which international pharmaceutical companies could participate.

The Ministry puts out a procurement tender and the companies will engage bumiputra tendering agents to bid for the tender according to the tender specifications and the agents are paid a percentage of commission based on every tender won, it said.

It claimed that these tendering agents act as intermediaries and earn a clean profit since they do not handle marketing, logistics or distribution.

“It is no coincidence that more than 70 pharmaceutical companies all only use the same few official-owned tendering agents,” it said, accompanied by proofs of the allegations.

By refusing to supply or deal with other resellers and tendering agents, international pharmaceutical companies grant official-owned tendering agents a monopoly and thus securing an automatic win in a tender, it said.

“From at least 2011 to the present, international pharmaceutical companies have been paying bribes to high ranking officials/politicians to assist in obtaining or retaining business in Malaysia in violation of the United States Foreign Corrupt Practices Act (FCPA).

 

“These corrupt payments are concealed as commission payments to the official-owned tendering agents,” said the whistleblower.

When contacted, Health Minister Dr Dzulkefly Ahmad said that he will look into it and peruse it properly.

“If there are substantive things, we will pursue it,” he said. – The Star