Misappropriations in Vanadzor and St. Grigor Lusavorich Medical Centers

The Prosecutor General's Office of Armenia has launched criminal cases against the staff of two medical centers for the alleged misappropriation of authority by commercial organization personnel regarding the procurement processes of hemodialysis supplies. This was reported by the Public Relations Department of the Prosecutor General's Office.

Earlier, the State Oversight Service of Armenia had forwarded findings on the purchasing procedures for hemodialysis supplies to the Prosecutor General's Office. An investigation by the Department of Protection of Public Interests at the Prosecutor General's Office found that the St. Grigor Lusavorich Medical Center LLC and the Vanadzor Medical Center LLC had purchased hemodialysis supplies from Company A from 2015 to the beginning of 2019, for a total value of 1,613,331,000 AMD.

The customs value of these supplies was found to be 722,670,000 AMD, meaning the medical centers procured the supplies at approximately 2.2 times the customs value. The medical centers organized eight purchasing procedures, with 92 lots, and in all cases, Company A was the sole winner. The procedures at both medical centers were non-competitive and violated the provisions established by the Law on Procurement and Government Decision No. 526-N, adopted on May 4, 2017.

Specifically, the technical specifications of the products represented those of specific models from Company F, meaning that only the representative organization of said company could participate in the procurement process. In the announcement for medical supplies procurement published by the Vanadzor Medical Center on January 31, 2019, specific models of Company F were cited, and the technical specifications were mere copies of the specifications for that particular model, with no corresponding hemodialyzer model available on the market. The bidding results indicated that only Company A participated in the procurement for the specific model of the hemodialyzer, proposing a price of 7,000 AMD per unit.

Meanwhile, for the needs of the St. Grigor Lusavorich Medical Center, a competitive procurement process conducted almost simultaneously with modified technical specifications attracted four participants, including Company A, which offered a price just 300 AMD lower at 6,700 AMD per unit. In another procurement process published by the Vanadzor Medical Center on January 31, 2019, only Company A was the participant, presenting a price offer that was 8,827,000 AMD lower in a competitive process held the same month.

In the case of two lots, Company A's price proposal was 44,470,000 AMD, while the same goods were purchased by St. Grigor Lusavorich Medical Center for 34,131,600 AMD, resulting in a difference of 10,338,400 AMD less. Thus, the investigation revealed that public officials at both medical centers had allegedly misused their regulatory authorities to organize non-competitive procurement processes for hemodialysis supplies, leading to severe consequences due to violations in setting technical specifications.

The purchasing processes were neither economical nor effective, impairing the principle of establishing market-based pricing mechanisms. Since 2015, all purchasing procedures organized on a non-competitive and discriminatory basis have seen Company A as the sole winner, preventing products from other companies in the sector from competing in the said processes.

Considering that the investigation revealed data containing elements of a crime, criminal cases have been opened under Part 2 of Article 214 of the Criminal Code of Armenia. The preliminary investigation into the criminal cases has been assigned to the Investigative Committee of Armenia.