On Friday, the United States Attorneys’ Office for the Southern District of New York unsealed an indictment against Liz Telecomm, a China-based purported manufacturer of long lasting insecticidal nets, commonly referred to as “bednets.”
Bednets protect people from the diseases of mosquitoes, and are a core tool in the fight against Malaria in the developing world and in countries that have concentrated levels of these disease born insects.
The Burkina Faso investigation was one of my last as Director of Investigations of the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) in 2013, and involved a joint investigation with the Office of the Inspector General at U.S. AID of corruption at the highest levels of the Burkina Faso government.
Together the investigations identified a scheme by government insiders to steer these valuable contracts for more than two million nets, to the ultimate manufacturer, Liz Telecomm, who had adopted the identity of another corporation, Thai based Tana Netting, in order to help win the contracts. Not only was the integrity of the procurement process tainted, the damage was further amplified by the fact that the company who got the contract ultimately failed to treat the nets with the medicinal component. It is the medicinal content that many contend provide the greatest protection from being bitten by a mosquito carrying malaria.
The quality of the counterfeiting was amazing. To the naked eye, one could not see the difference between the counterfeited packaging and Tana’s actual product. Tana Netting, cooperated significantly with the investigation and even took undercover video in China at the scene of the responsible parties and delivered the video to us. Tana’s business suffered greatly as a result of the corruption and the lost business.
More importantly, however, the population of the country was placed at tremendous risk of having much less protection against Malaria, all the while thinking that they did. The Global Fund Secretariat reacted quickly when I apprised them of the situation, and mitigated what could have been a substantial disaster by quickly mobilizing the delivery of proper nets to the country once the problem was identified by my team.
Nevertheless, the case presents another compelling justification for strong and effective oversight of procurement contracts for health products in high-risk locations where some still put profit over the health and safety of millions of people.
Robert M. Appleton is a partner in Day Pitney LLP, based in the firm’s New York office. His practice focuses on FCPA matters, economic and financial sanctions, and compliance issues. In 2005, he served as former U.S. Federal Reserve Chairman Paul Volcker’s Special Counsel in the Independent Iraqi Oil for Food investigation. In 2008, Appleton was selected by the U.N. Secretary General to serve as Chairman of the United Nations Procurement Task Force. He was Director of Investigations and Senior Legal Counsel at the Global Fund from 2010-2014. He also served as a supervisory Assistant U.S. Attorney, in the U.S. Department of Justice, Office of the U.S. Attorney for the District of Connecticut, for more than 13 years. He can be contacted here.