News2020.05.26 16:25

Vilnius city officials and a firm suspected of fraud in lung ventilator deal

Lithuanian financial crime investigators, the FNTT, are looking into a deal by Vilnius Municipality to procure lung ventilators. The firm Andrikus, which has failed to deliver the goods despite being paid in advance, is suspected of tax fraud.

City administration employees are also under investigation for suspected abuse and embezzlement, the Financial Crime Investigation Service (FNTT) said in a statement.

On Tuesday, FNTT officers took documents from the municipality's offices as part of an investigation into suspected embezzlement and bookkeeping fraud by Andrikus.

“The pre-trial investigation was started after receiving evidence that the municipality administration entered into a contract with a Vilnius-registered company in late March to purchase 10 lung ventilators for 278,000 euros,” the FNTT said.

The price and the selection of this supplier raised reasonable doubts, according to the service, not least because the company had previously not been engaged in medical supplies.

The FNNT also said that Andrikus sold medical goods to government and municipal institutions this year, but has allegedly failed to report it to tax authorities.

The company has not paid any taxes this year and has not submitted any VAT declarations, according to the FNTT.

The city also fully paid for the Chinese-made lung ventilators in advance, but they were not delivered by the end of April as agreed.

The deal is also under review by the Public Procurement Office (VPT).

Vilnius Municipality terminated its contract with Andrikus, the daily Lietuvos Rytas reported last week, and is seeking to recover the money it paid to the company.

No formal suspicions have been brought yet in the investigation led by Vilnius Regional Prosecutor's Office.

‘Normal process’

Commenting on Facebook, Vilnius Mayor Remigijus Šimašius said on Tuesday that the probe was “a normal process [...] when damage done by a supplier is under investigation”.

He said the city authorities were cooperating with the investigators. “The company must accept liability for the damage,” the mayor said.

Meanwhile, the municipality's director of administration Povilas Poderskis told BNS he could not provide any more details about the ongoing investigation.

He said the city signed over 100 contracts to purchase personal protection equipment and lung ventilators during the first months of the coronavirus quarantine, and three of them, including the one with Andrikus, were later terminated.

“There are questions regarding one supplier. The advance payment was made, the goods were not delivered and the contract was terminated. The FNTT is investigating this case and asked for documents from the municipality. We provided all documents and we now expect the FNTT's assistance in recovering the payment,” Poderskis told BNS.

“Naturally, there was no time for any checks during the peak of the crisis, and that is being done now, even if in a very rough way,” he added.

“It's OK, we will fix those errors and move forward. It's only the first wave of Covid-19 and there's no time for a witch-hunt,” Mayor Šimašius said.

The Health Ministry had previously warned that ICU S1100 lung ventilators were wrong for the country's pandemic response, but Vilnius authorities still decided to buy ten items from Andrikus.

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