How much does a mask cost? The shortest answer is: it depends. Today in Mercadona you can find an FFP2 for 50 cents, but in the first months of the pandemic, the unbridled demand and limited supply triggered the prices of these products in international markets, which the pandemic turned into authentic souks: the Community of Madrid arrived to pay 10.70 euros for a face mask with the greatest protection. The investigations into the contracts that both the regional government and the Madrid City Council signed in those difficult weeks reveal, however, that a large percentage of that final price went to the intermediary companies, who were left with disproportionate margins of the cake. Some of businessmen or commission agents well related to PP leaders who were in charge of the institutions that signed the contracts.
The Court of Auditors warned of very high prices in Almeida's mask contracts
The Anti-Corruption Prosecutor investigations have been filed that had begun in February of this year on the award of masks that the Government of Isabel Díaz Ayuso signed with the company Priviet Sportive SL and for which the president's brother received a commission from the company of more than 200,000 euros. Although the Public Ministry does not see criminal behavior, its file decree reveals that the textile company that runs a friend of the Ayusos charged the Community of Madrid for the masks almost triple what they originally cost. The matter is now being investigated by the European Public Prosecutor's Office, which is trying to investigate whether there was embezzlement of community funds, since these extraordinary items for health spending were paid with money from the EU.
The contracts reviewed by Anticorruption reveal details of a business whose numbers no one had explained. The operation carried out by Daniel Alcázar, owner and sole administrator of Priviet; his friend Tomás Díaz Ayuso; and the Madrid Health Service (Sermas) handled these figures: a contract for 250,000 masks for more than 1.5 million euros in total, that is, 5 euros (without VAT) for each mask. To obtain the sanitary material at source, Alcázar turned to the Korean market and specifically to the company K Beauty & Media, with which, according to the Prosecutor's Office, he had already had commercial relations in the past.
The price that Priviet paid for the total number of masks was 480,170.3 euros (1.9 euros for each mask). Once the purchase was made, he had to pay the cost of the flight to transport them to Spain, which cost him 76,871.13 euros, and another 6,501.24 for taking them from the airport to the Ifema complex, where a field hospital worked to solve the saturation of hospitals. Thus, the total cost of Priviet to cover the medical material and deposit it at its destination was 563,542.67 euros: and the net profit it obtained after receiving the money from the Community of Madrid, almost one million (948,957.33 euros) .
That contract was signed on April 1, just two weeks after the declaration of the first state of alarm. The Prosecutor's Office elaborates in its letter an analysis of the contracts of more than 100,000 euros that Sermas made between March 13 and April 30 and notes that the one signed with Priviet supposed the fourth most expensive price per mask.
The largest agreement by size and volume of money is from April 18, with the company Vin Doré 24K SL: 1 million units, but at 2.30 each. The Community paid the most expensive mask –within this range of contracts– to the company Palex Medical SA, although it bought a smaller quantity (100,000) and of FFP2 quality.
Helianthus Medical was awarded a contract for 400,000 FFP2 masks at 5.88 euros, a total of more than 2.7 million euros. The difference is that that contract included an "immediate delivery", while the Priviet contract provided for a delivery period of 14 days and although the masks it offered were level FFP2-3, finally sent a KN95 typeof inferior quality to the FFP2 and much less reliable (and expensive) than the FFP3.
In this study of the prices paid to other companies, what those companies originally paid for the masks and therefore the profit margin they obtained does not appear, nor do the possible commissions that the intermediaries took for the management of those operations.
In the case of Priviet Sportive, more than 10% of the 950,000 euros that it obtained in net profit from the contract ended up in the account of Tomás Díaz Ayuso. The brother of the Madrid president charged more than 117,000 euros for the management of that delivery: 59,203.52 euros as a bonus for the successful award and 58,300 euros more for the presentation of the other five offers between those made of masks and other sanitary material . According to Anticorruption, the remaining money up to complete the 234,103.52 euros that he received from his friend's company comes from other offers presented but without success. That is, the exact amount that Pablo Casado revealed and for which he asked the president of Madrid for explanations, before the internal fight broke out in the PP that retired him from politics.
No one in the popular now questions that Ayuso's brother has received those amounts from a friend's company that obtained a profit of one million euros in a 1.5 million contract paid for by the Community of Madrid.
Two thirds for commissions
Leno Malaysia SDN. Bhd., owned by a malaysian businessman with an enigmatic name, San Chin Choon, received three payments from the Madrid City Council at the end of March for the sale of medical supplies: 6.2 million in exchange for masks, 3.9 for self-diagnosis tests and 4.6 for nitrile gloves. As happened in the rest of the administrations in Spain, these contracts were managed under the emergency formula protected by the state of alarm.
What differentiates the one in Madrid from the rest of the municipalities in Spain is that it paid much more for the material it bought. According to the analysis made by the Court of Auditors at the end of last year, the government of José Luis Martínez-Almeida paid for the rapid antibody tests at a rate of 16.03 euros per unit. On those dates, Barcelona or Zaragoza disbursed half. The City Council of the capital paid 6.24 euros for each mask that it bought from Leno, of the FFP2 and K95 type. Barcelona, for example, in those days paid 2.5 euros per unit; Seville, 4; and Zaragoza, 1.60.
The pieces that unite the Malaysian businessman with the Madrid City Council, as this newspaper reported, are the businessman Alberto Luceño and Luis Medina Abascal, until then only known for his appearances in the gossip press for being the son of Naty Abascal and the Duke of Feria. The Anti-Corruption Prosecutor's Office investigated these purchases and Medina's connection with Carlos Martínez-Almeida, cousin of the mayor, but reached a different conclusion than in the case of the Community of Madrid and sued against them. Along the way, the two commission agents had left scandalous clues about the money trail: they bought hyper-luxury cars, yachts, vacations at full speed and even a flat in Pozuelo, the Spanish town with the highest income per capita.
The complaint raised by Anti-Corruption after receiving the report from the Anti-Money Laundering Service and which is now being investigated in a court in Plaza de Castilla reveals that of the 6.2 million euros (without VAT) that the City Council paid Leno for 1 million masks, two third parts went to the commission agents.
“Of the 6,689,300 US dollars paid for the masks, 3,000,000 were transferred from the aforementioned account. [de Leno] to the one titled by Alberto Luceño, and US$1,000,000 to the one titled by Luis Medina," says the complaint from the Prosecutor's Office, which infers that "the real selling price of the masks was US$2,689,300 and that the defendants artificially inflated it to take US$4,000,000 as net profit from the operation; that is, 148% of the real price of the product”.
That is, Leno charged the Madrid City Council – and he did so according to the Prosecutor's Office because Luceño imposed the prices on the municipal government – a price almost three times higher than what he paid for the masks originally. The Chin Choon company repeated the operation with the rapid COVID-19 tests: it sold 250,000 tests worth 4.2 million dollars (3.9 million euros without VAT) to the City Council. Of that total, the Malaysian company deposited three million in the accounts of Luceño and Medina, 244% of the initial amount only in commissions. According to the Public Ministry, in addition, most of these tests were defective: 115,000 had a sensitivity level of 80% and 60,000 did not reach 66.7%.
Leno, Luceño and Medina managed a third contract this time with nitrile gloves, the most leonine of the three, but the material was defective, the City Council demanded the return of the money and the commission agents renounced their percentage to cover the amount.
The case of the commission agents of the City Council is in the investigation phase in the courts, while the contract of the Community of Madrid for which Tomás Díaz Ayuso received a percentage has been filed by the Spanish Prosecutor's Office -while the investigation initiated by the European –; However, the data revealed by the proceedings carried out to date reveal that in those initial weeks of the pandemic, the budgets of the contracts were dilated, at least in these two cases, to hide commissions of thousands or millions of euros from mere intermediaries.