Explained: Brazil's $324 million controversial Covaxin deal and its implications for President Jair Bolsonaro

The Brazil Health Ministry signed a contract for 20 million Covaxin doses in February. (Image: Reuters)

A $324 million Covaxin contract signed by Brazil has been mired in serious allegations of graft, prompting the Health Minister to suspend the deal as the investigation is underway.

Brazil's President Jair Bolsonaro and Health Minister Marcelo Queiroga have denied allegations of wrongdoing.

"According to the preliminary analysis of the Office of the Comptroller General (CGU), there are no irregularities in the contract but, for compliance, the Health Ministry chose to suspend the contract," the ministry said in a statement.

Read: Brazil suspends $324 million Covaxin contract amid accusations of irregularities

Bharat Biotech has also denied any allegation of wrongdoing with respect to vaccine supply. The company said in an emailed statement that it had adhered to the highest standards of compliance, as reported by AP.

Nevertheless, the Brazilian federal prosecutors have opened an investigation into the deal, citing comparatively high prices, quick talks and pending regulatory approvals as red flags. The deal is also being probed by a Senate panel investigating the government's handling of the pandemic.

Also read: Brazil probes Health Ministry deal to buy Covaxin vaccine

Brazil recently surpassed 5,00,000 official COVID-19 deaths, the world’s second-highest behind the United States. About one in every 400 Brazilians has died from the virus.

What the Covaxin controversy about?

In February, Brazil's Health Ministrysigned a contract for 20 million Covaxin doses. Brazil agreed to pay about $320 million — at a cost of $15 per vaccine dose, the most expensive of all vaccines Brazil purchased — to Precisa Medicamentos, the representative of Bharat Biotech in Brazil.

The allegations emerged when a Singapore-based firm, now suspected of being a shell company, billed the Brazilian health ministry $45 million for yet-to-be-delivered doses of Covaxin, which did not have regulatory approval in Brazil.

A whistleblower at the Health Ministry said he had faced pressure to greenlight the import of Bharat Biotech’s Covaxin and that there were irregularities in the invoices.

Luis Ricardo Miranda, head of medical imports at the Brazilian health ministry, said that an invoice seeking a $45 million upfront payment to a Singapore-based company raised suspicions.

There were several red flags, according to Miranda, who testified before a Senate panel investigating the government's handling of the pandemic.

Miranda said that Brazil's $300 million contract for Covaxin made no mention of the firm that sent the invoice, Madison Biotech, an apparent shell company.

Yet, Miranda started receiving phone calls at all hours from his bosses, putting what he called "atypical, excessive" pressure on him to approve the payment.

Anvisa, Brazil's health agency, approved the importation of the Covaxin vaccine with restrictions on June 4, allowing the entry of only 4 million doses. In March, the agency had rejected a request to import the vaccine, citing concerns over a lack of documentation and information on its safety.

President Jair Bolsonaro's abetted corruption?

Accusations have been made that Bolsonaro turned a blind eye to possible corruption in a deal to purchase coronavirus vaccines.

Miranda claimed that he had informed Bolsonaro that he had been pressured to sign a contract that would increase the average price of vaccine doses by 1,000 percent.

Miranda took his concerns to his brother, Congressman Luis Miranda. Both later said they met with Bolsonaro on March 20 to warn him the Covaxin contract could be a "dirty deal".

Congressman Miranda said Bolsonaro told him in March he would order the police to investigate, but never did.

Investigations into Covaxin deal

Brazil's federal prosecutor's office is investigating possible irregularities in the contract to purchase 20 million doses of the Covaxin vaccine. The price per dose, which was higher than for other COVID-19 vaccines, drew prosecutors attention.

Federal prosecutor Luciana Loureiro Oliveira said in a statement that the ministry signed a purchase contract for the Bharat Biotech vaccine even though it had not been approved by Brazil's health agency, Anvisa, and that other already approved vaccines were on the market at lower prices.

The deal is also being probed by a Senate panel investigating the government's handling of the pandemic.

Besides, one of the leading opposition senators on that panel has also initiated a criminal complaint against Bolsonaro at the Supreme Court.

"I filed a criminal complaint today with the Supreme Court because of the serious accusation that the president took no action after being notified of a gigantic corruption scheme at the health ministry," said opposition Senator Randolfe Rodrigues, the commission's deputy chair.

Implications for Jair Bolsonaro

Accusations that Bolsonaro turned a blind eye to possible corruption have heightened threats to his presidency. The claims have added impetus to the opposition's impeachment drive.

The percentage of people rating Bolsonaro’s government bad or terrible has reached an all-time high, according to pollster Datafolha.

Seven of the 11 members of the Senate committee investigating Bolsonaro's COVID-19 response told The Associated Press that, once their inquest concludes, in August at earliest, they will vote to approve recommending Bolsonaro be indicted on the charge of prevarication.

The crime entails delaying or refraining from action required as part of a public official’s duty for reasons of personal interest.

A criminal case against Bolsonaro before the Supreme Court could see him removed from office, though Prosecutor General Augusto Aras, an ally, would have to bring charges.