*Uncovering the N95 mask scam in Maharashtra while a pandemic rages*

*Uncovering the N95 mask scam in Maharashtra while a pandemic rages*

N95 masks, considered to be the best respirator masks, are in a huge demand due to the corona pandemic. Health professionals dealing with Covid patients and Police Force are in dire need of these masks. It is shocking that they are in short supply from OFFICIAL sources, but available in plenty with dubious dealers and intermediaries at a mark up of anywhere between 100 to 500%.

Recently, due to the non availability of the N95 masks and PPE kits, the doctors of Government hospitals were allowed to make an appeal on the official letterhead, requesting donations. Many organisations rushed to help, but had a bitter experience. The companies manufacturing these N95 masks refused to provide masks to these registered NGOs quoting that the entire production was under Government Control.

On one hand the companies refused to supply masks at official rates and on the other hand, NGOs were flooded with calls and messages from dubious dealers who offered them the same masks, of the same companies, at exorbitant prices. 9 NGOs wrote to the Chief Secretary Maharashtra and Health Secretary Maharashtra seeking intervention but there was no response.

These fly by night operator, some of them were into jewelry business, some into production of Mineral water bottles and various other businesses have jumped into this as a money making opportunity. What makes is most intriguing is that all the sellers provide official bills with GST, which makes us wonder if these taxes are ever paid to the Government?

Our hunt for N95 masks revealed cases of fraud and price gouging within the booming face mask industry, some of them brought to light greater problems than just the scams themselves. 

We have just one question: How is it that the companies refuse to sell masks at the normal price even to NGOs but, there are lakhs of masks available in the black market at outrageous prices?

Let us see how this has happened….

There are 2 major Indian companies:

1.Venus Safety and Health Private Limited – Taloja – Panvel

2. Magnum Health and Safety Pvt Ltd – Palghar

Both the companies have been approved by Haffkine Institute (Maharashtra Government) for providing N95 masks. Copy of the same is attached as Exhibit 1 and 2.

The price of N95 masks supplied by Venus Safety was ₹17.33 till 28th Jan 2020. Haffkine had purchased 92,500 masks for the TB clinics at this price. A copy of the supply tender of Haffkine is attached as Exhibit 3.

Out of the 9 NGOs, only two could acquire masks from the company. That too a trivial quantity. Here are the prices at which they procured the masks:

1. Moneylife Foundation picked up 5000 Venus 4420 N95 masks from Venus Safety at a price of ₹40 + GST. Invoice attached as Exhibit 4.

2. Voice of Indian Taxpayers was given 3200 N95 from Venus Safety at a price of ₹60 plus GST. Invoice attached as Exhibit 5.

The first thought that came to our mind was why would the Government not intervene and try to make these life saving masks available by invoking Epidemic Act, Essential Commodities Act etc.

This made us dig the details

Now see how events unfold:

First a notification banning Exports of PPE and N95 comes on 8th Feb 2020 by Ministry of Commerce & Industry, Department of Commerce, GOI. Exhibit 6

This was followed by an order from National Pharmaceutical Pricing Authority, Ministry of Chemicals & Fertilizers, GOI, invoking clause (I), subsection (2) of subsection 10 of Disaster Management Act, Essential Commodities Act and Legal Metrology Act.

On 13th March 2020, Govt of India directs State Governments and Union Territories to bring 2ply, 3ply, N95 masks and Santitizers under EC Act. As per the order, this was done to ensure prevention of hoarding, black marketing and profiteering of these items.

Refer to the Press Statement given below (Exhitbit 7)

Press Information Bureau

Government of India

Ministry of Consumer Affairs, Food & Public Distribution

13-March-2020 20:10 IST

Govt brings masks and hand sanitizers under the Essential Commodities Act

In view the ongoing outbreak of COVID-19 (Corona Virus) and concern of the logistics for COVID-19 management particularly during last couple of weeks and that masks (2 ply & 3 ply surgical masks, N95 masks) and hand sanitizers have been noted to be either not available with most of the vendors in the market or are available with great difficulty at exorbitant prices, Government has notified an Order under the Essential Commodities Act to declare these items as Essential Commodities up to 30th June, 2020 by amending the Schedule of the Essential Commodities Act, 1955. It has also issued an advisory under the Legal Metrology Act. Under the E.C Act, after discussions with the manufacturers, States can ask them to enhance their production capacity of these items, to make the supply chain smooth, while under the L.M. Act the States can ensure sale of both the items at MRP.

On these two items, the States may now notify the Central order in their official Gazette, also issue their own orders under the EC Act to that effect and take necessary actions as per the situation prevailing in the respective States. Under the EC Act, powers of the Central Government have already been delegated to the States by way of orders during 1972 to 1978. The States/UTs, therefore may take action against the offenders under the EC Act and PBMMSEC Act. An offender under the EC Act may be punished with an imprisonment upto 7 years or fine or both and under the PBMMSEC Act, he can be detained for maximum of 6 months.

The decision would empower the Government and States/UTs to regulate production, quality, distribution etc. of masks (2 ply & 3 ply surgical masks, N95 masks) and hand sanitizers and to smoothen the sale and availability of these items and carry out operations against orders speculators etc. and those involved in over pricing, black-marketing etc. It will enhance the availability of both the items to the general people at reasonable prices or under MRP. The States are also advised to give publicity of State Helplines for registering complaints by the consumers of the above two items. The consumers may also register their complaints in this matter with the National Consumer Helpline No. 1800-11-4000, Online Complaints: http://www.consumerhelpline.gov.in, Department’s Website http://www.consumeraffairs.nic.in, dsadmin-ca@nic.in and dirwm-ca@nic.insecy.doca@gov.in.

However, from 13th March till date, no notification has been issued by State of Maharashtra, which is the worst affected state in the country.

On 2nd May 2020, nine organisations wrote to the Chief Secretary Maharashtra and Health Secretary Maharashtra requesting urgent intervention. A copy of this is marked as Exhibit 8.

Text messages were sent and calls were made to the Chief Secretary of Maharashtra, MD Haffkine Institute. But NGOs were informed that NO price regulation was done by Maharashtra State and EC Act was not invoked. The reason given was that both the companies, Venus and Magnum were now directly under the control of GOI. If there was any such control, how would the N95 masks of both these companies be available in huge quantities with fraudulent traders? Some of them were selling upto 5 lakh masks (one shot, was the term used by them) for as high as ₹225?

If GOI is in control of the companies, then the Central Government must explain why such lapses are happening when it is a question of life and death for innocent citizens.

We are not interested in politics, nor are we trying to target anyone. We demand that the State Government immediately invoke EC Act, take charge of production, quality and cap the price to a reasonable profit, a maximum of ₹50 to ₹60. Anyone found selling them beyond these prices should be booked. State Government should file FIRs on both these companies under section 3 and 7 of EC act and the entire production should be made transparent. Citizens deserve to get this from their Government. Ideally, the government needs to ensure availability of masks for every last person on the street.

For reference, the actual pricing sent by the company to a Government Official

1) N-95-4400 : For State Government (And BMC) ₹42 with GST

2) N -95- CVN 95+ : It is only for Central Government, ₹63 with GST

3) N 95-4200 : It is only for Government doctors ₹63 with GST

Out of the several videos that we hold, we are releasing 3 videos now, which shows rampant black marketing where the pricing is anywhere upto ₹225 that too only for a bulk purchase.

Even as the N95 shortage and this scam continues, it is heartbreaking to see the plight of our frontline health workers who are risking their lives to save lives of fellow citizens.

Some health workers even had to resort to desperate measures to meet their PPE needs, including the reported use of scarves, 3 ply masks and even trash bags or raincoats as protective equipment in hospitals. 

In normal times, hospitals buy their PPE from large medical distributors, which manage their different sourcing needs. The distributors handle the logistics, sourcing hand sanitizer from one supplier and respirators from another. The system works well when hospitals have predictable needs. But now, with hospitals that need masks competing feverishly against each other, they have had to go outside their usual supply chains into untested waters. With demand for PPE soaring, a grey market has cropped up that is occupied by popup brokers, speculators, fly by night operators and even scammers.

When someone says “I have a source”, most of the time they don’t even know where the factory is. They are merely reselling from another reseller.

Following are the details of the NGOs who demand the action

1. Sucheta Dalal

Cell No: 9820141236

Moneylife Foundation

2. Mrs Anjali Damania

Voice of Indian Taxpayers

Cell no: 9820503379

Email: anjalidamania1@gmail.com

3. Dr Anjali Chhabria

Cell No: 9920128287

Golden Citizens Trust

anjali.chhabria@gmail.com

4. Dr Shruti Manaktala

Devik Sparsh Divine Touch

Cell number : 9920798629

Email id : shrutisparsh@gmail.com

5. Lion Chetan Shah

Lions Club of Juhu

chetans63@gmail.com; lionsjuhu@gmail.com

Cell no: 9821220705

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