Latvian police to investigate inappropriate software procurements for Healthcare Ministry

Latvian police to investigate inappropriate software procurements for Healthcare Ministry

On Tuesday, 16 June, Latvia’s State Police performed 33 searches at multiple IT companies and homes of people related with them in a criminal process regarding possible fraud with procurement of inappropriate software for Healthcare Ministry and other state institutions.

State Police representative Gita Gžibovska has confirmed that on Tuesday Riga region’s Criminal Police officers performed 33 searches at multiple IT companies in Latvia and homes of people related with them as part of the criminal process commenced on 30 September.

This criminal process was launched in relation to potentially criminal activities – supply of inappropriate software named Owitech to Healthcare Ministry and other state institutions, causing the state budget damages worth at least EUR 204 458. Police explain the exact extent of damages will be clarified soon.

Police have confiscated documents and a number of data storage devices, said Gžibovska.

Five persons are given the status of persons under criminal process.

The criminal process in question was commenced following a request from Healthcare Ministry. In October 2019 it was announced by healthcare minister Ilze Viņķele on Twitter.

The ministry had previously turned to the police with suspicions of violations in procurements of ICT technologies. The minister’s advisor Edgars Skvariks reported that information and reports about those projects were sent to State Police and Competition Council.

Healthcare Ministry reported at the time that the institution was maintaining correspondence with service providers in order to reach an agreement on return of finances. The possibility of the ministry turning to court over this remains open as well.

Viņķele had reported that «a serious political interference» and signs of fraud were observed in two of the ministry’s ICT projects.

One of them was the procurement of the so-called two-basket service insurance system for the creation of the state health insurance database, which received funding from the state budget for emergencies worth up to EUR 1.9 million. The other project was the ministry’s ICT centralization project, which was supposed to receive funding of EUR 3.5 million.

The minister also says Healthcare Ministry ordered two inspections in both these projects. In the database project, experts found questionable need for the use of EUR 315 000 for procurement of equipment at the end of last year. In the ICT centralization project, inspections uncovered questionable dealings worth nearly EUR 600 000.

Inspection results set in suspicions that in both aforementioned projects completely different and more expensive licences were purchased. On top of that, neither of them were physically identified in both projects. Additionally, according to Viņķele, it has been observed that in those procurements competition was limited, because it seems procurements were created with specific businesses in mind.

Information from portal shows that Healthcare Ministry experts’ initial evaluation concluded that security service licence GrayWolf was procured for the needs of healthcare information system. Experts found no justifiable reasons why this service was bought when the system was not even ready.

National Health Service (NVD) spent approximately EUR 229 000 on procurement of GrayWolf licences between 2014 and 2019.

Findings of the inspection also generated suspicions that the OWITech licences procured for Healthcare Ministry’s information systems’ centralization project were basically a repackaged product manufactured by another American company and sold for three-fourths of the price.

In May 2019 the healthcare minister reported the ministry decided to halt the contract on the procurement of licences worth approximately EUR 300 000 and nearly EUR 200 000 of this amount is already paid.

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