The Military Man that Signed the Most Contracts with the Ministry of Health

José Gregorio Vicari Méndez, an assimilated physician of the Bolivarian Army, was the successful owner of Proveeduría Médica VDS, a medical supplies company that signed hundreds of contracts with the health office during the oil boom. This finding is part of a database developed by Armando.info with the public information contained in the National Register of Contractors. Although the Organic Law of the Office of the Comptroller states that an active official could have administrative responsibility if entering into contracts with the State, Vicari Méndez, who is no longer a member of the company, presents an argument in his defend that goes beyond the tragedy of Venezuela's shortages. "If I have a patient with a requirement, if there is no material, but I know where there is, I look for it. What should I do? Should I not operate?

6 August 2017

In the history of commercial relationships between private companies and the Venezuelan State, Proveeduría Médica VDS could pass unnoticed. But it should not. In the National Register of Contractors (RNC), this company appears as the one entering into the most contracts with the State, 406 in total. One of its shareholders was José Gregorio Vicari Méndez, a traumatologist specialized in hand surgery and assimilated by the Army.

As a military officer and public employee, under article 34 of the Law of Statutes in Public Office and article 145 of the Constitution of the Bolivarian Republic of Venezuela, Vicari Méndez is barred from" entering into contracts by himself, intermediaries or on behalf of another with the Republic, the states, municipalities and other state or private legal entities". He did it though.

The 406 contracts of Proveeduría Médica VDS, one of the biggest beneficiaries of its trade, were found after systematizing all the public information of the RNC in a database prepared by Armando.Info. And they can also be compared with the list displayed on the RNC portal, which was available for public enquiries until June 30, 2017.

An official imported material of osteosynthesis, prostheses, plates, screws, nails and other supplies for trauma interventions with preferential U.S. dollars, on a regular basis, and then sold them to the Ministry of Health, foundations and entities attached to other ministries, Hospital Universitario de Caracas (University Hospital where the specialist works since 2003), insurance companies, and private health centers.

Sudden Earnings

Established on October 16, 2002, in Caracas, Proveeduría Médica VDS, C.A's commercial activities began in 2005. The following year, its financial statements showed robust revenues, and that was thus maintained for five additional years.

In 2008, the company had what could be one of the best performances, because it signed 217 contracts with the Ministry of Health between August and December, during the management of Jesús Mantilla, another officer of the Bolivarian National Armed Forces.

In addition to obtaining numerous contracts, they also obtained preferential dollars

Vicari Méndez joined the company in June 2005, as medical director, but was already linked to it since its inception. Three years earlier, he had contributed 1 million bolivars in cash (check) to complete the initial capital of the company. In 2008, he became a partner by acquiring 50% of the shares and becoming the executive manager. The other half was in the hands of Decia Morelia Duque Matheus, who joined the same year as him to serve as administration manager, and in 2006, she became a shareholder.

Revenues declined in 2010 due to falling Venezuelan oil prices. But in the next four years, it managed to quintuple its revenues. In fact, from March 2009 to November 2011, Proveeduría Médica VDS imported medical and surgical instruments from Brazil, Germany and the United States for US $ 276,000, as evidenced in the records of Import Genius, a database of international imports and exports , which is updated with the United States Customs Department.

In addition to obtaining numerous contracts, they also obtained preferential U.S. dollars. Until 2012, the Foreign Exchange Administration Commission (Cadivi) —created in 2003 by the government of Hugo Chávez to govern the exchange control implemented that year, which is still in effect under the name of Cencoex— paid this company $ 383,288.

Part and Parcel

The Ministry of Health was the state entity with which VDS signed more contracts, but did not compromised exclusively with them. VDS was also a supplier of Hospital Universitario de Caracas (it entered into at least five contracts between March 2009 and August 2010), PDVSA, the Ministries of Communes, Agriculture and Lands, and Public Works and Housing, the Central Bank of Venezuela and the government foundations known as Negra Hipólita, Pueblo Soberano, Vicente Salias and Oro Negro. The latter is attached to the Ministry of Energy and Oil. Since 2008, it acquires medical and surgical material for Misión Barrio Adentro (the flagship program created by the late President Hugo Chávez in 2003) and manages medical aid. Since 2008, one of the founding members of VDS has been working there, Rayco Antonio Santana Jiménez, who after eight years with Oro Negro was appointed Administration and Financing Director of the foundation, a position published in the Official Gazette of January 4, 2017.

It is not common for a doctor to have his own importing company of inputs, whereby he commercializes the material that he uses in routine surgeries.

Vicari Méndez, for his part, works at Hospital Universitario de Caracas since 2003. He is currently an associate physician of the Hand Surgery service at the Hospital, where he usually goes on Mondays and Fridays to fulfill his obligations. The doctors on the 6th floor regard him as another associate, who also works in another hospital and has a distribution company, "that’s what they say," says a specialist.

It is not uncommon for a physician to have his own importing company of supplies, used to sell the material that he uses in routine surgeries. Consulted traumatologists, with decades in practice, agreed that it is not the "ought-to-be." While the younger ones studying some specialty, do not regard that as something bad but as a possibility for extra income in a country dominated by three-digit inflation. Although the truth is that private importers of medical supplies have been downsized and replaced by Chinese companies that negotiate direct sales with the Venezuelan government. VDS could be an example.

Vicari, as an Army official, is also a medical doctor at the Vicente Salias Sanoja Military Hospital, located inside Fort Tiuna, the most important military facility in Caracas, southwest of the city. And since 2014, he presides over the Venezuelan Society of Hand Surgery. In addition, he practices private medicine in two clinics that have also been VDS clients.

As an active soldier, his service record shows several awards from the Health Department of the FANB (2011), the President’sHonor Guard (2007), the Naval Health Service, and others, included in his professional profile .

In 2012, Defense Minister Henry Rangel Silva promoted him to the rank of Major of the Army, and four years later, in 2016, current incumbent Vladimir Padrino López promoted him to Lieutenant Colonel, both in the category of assimilated.

"If I have a patient with a requirement, if there is no material, but I know where there is, I look for it. What should I do? Should I not operate?”

Article 91 of the Organic Law of the Office of the Comptroller General of the Republic and the National Tax Inspection System provides for in paragraph 4 that the conclusion of contracts by officials, intermediaries or on behalf of another, with entities and bodies of the national, state, municipal or district public authority may generate administrative responsibility. Vicari Méndez did not consider that legal advice was necessary when he decided to join a state contractor company as an official.

His story, as he describes it, is that of a doctor who wanted to participate in a "small family business, in a team of entrepreneurship" to have an extra income. He assures that all company procedures were legal, transparent, with no irregularities and, hence, he saw no problem in being both a part of it and a military man.

His admission as a medical director was due to the company's need to process the health registry to import and sell the medical supplies and surgical instruments they would use for surgeries. Vicari Méndez does not consider that there is an ethical conflict or irregularity in his company selling the material to the hospital where he worked. "That depends on the eye of the beholder. If I have a patient with a requirement, if there is no material, but I know where there is, I look for it. What should I do? Should I not operate?," says the specialist.

Missing from the System

While being one of the companies that signed more contracts, VDS also happened to be one of the providers that inherited debts with the office of Health. It was not the only one. Vicari recalls that around 791 companies are in the same situation, to which the Ministry does not pay for having no budget. That was the response the company obtained in several meetings with representatives of the office.

Failure to pay by the Ministry accumulated a debt from 2011 to 2013 that amounted to Bs. 17,369,540. However, based on the company's financial statements, included in the record on file in the First Commercial Registry of Caracas, in 2014, a portion equal to approximately 7 million bolivars had to be honored.

Proveeduría Médica VDS was disqualified to enter into contracts with the State for failing to update its data in the RNC. The company’s attorney, Erwin Dugarte, affirms that it has been active, selling to private individuals the little stock left (very specific prostheses), because they cannot import material. As to the debt of the Ministry of Health, he does not know the status. "I am in charge of the legal aspects, I know nothing about that".

"I left that because it was not worth staying there, it was not worth affecting my career. I am totally disconnected"

Vicari Méndez resigned his position as executive manager in February 2014. Three years after making that decision, he assures not knowing whether the company is operative or else. After all this time, he says he expects to have no problems associated with his work in the company, and he clarifies that he has not obtained any benefits from it or enriched by his profits. He affirms that his home is rented and has few assets.

"I left that because it was not worth staying there, it was not worth affecting my career. I am totally disconnected," says the assimilated physician. He disregards the possibility of the company being favored with contracts for having a military man among the directors.

Vicari sold his shares to Decia Duque, with whom he maintains a family bond; they both have a son in common. Duque is the current managing director, with 100% of the shares. Despite being willing to talk about the company initially, she finally rejected the interview requested and referred any concerns to her lawyer Erwin Dugarte.

Dugarte justifies the 406 contracts subscribed by VDS with the argument that the company was the "only one" offering that type of traumatology medical and surgical supplies at that moment. Therefore, "it solved a problem that it can no longer solve because it does not have stock". But it is not remembered like this within the guild of importers of medical supplies.

"He is an assimilated, thus, he can do whatever he wants because he is not an active military officer”

The lawyer dismisses any irregularity linked to the presence of a military officer in the company's board of directors while he was a state contractor. "Dr. Vicari is not a career military man but an assimilated because he is a doctor. That has nothing to do with it. When he started selling his equipment, I removed him from the company in 2014. Everyone can have whichever company. He is an assimilated, thus, he can do whatever he wants because he is not an active military officer. And he adds, "The assimilated officer is totally separated from the active one. They are two completely different things. Active military officers handle weapons. The assimilated do not handle weapons, they are professionals of any race who render services to the Armed Forces," says Dugarte.

However, the financial statements of Proveeduría Médica VDS contradict him. The company sold supplies to the state while the assimilated military man was in the board of directors. Articles 89 and 92 provide for the assimilated and include them within the classification of military personnel, and the Organic Law of the Bolivarian National Armed Force as well.

"The assimilated personnel has the same obligations with respect to the Corruption Law," says Rocío San Miguel

Based on above articles of the Law, lawyer Rocío San Miguel, head of the civil association Citizen Control of Security, Defense and National Armed Forces, assures that the assimilated do not only form part of the National Armed Forces (FAN), but have the same obligations and limitations regarding the FAN, as any military member, "including the prohibition of contracting with the State, whether directly or through an intermediary. The assimilated personnel have the same obligations with respect to the Corruption Law,” she said.

In any case, the promotions received in 2012 and 2016 account for its active nature, and in 2012, Vicari was still part of the company.

After resigning their actions in VDS, Vicari and Duque have not been kept completely away from the workplace. VDS has sponsored and supported the congresses organized by the Venezuelan Society of Hand Surgery in 2014 and 2015, which Vicari has presided over for three years. The event that was scheduled for last July of the current year, with invited foreign doctors (as in previous ones) was suspended. The society "is broken," says Vicari.

The history of Proveeduría Médica VDS containing public information available online via the web portal of the National Register of Contractors, disappeared on Friday, June 30. It remained visible and available for public enquiry during the five years the company remained disqualified (since 2012), until its search was blocked in the system. It is no longer possible to see even the card with the general information of the company.

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