Defective Ventilators Have No Warranty, Supplier In China Out Of Reach: PAC Report

Ventilators urgently procured from China by Pharmaniaga Logistics Sdn Bhd (PLSB) for MOH arrived without any warranty and were deemed ‘not fit for purpose.’ One supplier in China can no longer be contacted.

KUALA LUMPUR, Nov 2 – Ventilators procured urgently from China by Pharmaniaga Logistics Sdn Bhd (PLSB), on behalf of the Ministry of Health (MOH), arrived with no warranty and were deemed “not fit for purpose”, MOH officials say.

An investigation by Parliament’s Public Accounts Committee (PAC) on Covid-19 management, whose report was tabled in the Dewan Rakyat last Monday, revealed that neither PLSB – a wholly-owned subsidiary of Pharmaniaga Bhd – nor manufacturers and suppliers in China provided warranties for the ventilators purchased during the Covid-19 emergency in 2020.

“Testing and commissioning (T&C) was done by the users in the hospital. The moment we distributed (the 136 ventilators) to all the hospitals that are designated to receive them, T&C [was carried out]. But warranty memang at that time-lah, at that time between May and June, memang tidak ada (was non-existent). There was no documentation.

“There was no warranty given by – when Pharmaniaga (PLSB) bought from China, there was no warranty given,” Dr Mohamed Hirman Abdullah, MOH senior principal assistant director (medical development division), said at a June 15 meeting with the parliamentary committee this year, based on transcripts published in PAC’s report.

Dr Azkhairie Anor Basah, another senior principal assistant director in the same division, said even if the ventilators had come with a warranty, it would not have been possible to claim it due to the absence of a local distributor for the China made products.

“When there is no local distributor, even though the warranty is there or not, even if there is a warranty, it cannot be done as there is no local distributor. That is why I think, during the price negotiations (between MOH and PLSB carried out later), it took into account the need for maintenance (of the 136 ventilators) by another party,” Dr Azkhairie said.

Dr Azkhairie said PLSB offered a two-year warranty after they agreed to upgrade all 136 of the ventilators purchased from China. This was agreed during the Emergency Procurement Price Negotiation Meeting on September 1, 2020.

In a separate meeting on August 22, former MOH secretary-general Chen Chaw Min told the PAC that there were no warranties for the procured ventilators because the MOH had to “plead” with suppliers to sell these ventilators to the MOH.

“No, no. They didn’t write a warranty because we – actually, we begged to buy from them. It’s not that they wanted to sell. We were pleading, ‘Please sell to us, if these are the specs that you have’,’” Chen said.

PAC, however, found discrepancies in the statements provided by the MOH and PLSB on the existence of warranties for all 136 ventilator units.

PLSB said that IDS Medical Systems (M) Sdn Bhd (IDSMED), a company recommended by PLSB to MOH for ventilator upgrades, had made efforts to “activate warranties” for the defective ventilator units by contacting both the suppliers and manufacturers of the ventilators.

However, not all suppliers could be reached, which led IDSMED to contact the manufacturers directly. Some manufacturers refused to cooperate with IDSMED and accept any returned ventilators, said PLSB chief operating officer Mohamed Iqbal Abdul Rahman.

The supplier that could not be contacted was Nantong Angel Medical Inst. Co. Ltd. 

Data published in the PAC report shows that Nantong Angel supplied 20 out of the 136 ventilators procured from China, specifically the Nantong Angel 8800 and ZXH550 models, each priced at RM149,940 per unit.

The overall cost for the Nantong Angel ventilators was RM3.02 million, inclusive of handling costs, accounting for 15 per cent of the RM20.12 million spent on all 136 ventilators. The majority of the 8800 and ZXH550 models failed the T&C process.

“IDSMED initially contacted the supplier. Suppliers may not necessarily be the manufacturer. They tried to work with the supplier; if the supplier agreed to manage the situation, they proceeded accordingly. Otherwise, they reached out to the manufacturer.

“Some of the manufacturers said if you have gone through this channel, they would not entertain the matter, as they had their approved channels. In some cases, this was what happened,” Iqbal told the PAC during a meeting on September 14.

“There were suppliers we couldn’t contact. We are not certain if the company still exists or not. However, what we did was similar to when we buy a Samsung product – we purchase it from a retailer, but the warranty comes from the manufacturer. So, we reached out directly to the manufacturer,” Iqbal said, adding that all ventilator manufacturers were still in operation.

The government procured a total of 136 ventilators from China for RM20.12 million during the Covid-19 pandemic in 2020, of which 104 are unusable.

MOH officials informed the PAC that the ministry went ahead with purchasing the ventilators from China based on the specifications provided in the manufacturers’ brochures, despite lacking prior experience in procuring ventilators from China.

The absence of any formal contract between the MOH, PLSB, and the Chinese suppliers has complicated the process of seeking reimbursement for the defective ventilators.

The MOH has reportedly drafted a letter of demand to initiate legal action against PLSB for the reimbursement of 104 defective ventilators from China. However, PLSB has verbally indicated that they will challenge the letter of demand, as they claim they were acting under MOH’s instructions.

The PAC, in their report, concluded that due to the absence of a contract, no one can be held accountable for the supply of defective ventilators during the Covid pandemic.

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