The Ministry of Health paid a total of €2,770,042.43 in rent to the private owner of the property housing the pharmaceutical warehouses from 2004 to 2019.
From 2004 to 2016, the Ministry of Health paid a rent of €1.7 million, while the private owner had paid the Ministry of Commerce just €80,000 for leasing the industrial plot on which the property was built.
The case of the Ministry of Health’s drug warehouse, which was flooded on Clean Monday resulting in the destruction of 105,941 packages of medicines, has now escalated to a new level.
Discussions about the possible unsuitability of the property have brought to light what has been happening since 2004.
Public revelations from the Audit Service have caused particular concern, as they suggest possible misappropriation of public funds due to the rent paid by the Ministry of Health for this specific building.
Responsibility for this situation, as it appears, likely spans two decades, considering that 14 ministers, 7 general directors, and numerous directors and deputy directors of Pharmaceutical Services have served at the Ministry of Health since 2004.
It is reminded that the warehouses are built on an industrial plot which the Ministry of Energy, Commerce, and Industry had leased to a private individual in 1979 at a low rent with the intention of operating an aluminium factory there.
However, this venture later ceased operations, and from 2004 onwards, the property, which had been built within the industrial plot, was sublet by the private owner to the Pharmaceutical Services.
Since 2017, the tenant of the property has been the Procurement and Supply Directorate of the Ministry of Health.
Initial discussions about leasing the space began in February 2003, with the first rent studied being £1.75 per square metre, with 7% increases every two years after the first three years. Before signing the contract, the rent had risen to £2.
According to the Audit Service’s report in 2019, before the Pharmaceutical Services even started using the space, the monthly rent increased further due to initial payments for the cost of space configuration works undertaken by the owner amounting to £88,000, followed by additional works costing £95,000.
The Audit Service highlights that “with the 7% increases every two years, the annual rent reached €150,703 in 2013.
In 2013, the contracting parties signed an agreement to reduce the rent to €135,000 annually.”
The Audit Service notes that the Ministry of Commerce, on 26/4/2012, “despite the fact that the company was no longer engaged in industrial activities but was subleasing its properties to the state since 2004, renewed the lease agreement of the industrial plot to the private individual for another 33-year period from 1/5/2012 to 30/4/2045.”
The contract between the private individual and the Pharmaceutical Services was renewed in 2016.
In 2017, the warehouses came under the control of another department of the Ministry of Health, specifically the Procurement and Supply Directorate, and the contract remains in force since then.
It is reported that in 2018, the Ministry of Health requested approval to extend the lease of the existing storage facilities instead of finding new ones, citing the possible implementation of the General Health System (GHS), which, as stated, “would result in redefining the storage space requirements.”
“Our Service, as we noted, considers it scandalous for the state to lease land at a low rent for industrial development and for the tenant to sublet it, especially to a government department, collecting a rent 2,125% higher than what he pays without even serving the original purpose of the industrial areas,” stated the Audit Service in its 2019 report.
It further added that “the case of the company subleasing the industrial plot to the Pharmaceutical Services since 2004 is a characteristic example of speculative exploitation of industrial areas.”
Notes on the unsuitability of the warehouse since 2019
A total of 105,941 packages of medicines were affected by the rain and hail that flooded the Ministry of Health’s drug warehouses on 18th March.
As reported by representatives of the Ministry of Health to the Health Committee of the Parliament, a total of 149 drugs were affected by the rain.
Of these, 2 were stored on behalf of the Ministry of Health, 63 for the GHS, and 78 for the State Health Services Organisation (SHSO).
The cost for these stocks amounts to €879,908, of which €54,000 relates to the Ministry of Health, €450,000 to the GHS, and €373,000 to the SHSO.
During yesterday’s session in the Health Committee of the Parliament, the Director of Pharmaceutical Services, Elena Panagiotopoulou, clarified that the contract for renting the warehouses no longer belongs to her department.
Since 2017, it has been under the Directorate of Purchasing and Supplies of the Ministry of Health. She read a note prepared in 2019 when an inspection was conducted on this specific warehouse.
Elena Panagiotopoulou stated, among other things, that during the inspection, it was found that the warehouse’s roof had cracks and problems “which were such that they would allow rainwater to enter the storage area.”
She also added that the note mentioned a lack of a thermometer system, disorderliness, unprotected areas, and entrances from which there was uncontrolled access, etc.
Since 2019, Panagiotopoulou said, no further inspections have been carried out because there was no invitation from the competent authority (Directorate of Purchasing and Supplies).
However, as she added, “if we had gone later and they had not complied with our recommendations, we would have had to call the Police and close the warehouses, which was not done, especially amid a pandemic and the urgent needs that existed.”
The Director of Pharmaceutical Services also indicated that during the pandemic, “quite a few Health Ministers visited the warehouses and held meetings to present the vaccines.”
In his statement, the Director of the Directorate of Purchasing and Supplies, Christos Nicolaou, emphasised that “it is one thing if the warehouse was unsuitable and another thing the hailstorm” and described how the hail that fell on Clean Monday blocked the drains, resulting in the problem.
During the session, it was also mentioned that rainwater entered the warehouse two more times recently, without, however, affecting the medicines.
