On December 9, Mexico's foreign minister, Marcelo Ebrard, announced on Twitter that the country had signed an agreement to buy 35 million doses of a covid-19 vaccine developed by CanSino Biologics, a Chinese company. The agreement was between the Chinese manufacturer, the Mexican government, and a third, Swiss company, Latam Pharma Innovative Ventures.
However, Latam Pharma had not yet been incorporated at that point, according to public corporate registry of Switzerland.
“They literally signed with a ghost company, a non-existent company, which obviously can’t be held accountable. They could have decided to create or not create the company after the agreement was signed. Although we’re in a health emergency, it’s completely unusual to sign with a business that has not yet been created,” said Lourdes Motta, a corporate lawyer who specializes in health contracts.
Latam Pharma’s date of incorporation is far from the only irregularity in the vaccine contract. Experts consulted by Univision Investiga pointed to several aspects of the contract with Latam Pharma that put the government of Mexico at a disadvantage. They explained that the contract was signed under Singapore law, establishes no accountability for CanSino if there are problems with manufacturing, offers no guarantee that signatories will meet their obligations, and leaves unclear the role of Latam Pharma, the company charged with packaging and distributing the vaccines in Mexico.
Univision Investiga found that Latam Pharma is made up of two Swiss companies whose partners are Guy Jean Leon Savoir Garcia, a Mexican pharmaceutical entrepreneur, and Luis Doporto Alejandre, a Mexican lawyer who was investigated in the Panama Papers scandal and fined by the Mexican government in June of 2020 for having participated in an illegal monopoly scheme with pharmaceutical companies.
Latam Pharma only has four employees and lists a lawyer’s office in the city of Zug as its domicile. Incorporated with little more than $100,000 in shares of capital, in 2020 it reported corporate revenues of $300,000.
“This seems like a company that only exists on paper, without its own operation and without a stake in the distribution of vaccines to the government of Mexico,” said Paulo Diez, a lawyer who has denounced several cases of corruption in public transactions in Mexico.
The Mexican organization PODER obtained a copy of the supply agreement for 35 million CanSino vaccines through litigation. Univision Investiga and PODER sent copies of this contract to corporate lawyers specializing in public transactions for analysis. The experts expressed concern that Mexico signed the agreement with Latin Pharma and CanSino under Singapore law.
The Mexican foreign ministry, the agency charged with acquiring vaccines for Mexico, told Univision that it "was decided that the jurisdiction would be Singapore, based on the judicial security conferred by Singapore’s legal system.”
In a written response, the Mexican Health Secretary cited two clauses of the public procurement law affirming that Mexico can sign contracts in a foreign country if there is only one supplier in the world that can sell that product, or if that provider requests that the contract be signed under the law of their country.
Diez rejected the arguments of the foreign ministry and the health secretary.
“To me, the Singapore component seems like a legal travesty. This contract leaves the Mexican government in a position of extreme disadvantage. CanSino is not the only supplier of COVID-19 vaccines in the world, nor is the company based in Singapore . Nothing justifies the fact that this was signed under Singapore law,” said Diez. “The choice of a foreign legal system was made, among other reasons, to evade a lot of provisions that benefit the Mexican government, provided for in Mexican law.”
If the Mexican government had a “point of contact” in Singapore — that is, if any element of the vaccine was based or made there — then signing the agreement under Singapore law would not be unusual, said Gabriel Barrera , another lawyer Univision consulted. However, he added, “from what I’ve read of the contract, this is not the case.”
“There exists no point of contact in this transaction with Singapore. The choice of Singapore is solely due to the neutrality, reliability, and reputation of its judicial system and laws,” Latam Pharma told Univision in an email.
In response to questions Univision sent each individual entity for this story, the foreign ministry, Latam Pharma, and the Ministry of Health all agreed that the company was not registered in the Swiss trade registry before the vaccine contract was signed.
According to Latam Pharma, this presents no problem. In Switzerland, they wrote, a company exists as soon as it has an act of constitution— from that moment onward, the company can sign contracts, even if it is not yet listed on the trade register.
However, neither the Mexican authorities nor the company provided registration documents, nor did they specify the date of the supposed constitution. The company said that public data on Latam Pharma’s registration is available in the trade register of Zug, Switzerland.
The Swiss public register indicates that the company was created December 10, 2020, and its registration was December 22, 2020 — after Latam signed the contract of December 8th with CanSino and the Mexican government.
Several experts explained that there are no retroactive obligations in law. Therefore, the Mexican government cannot force Latam Pharma to comply with a contract signed before the company's legal incorporation.
Diez said it is “very odd” that the contract omits a clause that normally appears in other agreements of this kind, which says that signatories must be “legally incorporated.” While the agreement lists this clause for CanSino and the Mexican Health Secretary, it leaves it out for Latam Pharma.
“When this happens, you quote the charter and say it’s pending registration,” said Diez. “This is a very clear indicator that everyone knew what was happening. Any lawyer knows that the first thing you say in any company contract is that it is properly incorporated in accordance with the laws of the country. This is a standard procedure.”
Mexico was the first country in the world to approve the CanSino vaccine for emergency use.
Mexican experts have told Univision the government is not being transparent enough about how the vaccine was approved for emergency use, the effectiveness of the vaccine, and the preliminary results from clinical trials, which evaluate the risks and effectiveness of the vaccine on a large population. The experts agreed that the vaccine seems safe, but they have doubts about its effectiveness.
Univision has published two previous articles detailing the questions experts have about the CanSino vaccine in Mexico. Until now, Mexican authorities have not responded to Univision’s questions about the way the vaccine was approved.
An irregular contract
The experts consulted for this story said that the date of Latam Pharma’s incorporation is far from the only irregular component of the contract, when read in accordance with Mexican regulations placed on public transactions. While the version of the contract obtained by PODER contains redactions on key clauses, like the vaccine price and how parties will be compensated, some language that concerns experts is visible.
“They did not include a series of necessary information , like if all signatories have the power to sign this contract. It does not comply with the basic contract elements that the government of Mexico requires in order to sign,” said Motta, who has a master’s degree in economics and health policy.
Latam Pharma appears in the contract as the company in charge of packaging the CanSino vaccines that have arrived from China in bulk, and completing the manufacturing process in Mexico. Under the contract, a “designated affiliate in Mexico” will package the vaccines, but no name for this company is provided.
International trade records show that Drugmex is Mexico’s bulk importer for CanSino , said Henry Peyronnin, an investigator for the C4ADS, an organization based in Washington DC that tracks international business.
Latam Pharma confirmed that Drugmex —part of the Argentine business group Dromex, which has several investments in the region — is their Mexican business affiliate.
Drugmex, was created in July of 2015 with an initial investment of $10 million and operates out of a drug packaging plant in the city of Queretaro. Records from the Mexican trade register show that Latam Pharma holds no documented shares in Drugmex.
Of the 8.1 million CanSino vaccines in Mexico by mid-June, more than five million doses of CanSino vaccines have already been transferred to the Drugmex plant in Queretaro. The doses arrived between February and March of 2021 to be packaged and distributed. The Mexican national vaccination plan indicates that CanSino will be the most widely used vaccine in this first year of vaccination, with 35 million total doses set to be distributed.
Univision asked Latam Pharma what its particular role and responsibilities were under the terms of the CanSino contract. The business responded that it does not finance the purchase of the vaccines and is not an intermediary between CanSino and the Mexican government, but only “provides the technical services for which it was chosen by CanSino Biologics.”
According to the contract and the Ministry of Health, these services include packaging and finishing the vaccines. In reality, this packaging is happening in Mexico — not in Switzerland — and is being done by Drugmex — not Latam Pharma— according to information verified by Univision.
“What the hell does Latam have to see here? The answer is very clear and obvious: nothing. Why do we need Latam here? We don’t. CanSino could perfectly well have signed the agreement with Drugmex and finished the job,” said Diez. “If the Mexican government had acted correctly and in good faith, it would have signed the contract in Mexico with Drugmex and asked for certain guarantees from CanSino”.
Gabriel Barrera, the lawyer specializing in contracts, agreed with Diez.
“We don’t know if CanSino has the capacity to fill and finish orders in Mexico. Latam Pharma appears, but apparently all they’re doing is putting money down, because it doesn't have a site for packaging, etc.,” said Barrera. “The affiliate (Drugmex) appears to be assuming obligations under the contract. This third party (Drugmex) is masked, and cannot be bound by this contract or required to comply because they did not sign it.”
Drugmex is responsible for importing, filling and delivering the vaccines, but Drugmex does not appear in the contract signed by Mexico. This, experts said, makes it difficult for the Mexican government to demand accountability from Drugmex if there is a problem with any of the batches of 35 million doses of the vaccine.
“Since Drugmex was incorporated in Mexico, if they had included it in the contract, the contract would have had to be subject to Mexican law,” said Diez.
Part of the agreement with CanSino and Latam Pharma indicated that the Swiss company would obtain emergency and commercial use permits for the vaccine. Mexico has withheld information about which company obtained these permits before the sanitary regulation agency. None of the participants in the contract confirmed whether this permission was granted to Latam Pharma, or whether it went to Drugmex or another company.
The health secretary said that CanSino had established the conditions of the agreement.
“If this contract was CanSino’s doing, the least that could have been demanded in return is that the Chinese company assume responsibility for the packaged product,” Diez said.
The experts also explained that the contract only makes CanSino responsible for the bulk product, but not the packaged, completed product.
The Mexican packager
The contract charges Latam Pharma with buying the CanSino vaccines in bulk and then packaging and delivering the vaccines to Mexico through Drugmex, according to Diez.
“CanSino receives payment from the Mexican government, although they do not package the vaccines nor do they assume responsibilities for the final product,” explained Diez. “CanSino charges the government, pays Latam Pharma its share. Then, Latam Pharma pays Drugmex and a final beneficiary who we don’t know.”
“That the Mexican government’s payment is made to CanSino has no commercial logic, but it does prevent the Mexican authorities from auditing the funds once they arrive to CanSino. It’s impossible to know how much Latam Pharma, Drugmex, or some other beneficiary is benefitting from this arrangement,” Diez said.
The lawyer said that a more logical order of events would be for Mexico to buy the product in bulk from CanSino and then, once the doses arrive in Mexico, contract Drugmex to package them.
Diez said a clause in the contract stipulates that “all the accountability for the final product, including any change or destruction or whatever it might be, is assumed by Latam Pharma, not CanSino.”
Motta added that under the contract, a batch of CanSino doses with defects must be returned to the packager. But it is unclear from the portions of the contract that are not redacted if there is any penalty for delivering the product that is defective, and which company bears the responsibility of replacing them.
Experts worry that if it is necessary at any time to remove the vaccine from circulation because of a defect, Mexico would not have the power to do so on its own. It would need to consult with CanSino.
“On an issue as delicate as the vaccine, Mexico should not have given up recall, the ability to remove the product from the market if necessary. That lacks transparency and is out of the norm,” explained Motta.
Univision directly asked Latam Pharma if the purpose of this company is to triangulate money from the purchase of vaccines, reduce the payment of taxes in Mexico, or something else. They responded: “None of the above. Latam Pharma does not sell any vaccine or receive payment from any government. Latam Pharma fully complies with all applicable regulatory provisions.”
The president of Latam Pharma
The lawyer Doporto is listed as chairman of Latam’s board of directors, but does not appear in any news media about the massive CanSino vaccination campaign in Mexico.
Months after Doporto allegedly began working for the company, an article appeared on the internet mentioning that he had joined Latam Pharma “to bring the best and newest vaccine technologies to the Latin American market.” The article was published hours after Univision contacted Latam Pharma with questions for this story.
A few days later, Latam Pharma confirmed that Doporto is the owner of another Swiss company — that company owns Latam Pharma.
In April of 2016, the Mexican news outlets Aristegui Noticias and Proceso revealed, as part of the Panama Papers investigation, that Doporto had received an $83 million dollar loan to buy Marzam, a drug distributor. The person who lent him money was Marina Matarazzo, the wife of an owner of another pharmaceutical company.
This other company, called Nadro, was the main competitor of Marzam, the company Doporto was buying. The loan could have facilitated the companies forming a conglomerate and creating a monopoly in the drug delivery market.
Upon learning of this operation, the Federal Commission of Competition began to investigate Doporto and the loan. Two years later, Doporto agreed to end ties with the lender. However, public documents from the Commission in June 2020 and February 2021, before and after the CanSino contract, show that he has not yet paid the loan, nor several fines imposed on him for monopolistic practices.
Neither Chancellor Ebrard’s tweet in December, nor the statements on the packaging of the CanSino vaccines, mention the relation between Doporto and Latam Pharma. Univision asked the Mexican foreign ministry and Latam Pharma if they had taken into account the fact that Doporto would take part in this transaction while still under sanctions from the Federal Commission of Competition.
Both the company and the foreign ministry said that the vaccine contract is unrelated to the sanctioning of Doporto because of the Panama Papers.
The ministry of health responded, “there is no record of Latam Pharma Innovative Ventures S.A.” in the public registry of companies prevented of making contracts with the Mexican government.
“It would be difficult for the Secretary of Health to find Latam Pharma in a directory of sanctioned companies, if the company did not even formally exist when it signed the contract with Mexico,” Diez said.
In December, when the contract with CanSino was announced, a statement from the Mexican government mentioned Jérôme Piguet, one of the members of Latam Pharma. Piguet was Latam Pharma’s representative in the contract with CanSino and Mexico, and it is his signature that appears on the contract.
In the following months, another member of Latam Pharma — Guy Jean Leon Savoir Garcia — was revealed. Garcia is a Mexican businessman who has managed other pharmaceutical companies. He was present at a CanSino-related event also attended by foreign minister Ebrard.
Both Piguet and Savoir Garcia are members of Latam Pharma in Switzerland, and Doporto is the president of the board. The same questions were sent to Doporto and Savoir Garcia, who also works as president of the board of Drugmex. We only received responses from the Latam Pharma email address.
Price per dose
While the price per dose that governments across the world paid for major vaccines such as Pfizer, Moderna, and Astra-Zeneca is public knowledge, it was impossible to confirm the price per dose the Mexican government paid for CanSino.
Javier Cobos, a financial analyst who was an associate director of S&P Global Ratings and a consultant for the Inter-American Development Bank, reviewed CanSino’s first trimester report at Unvision’s request. He said the price Mexico paid for CanSino doses can be inferred from the report. It is not known how much CanSino subsequently paid to Latam Pharma or Drugmex, the Mexican packaging company.
“This shows that the vaccines have a price of approximately $14 per dose,” said Cobos, after deducting the profits of the Swiss intermediary and Mexican packaging company.
Mexico has made confidential almost all information related to prices and negotiations for the purchase and approval of the vaccines they have obtained.
“It is the obligation of the Secretary of Health to keep confidential information that has been provided by the pharmaceutical company under strict protection,” the agency replied to questions from Univision Investiga.
In the same response, the health ministry copied a long list of information that the contract mandates be kept confidential about the vaccine. But in the Secretary’s response, the price per dose was added to this list.
When reviewing the Secretary’s email response in comparison with the contact, Univision found that the contract does not specify that pricing be kept confidential.
“The contract does say that no financial information can be disclosed, but it is not specified in the agreement that the price cannot be disclosed,” Diez said.
Information about how much other governments have spent on CanSino is similarly scarce. Four countries have ordered the CanSino vaccine: Chile, Mexico, China, and Pakistan.
When contacted by Univision Investiga, CanSino also refused to disclose the price.
“Pricing is part of the confidential information that we are not disclosing,” wrote Pierre Morgon, Senior Vice President of International Business Operations at CanSino, in correspondence with Univision.
In March 2021, Morgon told Reuters that CanSino had offered “tens of millions of doses" at the price of a “middle single digit U.S. dollar” to Covax, a global vaccine distribution campaign.
Dr. Krishna Udayakumar, a founding Director of the Duke Global Health Innovation Center, said that the prices governments across the world have paid for covid-19 vaccines — especially those coming from China, like Sinopharm and Sinovac — can vary widely.
In correspondence with Univision Investiga, communications officers for the World Health Organization and UNICEF wrote that they did not have information about the price of CanSino in Mexico.
The CanSino trimester report obtained by Univision Investiga reveals the company made $72.4 million in revenue between January and March of 2021, when the only country that had bought vaccines was Mexico. When asked by Univision Investiga whether this $72.4 million in revenue derived purely from the supply agreement with Mexico, Morgon declined to comment.
Udayakumar said that keeping price points confidential is in the interest of manufacturers like CanSino.
“From a manufacturing perspective, keeping these price points confidential is not surprising at all,” he said. “[Manufacturers] have almost no incentive to be more transparent, because it creates stronger power dynamics for their negotiation. It makes sure countries don’t know what other countries might be paying.”
But, Udayakumar said, keeping price points confidential can create “significant mistrust” and lead to countries paying widely varying prices for the same vaccine. He noted it could also increase the likelihood of corruption in vaccine transactions.
*Claudia Ocaranza from PODER contributed to the investigation for this report.