Corona legacy: Lawsuits from mask suppliers: Lauterbach faces billions in damages

Suppliers of corona masks have been arguing with the Federal Ministry of Health in the regional court in Bonn for around three years.

Corona legacy: Lawsuits from mask suppliers: Lauterbach faces billions in damages

Suppliers of corona masks have been arguing with the Federal Ministry of Health in the regional court in Bonn for around three years. Suppliers have sued the ministry in a total of almost 150 cases - after the federal government declared numerous contracts invalid and refused to pay the purchase price because the masks were allegedly defective or delivered too late.

In recent months, the amount involved in the legal disputes has increased significantly. According to the latest information from the Ministry of Health, the value of the lawsuits as of the end of September is around 988 million euros. There are currently 73 lawsuits pending, said Karl Lauterbach's (SPD) ministry at the request of left-wing finance politician Christian Görke. The answer is available from the business magazine “Capital”.

According to the latest information from the ministry, the number of lawsuits that have not yet been legally decided has recently fallen slightly. On the other hand, the financial risk for the federal government has increased massively: at the beginning of 2022, shortly after Lauterbach took office, the value of the mask lawsuits was still around 425 million euros, as "Capital" reported at the time. Now it's almost reaching the billion mark.

The background to the development is that possible claims from suppliers are in danger of becoming statute-barred at the end of the year. Those involved in the proceedings therefore assume that the total amount in dispute will continue to rise in the coming weeks - significantly. So far, many suppliers have only filed partial lawsuits with a view to court costs, said Berlin lawyer Christoph Partsch to the business magazine. They would now increase their demands. One company alone that Partsch represents with his law firm is now worth 250 million euros. The situation is similar at other leading law firms.

The procedures in Bonn involve the so-called open house procedure - a simplified ordering process that the then Health Minister Jens Spahn (CDU) started at the beginning of the Corona crisis in order to quickly procure masks. At that time there was chaos in the protective equipment market. The federal and state governments tried to secure masks through all possible channels - even from sometimes dubious providers.

In the open house procedure, the Ministry of Health guaranteed suppliers the unlimited purchase of FFP2 masks for an expensive 4.50 euros net each. However, it soon became clear that the federal government was being showered with masks: In the end, there were 733 awards in this purchasing process alone with a financial volume of around 6.4 billion euros. The Federal Audit Office later criticized “massive over-procurement”.

After the open house process ended early, the Ministry of Health withdrew from many contracts. The ministry argues in court because of defective goods or missed delivery dates. Many suppliers suspect that it was because they ordered far too many masks and the costs were completely out of control. In other cases, companies that won contracts were unable to deliver. In the end, the federal government paid open house contracts for almost one billion euros.

Many of the disputes subsequently ended up before the regional court in Bonn. There are now some judgments in the entire open house complex, but no supreme court decision yet. In individual cases, the ministry has also concluded settlements with suppliers. Why and under what conditions is unknown - as part of the settlement, the plaintiffs signed a confidentiality agreement.

Even under Spahn's successor Lauterbach, the Ministry of Health, supported by lawyers from various external law firms, is taking a hard line in the proceedings - probably because of the considerable financial risk for the federal government. Lauterbach also continues to block the release of ministry files on Spahn's mask shops to the public, sometimes with questionable reasons such as citing national security interests.

Most recently, the Cologne Administrative Court ordered the release of important documents, including test reports and documents from the consulting firm EY, which had long supported the ministry in processing the mask contracts, following a lawsuit from Open House supplier Joachim Lutz. Lauterbach's department has lodged an appeal against the verdict. A decision will not be made until next year at the earliest.

The legal battles over the federal government's billion-dollar mask purchases continue to drag on - while the Ministry of Health has already had to have service providers dispose of a good portion of the overprocured masks because the expiration date has expired. The costs for EY and other consulting firms, law firms as well as the storage and destruction of the corona masks have long since reached a three-digit million amount. And they will continue to rise as long as the proceedings are ongoing.

“The fact that the federal government still has so many procedures on its hands even three years after procuring the masks is an indictment of Jens Spahn’s chaotic procedure,” said left-wing finance politician Görke “Capital”. “The raw numbers are crazy: masks were bought for around six billion euros, and almost a billion is now being disputed in court.” At the same time, Görke also sharply criticized the current Minister of Health: Lauterbach should "finally clear up the rubbish Spahn left in the ministry," he said. "But you don't hear or learn anything about this from Lauterbach. He would rather be concerned with legal smoking than with wasting taxpayers' money."

In the case of another mask business run by the Federal Ministry of Health from the early days of the pandemic, investigations by the Berlin public prosecutor's office are also ongoing. This involves contracts with the Swiss supplier Emix with a total volume of more than 700 million euros. The Emix deals with the federal government were brokered by Andrea Tandler, daughter of a former CSU general secretary and Bavarian finance minister. A criminal trial began against Tandler and a business partner in Munich at the beginning of October; investigators accuse them of not properly taxing the Emix commissions amounting to around 48 million euros. Tandler and her partner deny all allegations.

One Emix contract with the federal government is particularly striking: in mid-April 2020 - after the Ministry of Health had already prematurely stopped the open house procedure due to the numerous offers from suppliers - it ordered a further 100 million masks from Emix, and at a higher price Unit price than in the open house procedure. The Berlin public prosecutor's office saw evidence of possible bribery in this transaction and, in mid-2022, initiated investigations against, among other things, the top official who was responsible for mask procurement in the ministry at the time. This case against the officer has now been discontinued, as the investigating authority confirms.

At Capital's request, a spokesman said that regardless of this decision, the Berlin public prosecutor's office would continue to investigate mask broker Tandler and her business partner Darius N.. A separate investigation against both of them is “still open,” he explained. This is about suspected bribery. Apparently the investigators still have doubts about Emix's transactions with the federal government.

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