Pirates and profiteers arrive on the heels of any crisis. Ferengis, essentially, they look to profit from human suffering. The coronavirus pandemic has them hoarding, trading, and profiteering in Personal Protective Equipment (PPE) on the epidemic’s sidelines and in figurative back alleys. What is not clear at the moment is where the U.S. government ends and where the thievery begins.
TPM’s Josh Marshall is looking for leads to help sort out just which government agency is confiscating shipments of PPE headed to states and hospitals and where those shipments wound up. Reports are spotty. Marshall cites a couple of cases in Massachusetts and New Jersey.
The Financial Times reports an incident in which a shipment of medical masks from U.S. manufacturer 3M that was bound for Germany was intercepted in Thailand and diverted to the US. 3M claims it has no evidence of that happening:
According to the German newspaper Tagesspiegel, the German capital ordered 200,000 special FFP2 and FFP3 masks that are used to protect emergency staff and care workers from infection with coronavirus.
Andreas Geisel, Berlin’s interior minister, confirmed that the consignment had been “confiscated” in Bangkok and never reached Berlin.
“We consider that an act of modern piracy,” he said. “You don’t treat your transatlantic partners like that.”
The U.S. president at a White House news conference on Friday criticized 3M for not directing all its production to U.S. needs, even demanding the firm send 10 million N95 masks to the U.S. from its hub in Singapore, FT reports.
These reports are likely the tip of the iceberg. Or several icebergs.
Politico reports that the Department of Justice’s COVID-19 Hoarding and Price Gouging Task Force will redistribute tens of thousands of N95 masks and other supplies confiscated from an alleged hoarder(s). The numbers vary from report to report making it unclear whether one or more seizures are involved. The U.S. Department of Health & Human Services statement says the owner will receive fair market value for the confiscated supplies.
Buzzfeed News reports the government plans to purchase coveted 5-minute coronavirus testing machines from Abbott Labs. Just not enough to supply the country:
According to a spreadsheet circulated in a Monday email between officials at the Federal Emergency Management Agency and the Department of Health and Human Services, California’s public health lab would receive just 15 testing machines and 100 coronavirus tests. Los Angeles County’s public health lab would receive the same amount.
According to the spreadsheet, all 50 state health departments, as well as some local health departments, would each receive 10 to 15 devices for a total of 780 devices distributed nationwide. Each lab would also be receiving 100 coronavirus tests — a total of 5,500 tests across the country. The document was first reported by Kaiser Health News.
But getting back to pirates and profiteers, it seems the Trump administration means to ensure at least some middle men get a piece of the action. An Abbott spokesperson told reporters the firm “will have shipped more than 190,000 of those rapid tests to 21 states” by the end of the day on Friday (emphasis mine):
HHS spokesperson Mia Heck confirmed that the agency only ordered 5,500 tests “because only 50k would be available in the first week, and we wanted to leave market share for hospitals and other healthcare providers to purchase through the commercial sector.”
Business Insider (subscription required) reports a thriving black market exists in medical supplies. Jared Moskowitz, Florida’s top emergency management official, explained it to a press conference last week:
“The N95 private market right now is like a Ponzi scheme,” Moskowitz told reporters on Monday, using the technical term for respirator masks that filter 95 percent of airborne particles. “All day long we try to find these masks. We’re talking to brokers. We’re talking to distributors. We’re talking to medical salespeople. We’re chasing down warehouses only to get there to find out that they’re empty.”
“We’re being told these supplies are on planes only to see that they’re phantom planes, chasing ghosts when they don’t appear on FlightAware,” the former Democratic state legislator continued. “We’re constantly engaging in bidding wars, being asked to wire money to accounts that were set up that very same day with email addresses that were created only a couple of days ago.”
Because 3M prioritizes orders from states and hospitals, purchase agreements themselves have become “golden tickets” for profiteers. Scammers lure some states into fake deals just to obtain them:
In an effort to stem the tide of fraud and profiteering, on March 20, 3M announced that it would work with “governments, medical officials, customers and distributors around the world to help get supplies where they are needed most.” It later clarified that it was directing more than 90 percent of its respirator production to healthcare and public health. The new guidelines, Plishka and Watters told Business Insider, had the unintended consequence of creating a black market for purchase orders — just the piece of paper — from states or other authorized buyers.
Now, anyone who wants to get into the lucrative 3M supply chain needs to have such a purchase order to demonstrate that the ultimate recipient of the masks is a priority. Potential scammers, Watters and Plishka told Business Insider, can “flip” the orders by selling them to other middlemen, who use them to buy masks from 3M that they can sell on the black market.
Such behavior, like the poor, we will have with us always. But only in the age of Trump has “Use your leverage” become a commandment endorsed at the highest levels.
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Note: The pandemic will upend standard field tactics in 2020. If enough promising “improvisations” come my way by June, perhaps I can issue a COVID-19 supplement.