But after mid-July, whispers about an investigation commissioned by Jilin province's people's protectorate over Hou's involvement in bribery started to become widely known.
The Wind from Germany
"It would have been impossible for us to discover Hou if Siemens' German headquarters wasn't investigated first. The bribery list given to China by Siemens helped local law enforcement investigate the case," says one official from the Songyuan Health Bureau.
Hou is now awaiting trial in Zhuling city while the investigation moves forward.
The EO has learned that the hospital made two deals with Siemens. First, in 2005, the hospital purchased a nuclear magnetic resonance imaging system worth of 1.35 million dollars after a public auction that was presided over by Hou. Second, it bought a digital subtraction angiography system on April 29, 2007. Finally, on on May 18, 2007, Hou signed the contract with the Harbin company. That contract has been suspended since Hou's detention.
How to Rig an Auction
Hou took over as director of the hospital in 2000. At the same time, the Songyuan medical system was promoting public auctions in purchasing medicine and equipment. "Hou set a good example in the bidding process," says one official of the Health Bureau. They add that Hou often invited other departments to supervise auctions alongside him, gestures that imparted a feeling of fairness and transparency to the proceedings. In this context, how could Hou have influenced the purchases?
One industry insider illustrated for us how Hou could have received bribes and influenced the auctions: First, during private negotiations with the equipment distributor, both the bribe and a low price for the equipment are decided on. Added together these constitute the price submitted by the distributer during the public auction. Hou could have then taken advantage of the authority that his market research reports held in order to sway opinion towards purchasing that equipment; if his reports claimed that Siemens equipment was fairly priced and the best of its kind, then it would be chosen without question, and he could retain the extra bribe sum introduced into the price at a later date.
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- Audit Storm is a Paper Tiger | 2007-07-27
