COVID-19: German gov't suffers defeat in 'face mask scandal'

Germany's government has received some bad news at a time of tricky budget negotiations.

The Higher Regional Court in Cologne has ruled in favor of a supplier of protective face masks, which the Federal Health Ministry ordered in 2020 at the start of the COVID-19 pandemic, but later refused to accept or pay for. The judges ruled that the ministry should pay €85 million ($92 million), plus €33 million in default interest.

The ruling may well have a knock-on effect, as another 100 similar lawsuits are pending in court. If the Health Ministry is defeated in these cases, it could face a record loss of €2.3 billion in total. 

The mask purchases are already considered one of the biggest tax wastage scandals in the history of the Federal Republic of Germany. 

Jens Spahn's (mis-) calculation 

A look back: In March 2020, the world was literally overrun by COVID-19. A vaccine was still months away, and medical protective gear was dwindling. Respiratory masks with the FFP2, KN95 or N95 standard, which are supposed to provide reliable protection against the virus, were in desperately short supply and there was a worldwide rush to stock up.

"China, the producer of around 80% of such masks at the time, was in lockdown and had stopped exports," recalled Simone Borchardt, a lawmaker for the center-right Christian Democratic Union (CDU) which led the government at the time. "In Germany, we even developed guidelines on how we could use masks several times and whether they could be washed, that's how crazy it was back then," Borchardt told the lower house of parliament, the Bundestag, during a debate in June. 

In this situation, then Health Minister Jens Spahn decided to procure masks in a sort of "open house" procedure. In this process, the relevant government body signs contracts with all interested companies so every provider gets a chance.

Spahn's thinking was that in the global competition for masks, he only had to set the price high enough to make sure Germany would get the goods. Contrary to the recommendation of his ministry officials, who considered a price of €3 (about $3.25 today) per mask to be appropriate, Spahn set the price at €4.50 for FFP2 masks, and at €0.60 for surgical masks. The response exceeded expectations and, in the end, the ministry found itself having placed orders for 5.7 billion masks. 

"The price was set far too high," said Martina Stamm-Fibich, from the center-left Social Democratic Party (SPD), which was the junior coalition partner to Spahn's CDU at the time and currently heads the government of Chancellor Olaf Scholz. "In my view, this already raises the question of how it was possible to calculate prices without taking market developments into account and who bears the political responsibility for this," Stamm-Fibich said in the Bundestag.

Four years later, Spahn is now on the defensive: "With the knowledge of today, I would make some decisions differently, without a doubt," he admitted in the debate. "And yes, in hindsight I cannot recommend the 'open house procedure' in such a situation." 

However, he argued, he had to make decisions quickly in desperate times: human lives were at stake and medical staff were demanding protection.

"We procured masks. Were they expensive? Yes. Was it chaotic at times? Yes. It was the same for every country in the world," Spahn said. "I don't recall anyone warning at the time to make sure the price isn't too high, but I know a lot of people who said: 'Get masks at any price'."

Did the Health Ministry miscalculate? 

The Health Ministry's calculation was that with 5 million health care workers needing two masks a day, more than 3 billion masks would be needed each year. 

However, in the end, only 1.7 billion of the ordered masks were distributed. As early as 2023, 1.2 billion protective masks were destroyed because their expiry date had passed. 

What Spahn hasn't said is that the Health Ministry must have come to the conclusion early on that it had miscalculated. The "open house" procedure was abruptly ended in May 2020 and ministry officials were trying to find ways to get out of as many contracts as possible.

An opportunity arose when some companies failed to deliver the expected quality. In these cases, the ministry unilaterally withdrew from the purchase contract. The same happened to suppliers who were unable to deliver on time, or only provided a part of the masks on the agreed date. The purchase contracts referred to a "fixed deal," claiming all contractual obligations would cease after the delivery date had passed.

However, it's precisely this clause that the Higher Regional Court in Cologne has now declared invalid. The judges found that suppliers had been put at an "unreasonable disadvantage" and the ministry should have been more flexible and set a shorter subsequent deadline.

The Health Ministry now wants to have the case clarified at the highest level by the Federal Court of Justice. If the court rejects the case, the Cologne ruling will become legally binding and is likely to have an impact on the other court proceedings — with the corresponding financial consequences. 

Ongoing reappraisal of COVID-19 measures

Beyond the legal struggle, the political debate also continues — and it goes far beyond the prices of medical masks. Were the government's COVID measures, with their deep and far-reaching encroachments on fundamental rights, justified? What lessons can be learned from the pandemic, and what should be done differently in the future?

However, the parties of the ruling center-left coalition government — the SPD, Greens and the neoliberal Free Democrats (FDP) — have not yet been able to agree on what form a reappraisal would be appropriate. All three parties are in favor of a citizens' council. The Greens and the FDP are also pushing for the establishment of a commission of inquiry in the Bundestag, allowing lawmakers and experts to be heard and make recommendations for further procedures.

This article was originally written in German.

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