Face mask supplier ordered to pay back €43 million for faulty masks will appeal

Face mask supplier O2 Health intends to appeal against the Alkmaar court's verdict ordering the company to return more than 43 million euros to the government. The company's owner, Rutger Brest van Kempen, told ANP about the plan to appeal on Thursday, but he did not want to comment on the case. His attorney, Ellen Gielen, said the company cannot afford to refund the money, and she will review the verdict to determine if an appeal is advisable.

"The masks were purchased with the advance paid by the government. I suspect that the money was largely used for this," Gielen said. "That means there is no more 43 million." Furthermore, O2 Health does not own any significant assets, she stated. Brest van Kempen would not say if O2 Health is currently an active business.

In March 2020, when the coronavirus crisis had just broken out in the Netherlands, the Dutch State concluded a purchase agreement with O2 Health for the supply of eighteen million FFP2 face masks, which were urgently needed by the healthcare sector at the time. The State paid more than 45 million euros, 80 percent of the purchase price, to the company in advance.

O2 Health then bought the masks in China. During testing in the Netherlands, many of the face masks supplied did not meet the requirements. In addition, far fewer masks were delivered than agreed. After more than a year, O2 Health had delivered eight million, about ten million short of the agreed total, the verdict stated. Gielen said that not enough masks were delivered, but it was because only because of the batch which had already been rejected by the government.

In the end, the State dissolved the purchase agreement in May 2021 and one month later filed a lawsuit against the company, which is based in Heerhugowaard. The government did keep over 500,000 face masks that did comply with requirements, according to testing on samples. The State was willing to pay 2 million euros for these, and then demanded a refund of the lion's share of the advance.

Four O2 Health accounts were seized in 2021. As the verdict was immediately enforceable, the government was authorized to begin collecting money in the case, including from the seized accounts. It was not clear how much money was present in those accounts when they were seized. It also was not immediately clear on Thursday whether all the money could still be recovered by the State. The Ministry of Health said it will answer ANP's questions about this at a later date.

The company's lawyers argued during the case that the company will go bankrupt if the court rules in the government's favor. Brest van Kempen also did not want to answer questions about this. The O2 Health website was offline on Thursday.

According to the court, the government had the right to terminate the agreement. The decision was already made on December 21, but was quietly published on the court system's website on January 9. Three days later, the court issued a press release about it after newspaper AD published an article about the verdict. The company has three months from the date of the verdict to file an appeal.

It was not the only situation of a deal gone wrong regarding the purchase of face masks during the coronavirus crisis. The most famous case is the controversial deal that the ministry concluded with Sywert van Lienden and his business partners. The sellers said claimed they were a nonprofit, but it later turned out that millions of euros in profit margins were funneled to the founders. The deal involved a total of about 100 million euros.