Rtn John Casella provided a warm introduction to our guest speaker Rtn David Laurence to provide insights into the recent surge of medical gloves fraud cases in both Thailand and abroad. Rtn David is the founder of a legal technology company named Pegleg Co., Ltd which provides legal management services and expat litigation insurance. Rtn David was formerly with Tilleke & Gibbins before joining as in-house counsel for Sri Trang Gloves and its parent company Sri Trang Agro-industry PCL, which is Thailand’s largest medical glove manufacturer. Rtn David was instrumental in the company’s expansion from 6 to 72 countries over 18 months and the eventual SET listing of Sri Trang Gloves in June 2020.
 

Rtn David provided a market overview of the medial glove industry highlighting that interest and prices have risen exponentially since the beginning of Covid. For instance, a case of nitrile gloves have risen from $19 per carton to $150 per carton not including shipping costs. Before Covid the medical glove industry was facing thin profit margins, volatile input costs, and high regulatory service costs in managing the various unharmonized jurisdictions that were mostly country specific. When the pandemic hit, many of the larger manufacturers started running out of inventory when clients were demanding more. As such, a new group of middlemen emerged in the industry to close the gap in discovering manufacturers worldwide who could fulfill the supply shortage.


In this environment, unregulated distributors and counterfeit gloves blossomed on the heel of surging global demands. The quality of the unregulated gloves also saw a steep decline, for instance by merging higher quality nitrile with less stringent quality vinyl produces gloves that would break and tear very easily. Forged documents and agreements, for example middlemen posing as “allocation holders” for large manufacturers, became more prevalent as buyers tried to secure PPE medical equipment at any price. Rtn David wanted to help the due diligence and education required for appropriate medical gloves sourcing by launching a free YouTube channel to help buyers named “5 minutes to save 5 million dollars”. This series of videos, which was created and hosted by Rtn David, can still be seen online.

Rtn David shared candid insights in the current environment for medical gloves, for instance, how fraud remains rampant as the many legal enforcement institutions remained overwhelmed and backlogged from the Covid crisis, thus it remains a “buyers beware” marketplace. He recommends that investors in medical gloves should remain very cautious, especially with a likely decrease in global demand coupled with increasing manufactured supply coming online in the coming months as previous investments in medical glove manufacturing start hitting the market. Questions from the crowd included Rtn Andrew who asked if inspecting companies, such as SGS, were unable to do their due diligence because of travel restrictions or other reasons, Rtn David replied that the fraudulent middlemen and sellers had discovered new ways in deceiving their customers, such as conducting “bait and switch” operations by replacing a previously approved shipment with a lower quality and unapproved shipment.


Rtn Matthew shared with us that he also recently experienced fraud in the PPE industry and asked what could be done to clearly identify fraud from a buyers point of view in which Rtn David mentioned that site visits with the manufacturer, while in a active production run, is the main tool to help identify potential partners. Rtn Sanjeev mentioned that Thailand banned the export of PPE early on during Covid and asked whether many buyers knew of that law, which we presume would have saved them from the subsequent fraud. Rtn David replied that he believes many buyers overlooked that law when making urgent sourcing decisions for PPE and suggested that most buyers will not get their money back from the fraud. Rtn Joseph ended our interesting discussion by providing a vote of thanks to Rtn David for sharing his insightful knowledge on this newsworthy topic.