“Just a whiff of corruption.” These are the exact words of President Duterte in emphasizing his administration’s zero tolerance against graft and corruption.
But if you’ve been following the Senate’s inquiry on questionable Covid-19 contracts involving the Department of Budget and Management’s Procurement Service (DBM-PS) and some of the President’s closest allies, it is not farfetched to infer that the alleged irregularities in the procurement of much-needed supplies to contain the pandemic constitute massive thievery of people’s money.
And the way it was done, as unraveled in the Senate probe, was so crude and brazen that either the scheme’s actors did not even have the sophistication to cover up their tracks or it could be that the strength of their government connections has boosted their confidence that they could easily get away with it.
What makes it doubly reprehensible was the timing: they did it in the midst of a pandemic that has been crippling the national economy in the past 18 months, leaving people’s lives and financial sustenance hanging in the balance. Gauging the way the probe has been progressing, the stench stemming from the scam was too nauseating not to have wafted all the way to Malacañang.
The Congressional probe was an offshoot of the yearly Commission on Audit (COA) reports detailing billions’ worth of insufficiencies of pandemic funds, mostly under the Department of Health (DOH). The health agency conveyed P41.8 billion to the DBM-PS without a memorandum of agreement.
At the center of the probe is Pharmally Pharmaceuticals Corp. which was awarded by DBM-PS a staggering P8.7 billion worth of contracts to supply “overpriced” face masks, personal protective equipment (PPE) sets and Covid-19 test kits to the government last year.
The firm, which the Senate discovered to have a fictitious address, sold its face masks in May last year to the government at P27.72 per piece, which Senate Minority Leader Franklin Drilon declared overpriced. According to Drilon, these vital pandemic protection materials were being sold by other suppliers at half that amount, between P13.50 and P17.50 each. Pharmally’s test kit was sold at P1,720 each, almost double the P925 being supplied by other companies, while its PPEs were bought at P1,910 apiece, also more than double the market price of P945 at the time, as per DBM-PS’s own figures.
Sen. Panfilo Lacson said that “it is clear that we are looking at large-scale corruption here,” which was allegedly perpetuated by the principal figure, former DBM undersecretary Lloyd Christopher Lao, and aided by other company officials who were possibly associated with those in government. Lao, records show, is closely linked with Sen. Bong Go, but the latter denied ever knowing the former.
“I don’t want to speculate because we are really being fooled by Lao,” Drilon said. “He is saying he did not have a backer, and that he applied for the job, which of course, is rubbish. Senator Go, on the other hand, says he does not know anything, and Lao was not his aide. So that’s the mystery. Something is being hidden, and someone is being shielded.”
Lao awarded over P8 billion worth of Covid-19 contracts to Pharmally, a firm Lacson described as lacking the track record to secure big-ticket government procurement contracts. The company was only incorporated in September 2019 and had a capital of only about P600,000. He said that the company got the contract with the DBM-PS, which didn’t even bother to do due diligence. “Those behind the plot were targeting a huge amount of money in procuring supplies,” Lacson said.
According to Drilon, Health Secretary Francisco Duque III exercised “negligence in transferring the multibillion fund to the DBM-PS and that plunder was not a vague possibility if the overpricing of purchases would be proven to be over P50 million.” He urged the Office of the Ombudsman to investigate Lao even if the latter had already resigned from the DBM.
Drilon said Lao could face plunder charges as he was directly responsible for the DOH supply deals through the DBM-PS. Duque, on the other hand, “made it possible” for the deals to be consummated when he officially allowed in what the senator described as an irregular transfer of funds to Lao’s office.
In a DZBB radio interview, Drilon said: “It seems to have been planned. If there is premeditated murder, here, we have a premeditated plunder. For me, in times of the pandemic, this is treachery.”
Calling the DBM-PS contracts “the sure ticket to wealth,” Drilon remarked that, “Indeed, business is booming for these contractors, Pharmally earned P284.9 million in 2020 from zero income in 2019 after winning the contracts. I am worried there are so many red flags in the procurement of several medical items.” He added that “[t]hese warning signs indicate possible anomaly, corruption or fraud.”
Lao, upon questioning by the senators, said he was not aware that the same Taiwanese company was the trader DBM-PS had contracted, explaining that he “had no time to check on the companies since it was an emergency” and “the government did not have plenty of options at the time.” In defense of Pharmally, Lao said that these companies were contracted “at a time when the economy was shut down and there were no supplies. The government used diplomatic channels, contacting embassies, envoys and even the ambassador of China to find supplies.” Lao also defended the price of Pharmally’s PPEs saying “each set included nine or 10 items, such as a coverall, a lab gown, an apron, gloves and head and shoe covers.” Sources pointed out that Lao conveniently glossed over the fact that the total cost of all these additional items would still be lower if provided by other suppliers.
Lacson said that a full-blown investigation of an obscure company and the people who were helping it “hit the jackpot” is in order. He made the call after Blue Ribbon Committee Chairman Richard Gordon played a video during Friday’s hearing, which showed that Michael Yang, a former “economic adviser” of President Duterte, and officials of Pharmally met with President Duterte in Davao City in 2017. Gordon said he showed the video because the public has the right to know how Pharmally managed to bag big-ticket deals and where the Filipino people’s hard-earned income to pay for their taxes went.
But Duterte defended Lao and Yang from controversies about the government’s pandemic spending. In fact, he spent a huge chunk of his televised meeting with the pandemic task force exonerating the two from allegations of anomalies tainting his administration’s procurement of medical supplies for the Covid-19 pandemic.
The President said he appointed Lao to a vital government post because he trusted him. Lao, he said, worked with him in his 2016 campaign team, and when he was Davao City mayor: “What’s wrong if I pay my debts?” Duterte also shielded him from any wrongdoing in relation to Pharmally. He described Yang as the contact person of Chinese businessmen who want to do business in the Philippines: “Yang is a businessman, he doesn’t throw away money. He has contacts with big corporations in China and he is their entry here. I thought, let us go to China and invite the investors here? There, they invested, but during the time of pandemic. What’s wrong with that?” the President said.
Whiff of corruption?
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