Monday, October 25, 2021

TIMELINE: Senate probe into irregularities in Covid-19 funds use

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CORRUPTION allegations have been hounding the Duterte administration since August this year after the Commission on Audit (COA) released an audit report for fiscal year 2020 where it flagged the deficiencies in the Department of Health’s (DOH) use of coronavirus disease (Covid-19) pandemic response funds.

The matter has taken a toll on the relationship between the country’s ranking officials, including President Rodrigo Duterte, and several lawmakers at the Senate.

COA report

In its report released early in August, COA noted various irregularities, including how the DOH managed some P67,323,186,570.57 worth of public funds intended to address the Covid-19 pandemic. The DOH was given around P77 billion worth of Covid-19 budget.

The agency said the deficiencies, which include unobligated and undisbursed billion worth of pesos at the end of the year, contributed to the “challenge encountered” and “missed opportunities” by the DOH amid the Covid-19 crisis.

The COA said the deficiencies also “casted doubts” on the regularity of related transactions.

The audit department also noted other deficiencies, such as in handling petty cash funds, procurement of medicines near expiry, management of fund transfers, and payment of Covid-19 allowances for health workers.

Senate investigation

In a press release on August 12, 2021, Senator Franklin Drilon called for a Senate inquiry “in aid of legislation,” noting that the findings of COA were “alarming and disturbing,” especially that they have already “heard” corruption allegations involving the purchase of personal protective equipment (PPE) and test kits “and these corruption allegations have remained unanswered and unsolved.”

Other senators also pushed for the conduct of investigation, prompting Senator Richard Gordon, the chairman of the Senate blue ribbon committee, to open a probe.

Healthcare workers’ benefits, allowances

In August 18, 2021, the inquiry was opened, focusing more on the delays in the release of benefits and allowances of healthcare workers (HCW) as mandated by the Bayanihan Law.

During the first period, which is from September to December 19, 2020, Health Secretary Francisco Duque III said P6.4 billion was released for the active hazard duty pay of 384,159 HCWs and special risk allowance (SRA) for 306,314 others, while 103,096 of them also received meals, accommodation, and transportation (MAT) allowances worth P990.9 million.

Senators noted that in the second period from December 20, 2020, of the P9.02-billion budget for the health worker’s special risk allowances (SRA) from December 2020 until June 2021, only P6.93 billion was distributed. Duque said there was a challenge in the conduct of validation as to who is entitled to receive the benefit.

Gordon said there should no longer be validation, as all health workers should receive SRA since they are equally exposed to the risk brought about by Covid-19.

The DOH and the Department of Budget and Management (DBM) were also pinpointing at each other for the delay in the release of health workers’ allowances in June.

While Duque said there was a delay in the release on the part of the DBM, budget officer-in-charge Tina Rose Marie Canda said there was a delay on the submission of request for fund release on the part of the health department.

Representatives from health workers’ groups testified during the probe to express their sentiments against the government.

Duque resignation

The delay in the release of their allowances and benefits brought healthcare workers’ groups to the streets either in front of the hospitals where they work, or at the DOH head office in Manila for the conduct of picket protests in September.

They called for the resignation of Duque, as well as Duterte over their negligence to take care of their welfare while they cater to Covid-19 patients.

During the Senate hearing, Senator Grace Poe-Llamanzares said “shouldn’t Duque be suspended” following the release of the COA report.

Other senators called out the health secretary over his emotional outburst, as he slammed COA’s "unfair and painful" report on the DOH spending.

Duque, unaware that he is not muted while he virtually attends the probe, was heard telling someone from his office “alam mo nagulo na ang utak ko. Hindi ko na alam.”

Gordon responded and said "marami kayong psychiatrist sa DOH. Pagamot ka muna sa psychiatrist ninyo sa DOH."

Procurement Services funds

At the later part, Drilon questioned the P42-billion funds transferred to the Procurement Service (PS) of the DBM without proper documentation, tagging it as “the most alarming.” It was part of the P67-billion DOH Covid-19 funds flagged by COA.

The DOH said the budget was for the procurement of medical supplies necessary for protection against Covid-19, such as face masks, PPE and face shields.

Senators Imee Marcos and Risa Hontiveros brought up the complaint of several local manufacturers after they were shut out of biddings facilitated by the PS after the government urged them to retrofit their factories in order for them to manufacture medical supplies.

Gordon sought for the assistance of Canda in order to locate resigned PS head Lloyd Christopher Lao, whom they invited for the next hearing.

Before the second hearing set on August 25, former senator Antonio Trillanes IV made a statement linking Lao to Senator Christopher “Bong” Go, Duterte’s former long-time aide.

Lao and Go both denied Trillanes’ claim but admitted they had worked together before.

Lao’s denial

On August 25, the second day of the inquiry, Lao attended the probe where he denied irregularities in the transfer and use of P42-billion funds from the DOH.

He said there is no need for the transfer of funds and the procurement of face masks and face shields to be covered by a memorandum of agreement, as it was considered common use by the Government Procurement Policy Board.

Lao also denied that the face shields and face masks procured by his office for DOH were overpriced considering the demand and supply.

The panel asked for the documentation of biddings conducted by PS.

Medicines overstocking

As the senators continue to scrutinize the management of the DOH funds, Senator Panfilo Lacson noted the overstocking of medicines, which are found to be near expiration.

He said around P2.73 billion worth of medicines, which are nearly expired, remains undistributed since 2013.

Lacson said there could be a “well-entrenched mafia” operating at the DOH regardless of the administration.

He urged Duque to look over and address the matter.

Pharmally contract

At the resumption of the Senate investigation on August 27, after receiving documents pertaining to the transactions entered into by PS for the procurement of medical supplies in behalf of the DOH, lawmakers grilled Lao for awarding an P8.68-billion contract to a start-up Pharmally Pharmaceutical Corporation, which only has P625,000 paid-up capital.

Drilon said Pharmally offered face masks for P27.72 per piece, while other bidder companies offered it for only P13.50 to P17.50 per piece.

Covid-19 test kits from Pharmally amounted to P1,720 per piece, while other bidders offered it at P925 per piece.

Drilon said PPEs were bought for P1,910 per piece from Pharmally instead of P945 per piece from other bidders.

He said they also had a hard time locating the officials of Pharmally.

In defense, Lao maintained that the bidding process was in accordance to Republic Act 9184, or the Government Procurement Reform Act, which allows negotiated procurement in times of calamity and crisis.

He also cited the provisions of the Bayanihan laws that allow the conduct of procurement in the most expeditious manner.

Lacson then hinted the possible links of Pharmally officials to former presidential adviser for economic affairs and Davao businessman Michael Yang, who was allegedly the biggest supplier of medical items amid the Covid-19 pandemic.

Gordon showed footage uploaded by state-run RTVM of Yang having a meeting with Duterte, Go and several Pharmally officials, including its president Huang Tzu Yen, his father Huang Wen Lai and the firm's director Linconn Ong.

Drilon and Lacson expressed belief that there was a pre-meditated plunder on the procurement of medical supplies.

Noting the government could have saved billions of funds if the purchases were not made through Pharmally, Drilon moved for the committee to ask the Office of the Ombudsman to conduct a proper investigation on the transactions entered into by the PS with Pharmally for possible violations of anti-graft laws.

The panel moved to issue subpoena to Yang and several Pharmally officials.

In a separate interview, Hontiveros revealed that the Huangs were wanted in Taiwan over fraud charges.

Gordon, on the other hand, said in a television interview that the investigation may go as high as Duterte.

At the beginning of the resumption of the investigation on September 7, Gordon defended the Senate from Duterte’s statement that nothing happens in the investigations they have conducted.

He urged Duterte to show some respect to the Senate, which is a “co-equal branch.”

Gordon maintained that the previous probe conducted by the committee had been effective and meaningful, citing the investigation on the P50-million bribery case that resulted in the conviction of former Immigration deputy commissioners Al Argosino and Michael Robles by the Office of the Ombudsman.

He also noted the identification of illegal activities at the Philippine National Police (PNP) committed by erring cops, which resulted in the resignation of then PNP chief Oscar Albayalde and the action they took against former customs commissioner Nicanor Faeldon, who was implicated in the illegal entry of P6.4 billion worth of illegal drugs from China.

Pharmally owner Huang Tzu Yen attended the probe but he did not undergo questioning, as he was required to reaffirm his oath to tell the truth during the probe before the Philippine embassy since he was in his home country Singapore.

Pharmally officials’ arrest

The committee recommended the arrest of Yang and five Pharmally officials, including Ong; Twinkle Dargani, its president; Mohit Dargani, treasurer; Krizle Grace Mago; and Justine Garado after they failed to heed to the summon to attend the probe twice in order to shed light on the matter.

The recommendation was later approved by Senate President Vicente Sotto III.

It was uncovered during the said hearing, following the testimony of Ferdinand Ferrer of the EMS Components Assembly Inc., who heeded to the call of the Department of Trade and Industry (DTI) to repurpose their factories for the manufacturing of medical supplies to augment its need, that PS blocked the delivery of their items.

Ferrer said they bagged a P1.3 billion total original contract from PS for the procurement of 100 million pieces of medical grade face masks at P13.50 each on April 27, 2020.

They delivered a total of P25.8 million face masks until November 2020 and the rest, which involves 74.1 million, was delivered in the first quarter of 2021 but the price was lowered down to P2.35 each.

The company owner said they suffered losses considering they invested P200 million for the project.

Lawmakers noted that PS got too many stocks from Pharmally that resulted in overstocking and the denial to the delivery of the local manufacturers.

Senators believed that Pharmally was favored because of its links with Yang, but Lao denied this.

On September 10, Yang and the five Pharmally officials attended the probe.

It was found then that Yang, despite his denial of any business dealings with Pharmally, financed its transactions with PS, as revealed by Huang.

Due to the flip-flopping of Yang and Ong, the panel moved to arrest and detain them at the Senate office “until they tell the truth” in the committee hearing.

In the following hearing on September 13, Yang was no-show with his legal counsel, citing he has an emergency medical situation after his blood pressure shot up.

Gordon refused to accept Yang’s excuse.

Ong, on the other hand, was placed under house arrest since he was suffering from Covid-19 infection.

Lawmakers grilled Pharmally officials until it was unearthed that Yang lent the firm P7.29 billion in order for them to fulfil their P8.86-billion contract with PS.

Huang admitted they do not have the funds for the deal.

It was also found out that Pharmally actually served as an “agent,” as they get their stocks to other suppliers and pass it to the government with a mark-up.

Drilon said Pharmally underwent an “unusual” process in order to get a contract from PS, citing for example the delivery of supplies despite that lack of purchase order and delivery request from PS.

Mago recalled that in their first transaction with PS for the delivery of 500,000 face masks, they delivered it on the same day.

Ong said they got the supplies from TigerPhil for P23 each and passed it to DBM at P28 per piece.

Retired DBM-Procurement Service Inspection Division officer-in-charge Jorge Mendoza also recalled an instance where they had to sign delivery reports before an actual delivery had taken place.

Gordon said Pharmally used its influence due to its links with Yang in order to get deals with the government.

Drilon said apart from the P8.68-billion contract awarded to Pharmally by PS for the procurement of medical supplies for the DOH, the agency also awarded them three more other contracts for the delivery of KN95 face masks (P300 million) and Covid-19 test kits (3.122 billion) that totaled to over P3.422 billion from April to June 2020.

Gordon vs Duterte

During the recent hearing on September 17, Gordon expressed outburst Due to the continuous attacks made by Duterte as he defended Yang and Lao.

He tagged Duterte as a “cheap politician” and a President “the Filipino people cannot respect.”

Gordon maintained he will not stop the investigation until they ferret out the truth.

He revealed that Pharmally officials were able to acquire luxury vehicles worth millions of pesos following the deals with the government.

The irregularities in the financial and accounting report of Pharmally were also noted during the probe.

Another witness, Rose Nono Lin, a shareholder of Pharmally Biological, testified during the inquiry but she denied any links with Pharmally Pharmaceuticals as claimed by Hontiveros that they were a sister company.

Lin is the wife of Lin Wei Xiong, who reportedly is the same person as Wen Li Chen and Allan Lim, an alleged drug personality who was seen in a photo with Duterte and Yang.

She is also an incorporator of the Full Win or Fu De Sheng Group in the Philippines. She denied that Yang was the chairman of the said company.

The next hearing was set on Tuesday, September 21. (SunStar Philippines)


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