COA: GSIS purchase of P25-M avian flu meds in 2006 was unnecessary, irregular

MANILA, Philippines – The purchase by the Government Service Insurance System (GSIS) of some P25.13 million worth of avian flu medicine in 2006 has been found by the Commission on Audit (COA) as being “unnecessary and irregular” as it went beyond their mandate.

The COA decision dated July 4 added that the purchase by the GSIS of Oseltamivir capsules also meant spending public funds outside of the agency’s purposes.

“The procurement of medicines for the treatment of Avian Influenza is a health related function which belongs to the Secretary of Health who was designated by then President Gloria Macapagal-Arroyo as the Crisis Manager for the Avian Influenza under Section 114 of EO No. 280,” COA explained in its decision.

“Created under Commonwealth Act No. 18613 and Republic Act (RA) No. 8291, GSIS is a social insurance institution that provides a defined benefit scheme under the law. Section 34 of RA No. 8291 provides that the contributions of the members, together with the earnings and accruals thereon, shall be used to finance the benefits administered by the GSIS, and not for purposes other than what are provided for under RA No. 8291,” it added.

As such, the COA said the contributions of GSIS members should only be used to finance lawful benefits, like insurance coverage, and not for the purchase of medicine.

This affirmation of the previous notice of disallowance (ND) by the COA came after a petition for review was filed by the then administration of the GSIS in 2015.  With the decision, the COA’s Prosecution and Litigation Office is instructed to forward the case to the Office of the Ombudsman for further investigation and possible filing of a complaint.

No national emergency

The COA also noted that GSIS cannot justify their purchase of the anti-avian flu medicine as there was no declaration of a national emergency.

“There was no national emergency declared by the President as to the outbreak of Avian Influenza in the country. Thus, there was no urgent necessity for the procurement of Oseltamivir capsules,” the Commission stressed.

“Moreover, the stockpiling of the Oseltamivir capsules is without basis and its procurement is not germane to the powers and functions of the GSIS BOT,” they added.

According to the COA, former GSIS President and General Manager Winston Garcia arranged a deal with pharmaceutical company Unilab to buy the medicines, intended for its members should an avian flu outbreak is declared in the country.

A memorandum of agreement (MOA) was officially signed between GSIS and Unilab on March 30, 2016, while 476,300 Oseltamivir capsules were delivered from April to May 2006.

However, COA’s audit report of GSIS released a year after found out that most of the medicine remained in stock and were about to expire.  Also, only 109,880 capsules worth P6.152 million were distributed, but the remaining P18.79 million or 366,420 capsules were still being kept by the GSIS.

“Unsatisfied with the Management’s comments, the ATL (Auditing Team Leader) and the SA (Supervising Auditor) issued ND No. 12-001-OE (06)9 disallowing the total disbursements of P25,132,367.28 […] on the ground that the procurement of the medicine was unnecessary and not within the corporate mandate of GSIS,” the COA explained.

In the initial COA findings, then GSIS board members Garcia, Bernardino Abes, Jesse Andres, Daniel Gutierrez, Esperanza Ocampo, Reynaldo Palmiery, Raymundo Lapating, and Jesus Santos were found liable.

Also implicated in the transaction were Angel Concepcion, Jr, former Vice President (VP) for Medical Services; Esperanza Fallorina, VP for Accounting; Concepcion Madarang, Senior VP for Administration Group; and Consuelo Manansala, Executive VP for operations.

The COA modified its notice saying that Lapating and Ocampo were excluded from liability as they supposedly had no role in the appropriation of the funds for the capsule, nor did they approve the disbursement of funds for payment.  /muf