Former DBM Undersecretary Christopher Lao. SCREENGRAB
MANILA, Philippines — Senators on Friday grilled the former head of the Department of Budget and Management-Procurement Service (DBM-PS) after finding out that a firm which bagged P8.6 billion in procurement contracts for medical supplies submitted “fake addresses” in its registration document.
During a Senate blue ribbon panel hearing, senators questioned how the DBM-PS exercised its due diligence under former head Christopher Lloyd Lao in choosing firms to supply face masks, test kits, personal protective equipment and other medical supplies amid the pandemic.
Among the companies mentioned in the hearing was Pharmally Pharmaceutical Corp., which senators noted was awarded P8.68 billion in government procurement contracts.
The blue ribbon committee attempted to serve subpoenas to Pharmally officials, whose stated addresses in the firm’s Securities and Exchange Commission general information sheet (GIS) are located in a condominium in Taguig City.
But when the subpoenas were sent there, the building’s guard said the addresses were “unknown to him,” according to the blue ribbon committee secretary.
“They stated fake addresses. A simple diligence would have shown that these are fake addresses,” Senate Minority Leader Franklin Drilon said.
There was either “collusion”—or an “appalling lack of due diligence,” Senator Panfilo Lacson, for his part, said.
“Or they are sloppy. I don’t know what to believe. Being the head of the PS-DBM, a trained and experienced procuring entity of government, yet not even detecting a fake address by the incorporators, I wonder how they were able to award the procurement of billions of pesos of items,” Lacson went on.
According to Lao, Pharmally was among the companies recommended to the DBM-PS when it used diplomatic channels to find suppliers at the height of the COVID-19 pandemic.
Lao also told senators that the firm did not submit its GIS to the DBM-PS, hence, it has no copy of the addresses stated in it.
However, Senator Richard Gordon, chairman of the committee, said the DBM-PS should still have checked the firm’s records.
“You’re giving them large amounts of money [yet] you did not bother to check?” Gordon asked.
‘Red flags’
Drilon likewise questioned why the DBM-PS chose Pharmally as one of its suppliers when it has paid-up capital of only P625,000.
He said this was “obviously insufficient” to assume “huge risk” for the delivery of P8.68-billion worth of procurement.
According to the senator, the law required that negotiated procurement can only be entered into with persons who have the technical, legal and financial capabilities.
Further, Drilon noted that the firm’s assets increased to P284.9 million in 2020, from P599,000 in 2019, supposedly after bagging the said government contracts from the DBM-PS.
“Indeed, business is booming for these contractors. It appears that PS-DBM gave them the sure ticket to wealth,” he said.
“I am worried there are so many red flags in the procurement of several medical items. These warning signs indicate possible anomaly, corruption or fraud…Red flags are all over. We should not ignore these red flags,” he added.
Lao was summoned to attend Friday’s hearing after senators earlier questioned the allegedly overpriced face masks and face shields purchased by the Department of Health in 2020 through the DBM-PS at P27.72 and P120 per piece, respectively.
But Lao said his team did the “best” it could to ensure that the price of supplies being procured at the time was the “most affordable.”
“In fact, if you base it on the previous procurement, mura na naman siya. Compare it to present procurement, mahal siya.Kasi the present we have now, is a lot cheaper compared to what we procured last year,” he told senators.
“Mahirap kasi…there is no history to compare the scenario we were in because it is the first time, I think in my generation, I have never experienced a pandemic. We were just reacting during that time on what we had. Our capabilities are limited, our capacity is limited, our personnel skills are limited,” he said.
“Based on that, we acted on it. It’s a judgement call, either we can buy or we cannot buy. Either we get it now or we don’t get it now. That’s the only thing I have in my mind,” Lao further said.