Michael Yang —SENATE PRIB
The cat is out of the bag.
President Duterte’s former economic adviser Michael Yang personally loaned money to Pharmally Pharmaceutical Corp. last year as the undercapitalized company struggled to pay Chinese companies for medical supplies ordered by the Philippine government, the company’s Singaporean chair and president Huang Tzu Yen told senators on Friday.
Huang’s bombshell testimony belied Yang’s claim in the early part of Friday’s Senate blue ribbon inquiry that he had only introduced one of the company’s Filipino directors, Linconn Ong, to his friends among Chinese suppliers in China.
Ong, who also testified, told the senators that Yang, a close personal friend of Mr. Duterte, had advanced the payment to the Chinese suppliers and guaranteed that Pharmally would be able to pay up.
Testifying from Singapore, a visibly distressed Huang told senators that Yang offered to lend money to Pharmally “so we will be able to pay for [the supplies], so we don’t get blacklisted” after his company had won billions of pesos in government contracts
“We will pay him back once we receive the money from the government,” Huang said during a video conference.
Ong confirmed his boss’ statement. “Mr. Chairman, to be precise, Michael Yang paid for the stocks,” he said.
Pressed for the amounts they borrowed, neither Huang nor Ong could immediately say how much Yang lent Pharmally, saying they needed to check their records.
“Now the cat is out of the bag. I’m sorry but you’re still being evasive,” the committee chair, Sen. Richard Gordon, said.P8.7-B contracts
In mid-2020, Pharmally, a trading company with a paid-up capital of only P625,000, won P8.7 billion worth of contracts with the Procurement Service of the Department of Budget and Management (PS-DBM) headed then by former Budget Undersecretary Lloyd Christopher Lao.
The contracts are at the center of the Senate inquiry into the Department of Health’s transfer of P42 billion of pandemic response funds to the PS-DBM to procure medical supplies like face masks, personal protective equipment (PPE) and COVID-19 test kits.
Huang made the disclosures after the Senate panel threatened to arrest Ong, who angered senators for his inconsistent and evasive statements.
“The company borrowed money from Michael Yang. I think Linconn Ong hesitated to say that because he didn’t want to offend Mr. Yang. That caused him to be evasive,” Huang said.
“Someone helped you at a difficult time, you don’t say things that might implicate them. The statement that we borrowed through our accounts, what he said is true. We did receive his (Yang’s) help but only after we were awarded the contracts,” Huang said.
Upon questioning by Senate Minority Leader Franklin Drilon, the Pharmally chair said Yang only helped the company for the initial contracts for the PPE sets and COVID-19 test kits in 2020.
They did not get help from Yang for the supply of surgical masks and for the contracts they got this year, Huang said.
“It was a time when we wanted to bite off a bigger contract [than we could deliver],” he said.
Drilon said there was nothing wrong to aspire to be a successful young businessman but that the Philippines sets certain requirements on the financial capacity of a company before engaging in a supply contract with the government.
“The fact is you won contracts without a single centavo, which is why you had to go to Michael Yang,” the senator said.
“We realized this caused a huge ruckus,” Huang responded, “but we don’t want to make people think we’re a dummy for Michael Yang.”
Sen. Panfilo Lacson pointed out that Huang and Ong’s admission was contrary to what Yang told the committee hours earlier, saying that Yang had lied under oath.
Yang had said that he had nothing to do with Pharmally’s transactions and merely introduced Ong to the suppliers.
Mother company
Speaking through a Chinese interpreter, he said that since he introduced the executives of Pharmally’s mother company, the Taiwan-based Pharmally International Holding Co., with Huang and his father, Huang Wen-Lai, to Mr. Duterte in March 2017, he had no more dealings with the company’s executives.
Yang said that after the meeting in Davao City with Mr. Duterte “there was no communication” between him and the Huangs, and he had “nothing to do with those contracts or awards.”
Yang said he introduced some of his “friends” to Ong when the Pharmally executive approached him to get help with the supplies.
Asked by Lacson whether he acted as go-between or middleman between Pharmally and the suppliers, Yang said he “only introduced and let them discuss things on their own.”
He said he did not know where Ong and the suppliers closed their deals and where they purchased their stocks.
Inconsistencies in the testimonies of the two men soon emerged.Only role
In answer to a question from Lacson, Ong said “it’s true that he introduced us to suppliers and friends who helped with the PPE project.”
“That was his only role?” asked Lacson. “I’m not privy to their discussions,” Ong replied, adding that Yang introduced him to four suppliers in China.
“So, his only role is just introduce you to the four suppliers in China, and you are the one who dealt with suppliers?” the senator asked.
Ong then changed his tune: “In addition to that, he also guaranteed for us, he guaranteed for us.”
Ong said Yang’s interpreter “might have missed the part about Yang making the guarantee” for Pharmally.
“So, it’s just saliva as guarantee? It’s a loan based on the guarantee of Mr. Yang?” the senator asked.
“It seems that you are correct. More or less, the logic is like that,” Ong replied.
But the Pharmally executive could not explain how the company was able to remit payments to the Chinese suppliers when its audited financial statements showed that in 2020, it had only about P600,000 in assets.
“How much in total did you pay suppliers?” Lacson asked Ong, who said he had no access to the accounting records.
“Don’t you have an idea of how much you paid?” the senator pressed him.
Ong did not want to reply, saying that the amounts were “a bit like a trade secret already” but he said the company would cooperate with any scrutiny by the Commission on Audit, which could demand records from the company which received government funds.
After more questions from the senators, he also disclosed that he had signed an agreement with Yang but could not recall the exact nature of the document.“I can’t remember. I hope you understand. It’s true there are transactions that are only verbal,” Ong said.
Lacson could not believe that Ong could not remember such an important document.
Ong said he he will look for the document.
Displeased with Ong’s and Yang’s testimonies, the senators moved to order the two arrested for lying to the committee. Huang appealed that Ong not be arrested.
Yang was at Dusit Hotel in Davao City during the hearing and Ong was at his residence.
“Out of humanitarian consideration, we will let him stay in his home,” Gordon said. He earlier told the committee that Ong had tested positive for COVID-19.
The blue ribbon committee chair also said the Anti-Money Laundering Council should look into the transactions made under Pharmally’s bank accounts to determine the “money trail.”