Marcoleta grills expert for pushing ‘due diligence’ in gov’t procurement
MANILA, Philippines — The accountant who was asked by the Senate to analyze the financial statements of Pharmally Pharmaceutical Corp., the controversial firm in the center of the disputed multi-billion pesos worth of contracts for COVID-19 supplies, was grilled by an administration ally during a House panel investigation on Monday.
Sagip Partylist Rep. Rodante Marcoleta questioned certified public accountant Mon Abrea about his remarks before a Senate panel conducting the same inquiry on the government’s procurement of pandemic supplies last year.
Abrea has been insisting on “due diligence” as a “basic principle” in the procurement of services and supplies by the government.
In the House committee on good government and public accountability’s hearing on the alleged overpriced pandemic supplies, Marcoleta initially asked the accountant: “Ano nga ang resulta ng analysis mo kaya mo sinabi na may due diligence o walang due diligence? Kailangang liwanagin mo dito para maintindihan ka ng tao kung ano yo’ng due diligence at bakit tumestigo ka kung merong due diligence o walang due diligence.”
(What is the result of your analysis which led you to say that there is due diligence or there is no due diligence? You should clarify it here so that the people would understand what due diligence is and why you testified to say whether there is or there isn’t due diligence.)
To which Abrea replied: “Mr. Chair, base po sa kanilang audited FS (financial statement), maliban po do’n sa P625,000 na initial capital ng Pharmally, hindi rin po naging malinaw Mr. Chair kung saan po nanggaling ang kanilang financing at kanilang supplies Mr. Chair.”
(Mr. Chai, based on their audited financial statement, aside from Pharmally’s P625,000 initial capital, the source of their financing and their supplies was also not clear.)
Marcoleta then asked Abrea whether he is aware of the Bayanihan to Heal As One Act or Bayanihan 1 provisions, which allow the government to enter into emergency procurements due to urgency in 2020 as the COVID-19 pandemic progressed nationwide.
Abrea answered that he knows the Bayanihan 1 provision, leading the lawmaker to press on questioning the expert for still declaring his audit observation on Pharmally’s financial records before the Senate despite knowing the stipulations under the emergency law.
“Dapat alam mo na walang nire-required doon kung anong minimum capitalization. At dapat alam mo rin na hindi tinatanong doon kung saan kinuha ‘yong pera na ginamit sa kapital. Saan mo ibabatay ngayon ‘yong panukat mo, o ‘yong standard mo, ‘yong batayan mo na walang due diligence?” Marcoleta asked Abrea again.
(You should already know that the law does not require what should be the minimum capitalization. And you should also already know that the law does not ask where the money used as capital came from. Where would you base now your yardstick, or your standard, your basis that there was no due diligence?)
Abrea replied by emphasizing that “due diligence” is the “basic principle.”
“Mr. Chair ang due diligence po ang basic principle po ng pag-iingat, para masigurado natin na may kapasidad ang kahit sino mang kumpanya or individual na makikipag-transaksyon po tayo,” the accountant pointed out.
(Mr. Chair, due diligence is the basic principle of protection, so we can make sure that any company or individual has the capacity to transact with us.)
Marcoleta then compared the government’s procurement of pandemic supplies like face masks and personal protective equipment (PPE) sets to a person asked by doctors to purchase medicines for a gravely sick family member.
He then asked Abrea if he would wait for less expensive medicines to be available or would he rather purchase expensive yet readily available drugs.
“Meron ngayon, tatlong botika ang nagsabi sa’yo, ‘yong isa sampung piso lang ‘yong gamot, ‘yong isa naman P50, pero wala silang supply. ‘Yong isa P1,000, siya lang ang merong supply […] (Bibili ka) kahit na ‘yong kalaban niya P10 at P50 lang. Because they don’t have the supply at the time you needed the most that particular brand. Tama?” Marcoleta asked.
(So now, there are three drugstores telling you, one has the medicine for P10, the other for P50, but they have no supply. The third one sells it for P1,000 but only that shop has the supply. You would still buy even if its competitors are only selling it for P10 and P50, right? Because they don’t have the supply at the time you needed the most that particular brand. Right?)
“Tatanungin mo ba kung saan nanggaling ‘yong kanyang capitalization? Because if you do not do that, sasabihin mo wala kang due diligence. Sasabihin ba ng kamag-anak mo […] Mon, wala ka namang due diligence eh, binili mo kaagad eh, padaskol-daskol ka naman, bakit di mo muna tinanong kung merong capitalization,” he added.
(Will you even bother to ask where their capitalization came from? Because if you do not do that, you will say that there was no due diligence. Will your relatives tell you, Mon, you did not exercise due dilligence, you immediately purchased it without asking if it has enough capitalization.)
Abrea was made to answer yes or no – and he answered yes, that he would buy the expensive ones.
Consequently, Marcoleta emphasized his point that the government did the same in transacting with Pharmally.
Abrea was no longer given the chance to expound his answer as Marcoleta already ended his interpellation.
Both the Senate and the House of Representatives were conducting separate investigations on a Commission on Audit (COA) report that showed P67.32 billion worth of deficiencies in the Department of Health’s (DOH) COVID-19 funds last year.
Part of the P67.32 billion was the P42 billion funds that DOH transferred to procuring agencies like Procurement Service-Department of Budget and Management (PS-DBM), which granted the P8.7 billion supplies contract to Pharmally despite the firm’s small paid-up capital of P625,000.