Senators question DSWD on ‘Pharmally-like’ deal
MANILA, Philippines — Senators on Monday set their sights on another little-known company contracted by the government last year to deliver P50 billion in cash aid to indigent Filipinos, beating large competitors such as GCash and PayMaya and dwarfing the medical supply deals bagged by Pharmally Pharmaceutical Corp.
Lawmakers led by Sen. Manny Pacquiao sought an explanation on how and why Starpay Corp., one of six electronic wallet firms engaged by the Department of Social Welfare and Development (DSWD) to digitally transfer money to beneficiaries under its social amelioration program (SAP), was able to get the lion’s share of the funding.
At a hearing of the Senate finance subcommittee on the DSWD’s 2022 budget, Senators Panfilo Lacson and Francis Pangilinan drew parallels between Pharmally, whose P11.5 billion worth of procurement deals for pandemic supplies in 2020 and 2021 is under scrutiny, and Starpay, which was reportedly having cash-flow problems before it won lucrative government deals.
“I think the question is: Is Starpay the Pharmally of the DSWD or not?” Pangilinan said at one point during the budget hearing.
Pacquiao replied: “I think it’s bigger than Pharmally.”
The senator, who in July alleged that P10.4 billion in SAP funds were unaccounted for, raised several questions about how Starpay was able to corner a P50-billion share of the cash aid for distribution to DSWD beneficiaries despite acquiring a license only in 2018 and declaring a loss in 2019.
“Of the P85.1 billion in funding, the DSWD entrusted to Starpay almost 60 percent, or more than P50 billion. The remaining 40 percent was divided among five other FSPs (financial service providers) and EMIs (electronic money issuers), which no doubt were larger than Starpay,” he said.
“These are questionable transactions. The fact that they received the bulk of the cash aid, compared to GCash and PayMaya, which are better known, is suspect. That’s why I want to dig deeper into this. We do not know yet if the money really went to the beneficiaries,” Pacquiao said.
He asked the DSWD to explain why Starpay was designated as one of the DSWD’s FSPs for SAP despite its “questionable track record.”
“Up to now, it’s not yet clear why Starpay was so favored. Out of the 14 million beneficiaries for SAP 2 (or the second tranche of SAP), the cash aid entrusted to Starpay was intended for 6.9 million beneficiaries,” Pacquiao said in Filipino.
Pacquiao cited the company’s financial records allegedly showing that it had only P70,000 in sales in 2019, which jumped to P113 million in 2020.
Asked to respond, Social Welfare Secretary Rolando Bautista told the senators during the hearing that all of the DSWD’s dealings with Starpay were made in consultation with the Bangko Sentral ng Pilipinas (BSP).
Under the original arrangement, according to the Cabinet official, Starpay was supposed to handle cash transfers to only 1.6 million beneficiaries, but the DSWD allowed the company to accommodate more people because of technical difficulties experienced by the other service providers, which had no means of offline transfers.
Bautista noted that many of the beneficiaries either had no mobile phones or had given wrong or nonworking numbers that could not be reached.
“So we undertook a careful assessment and we saw the capability of Starpay and RCBC (Rizal Commercial Banking Corp.). They could redistribute the funds to those who could not be served by the other financial service providers,” he said.
However, Sen. Imee Marcos, who presided over Monday’s hearing, wondered how Starpay ended up becoming the biggest financial service provider under the Bayanihan law “considering it is the smallest” among the companies contracted by the DSWD.
Sen. Nancy Binay chimed in: “What was the advantage of Starpay over GCash?”
DSWD Director Katrina Grace Ongoco explained that only Starpay and RCBC had the advantage of catering to people with no mobile phone numbers, unlike more established brands such as GCash, which initially was allotted the biggest number of beneficiaries to serve.
“But RCBC also had limitations based on geographical allocation. They could not serve in many locations, so the allocation that should have gone to RCBC also went to Starpay,” she told the body.
If that were really the case, according to Pacquiao, it didn’t explain why Starpay still failed to deliver what was promised.
“Why were there only 800,000 downloads? If supposedly, they were going to serve six to seven million beneficiaries, why is it that after 10 months, they still weren’t finished and had to return the money to the DSWD?” he said.
Starpay, however, earlier said it served more than five million beneficiaries in a “very short period of time” and liquidated all the funds it received from the DSWD, although it admitted that it failed to distribute about P8.2 billion in cash aid that had since been returned to the DSWD.
“From losing P26 million in 2019, they earned P20 million in 2020. What’s worse is that, based on Starpay’s financial records in the SEC (Securities and Exchange Commission), they had P11 billion in cash in December 2020, compared to only P5 million in 2019,” Pacquiao said.
“Of the P11 billion in cash, it turns out that P10 billion was intended for the cash aid—cash aid that they did not immediately distribute to our people and kept dormant in their account so it could earn interest,” Pacquiao said.
He claimed that Starpay let the amount sleep from July 2020 to April 2021 in an interest-earning account at a private bank instead of depositing it in a government financial institution such as Land Bank of the Philippines.
“According to my reliable source, Starpay earned P200 million in interest from their account in the private bank,” Pacquiao said, but declined to name the bank during the public hearing, saying he did not want to damage its reputation, but that he could do so in executive session.
DSWD officials, however, denied that the agency made any cash deposits to Starpay using a private bank account, saying all the transfers were made to the company’s Landbank account, pursuant to BSP regulations.
Marcos instructed the DSWD to provide the subcommittee a breakdown of all deposits and refunds in its accounts with the corresponding dates to get a better picture of the transactions.
—WITH A REPORT FROM INQUIRER RESEARCH INQ
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