Duque on graft indictment: Covid fund transfer ‘legal’

Duque on graft indictment: Covid fund transfer ‘legal’

/ 05:34 AM May 12, 2024

Francisco Duque III

Francisco Duque III PPA POOL

MANILA, Philippines — Former Health Secretary Francisco Duque III on Saturday said he would ask the Office of the Ombudsman to reconsider its ruling that found probable cause to indict him and former Budget Undersecretary Lloyd Christopher Lao for graft over the “illegal” transfer of public funds worth P41.46 billion for the procurement of COVID-19 personal protective equipment (PPE) in 2020.

In a separate ruling, the Ombudsman also found Duque and Lao guilty of grave misconduct and conduct prejudicial to the best interest of the service, for which they were penalized with perpetual disqualification from or reemployment in government service and forfeiture of retirement benefits.


READ: DOH to ‘respect all legal proceedings’ in graft case vs Duque


“We will file an MR (motion for reconsideration) immediately, probably by Monday or Tuesday, to the decision and resolution of the Ombudsman,” Duque said in a phone interview. “And we will refute the allegations there.”

“There are a lot of documents … that will support the transfer as regular and legal,” the former health chief said.

‘Grand conspiracy’

Approved by Ombudsman Samuel Martires on May 8 but made public only over the weekend, the rulings come after state prosecutors included Lin Weixiong, a close associate of former President Rodrigo Duterte’s economic adviser Michael Yang, in the graft complaint over the questionable multibillion contracts awarded to Pharmally Pharmaceutical Corp.

According to the Ombudsman’s May 2 order, Lin served as Pharmally’s financial manager despite being a Chinese citizen, in violation of the antidummy law. He was also said to have exercised full control over the assets of the undercapitalized company, whose earnings suddenly swelled after bagging the “anomalous” contracts for pandemic supplies.

The same order also junked Lao’s supplemental motion for reconsideration for “lack of cogent reasons.”

The back-to-back rulings are the latest development in what was dubbed a “grand conspiracy” by Pharmally executives and budget procurement officers to swindle the government of billions of pandemic funds at the height of the COVID-19 pandemic.


‘Evident bad faith’

In recommending the filing of graft charges, the Ombudsman said Duque and Lao “acted with evident bad faith or gross inexcusable negligence” in their duties as health chief and head of the Procurement Service of the Department of Budget and Management (PS-DBM), respectively, when they authorized the movement of funds from March to December 2020.

“For such … to be valid, Duque was required to determine first that it will hasten the procurement, that the DOH (Department of Health) has no capacity and proficiency to undertake the procurement itself,” the 49-page resolution read.

However, “none of these parameters, requirements and conditions were present and observed in this case,” it stressed, noting that no memorandum of agreement (MOA) or liquidation of the fund transfers were signed by both parties before the money was remitted to the PS-DBM. Citing the Bayanihan law and the guidelines of the Government Procurement Policy Board (GPPB), the resolution said the DOH, as a procuring entity, had the authority to directly negotiate or purchase essential COVID-19 goods, whether classified as “common-use supplies and equipment” (CSE) or not.

Service fee

“As a consequence … PS-DBM subjected the procurements that it conducted on behalf of the DOH to a 4-percent service fee,” it said. The percentage is equivalent to around P1.66 billion of the total procurement cost.

It acknowledged Lao’s admission that the extra charge is a “standard service fee” for PS-DBM services.

But the Ombudsman said: “Such imposition of service was unwarranted in this case given that fund transfers were invalid, unjustified and illegal. In fact, there was also no MOA … for the imposition of the service fee.”

“This amount could be equated to the additional much-needed COVID-19 supplies that the DOH could have procured through direct negotiation with suppliers,” it added.

The Ombudsman also pointed to a Commission on Audit report that the PS-DBM failed to deliver the procured items on time, with about P34.16 billion in public funds yet to be utilized in December 2020.

Because of these circumstances, the questionable deal for PPE caused “undue injury” to the DOH, it said.

“Respondents’ wrongdoing was highlighted by the fact that the illegal fund transfers occurred amid a national health emergency where respondents were expected to be more prudent and diligent in handling people’s money,” the resolution said.

Covered by the fund transfers were items identified as CSE, including surgical masks, face shields, PPE sets, various brands of COVID-19 test kits and other types of test kits.

The bulk of the order, however, were 10 units of automated nucleic acid extraction machine worth P42.5 million, 1,500 units of mechanical ventilators worth P1.4 billion and 10,000 pieces of cadaver bags worth P13 million.

The procurements, the Ombudsman noted, could not be classified as “common-use” items based on GPPB rules.

Defending his actions in the Inquirer interview, Duque said his job as the health secretary and chair of the Inter-Agency Task Force for Emerging Infectious Diseases during the pandemic “was to ensure that our people are not going to die, [and] not going to develop severe infection and its complications.”

“I was busy during the initial stage of the pandemic. I was everywhere … working round the clock in making the public comply with our public health interventions,” he said. “So I can’t spend my time trying to look for local suppliers.”

It is for this reason, Duque said, that he tapped the services of the PS-DBM because it had “a mandate to procure for national government entities for common-use supplies.”

On the allegations that the fund transfers were illegal, the DOH chief countered: “How can that be an injury to the government when that percentage for (service) fee is in accordance with their charter?”

Other DOH execs cleared

In the same rulings, the Ombudsman dismissed the criminal and administrative charges against several other former DOH officials for lack of probable cause.

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Cleared were former DOH spokesperson Enrique Tayag; Undersecretaries Carolina Taiño, Roger Tong-An, Leopoldo Vega; retired Undersecretary Myrna Cabotaje; directors Crispinita Valdez and Napoleon Arevalo; chief accountant Lorica Rabago; and officer in charge of the DOH financial management service Filipina Velasquez.

For more news about the novel coronavirus click here.
What you need to know about Coronavirus.
For more information on COVID-19, call the DOH Hotline: (02) 86517800 local 1149/1150.

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TAGS: COVID-19, Francisco Duque III, Lloyd Christopher Lao, Pharmally, PS-DBM

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