No corruption? Duterte’s embrace of Pharmally COVID deals

June 07, 2024
No corruption? Duterte’s embrace of Pharmally COVID deals

RODRIGO DUTERTE pandemic corruption composite image from Inquirer file photos

MANILA, Philippines — No country was ever prepared for the COVID-19 crisis, Rodrigo Duterte, who was president of the Philippines from 2016 to 2022, had said as he defended the contracts that his administration entered into in response to the contagion.

“When the pandemic started, we had nothing,” he had said.

In 2021, the Commission on Audit (COA) called out the Department of Health (DOH) for “deficiencies” in its handling of P67.3 billion in COVID-19 funds.

But Duterte was quick to clear the DOH, and then Health Secretary Francisco Duque III. “It’s impossible to steal P67.3 billion,” he stated, stressing that the deficiencies only meant that some documents required by COA were missing.

READ: Duterte defends DOH on issue of ‘deficiencies’: ‘It’s impossible to steal P67.3 billion’

“I’m sorry but I said, even if I’m the only one left, I will stand for Duque even if it will bring me down,” Duterte said to defend the then health secretary, who has received backlash over corruption allegations.

READ: I will stand by Duque even if it brings me down — Duterte

According to data from Pulse Asia, Filipinos’ approval of Duterte’s fight against graft and corruption fell from 77 percent in September 2020 to 52 percent in September 2021, which was the height of the pandemic spending controversy.


GRAPHIC by Ed Lustan/

Still, Duterte insisted there was no corruption, saying that he would resign if there was proof that COVID-19 funds were mishandled. “[Pinang]sisira lang (It’s just being used to mudsling),” he said of the issue that was being investigated then by the Senate Blue Ribbon Committee.

READ: Duterte insists ‘no corruption’ in gov’t procurement during pandemic

Controversial deal

Based on COA’s audit report, part of the P67.32 billion handled by the DOH for its response to the health crisis was more than P40 billion transferred to the Procurement Service of the Department of Budget and Management (PS-DBM).

The fund transfer by the DOH to the PS-DBM was flagged as it was made without the required memorandum of agreement and Certificates of Previous Liquidation.

Some, or P11.5 billion, of the over P40 billion was paid to Pharmally Pharmaceutical Corp. for medical PPE, or personal protective equipment, such as face masks and face shields.

READ: ‘Negosyo lang’: Pharmally’s meteoric rise

The corporation, which was allegedly financed by Duterte’s friend and former economic adviser, Chinese businessman Michael Yang, was only formed months before it bagged overwhelming contracts from the government.


GRAPHIC by Ed Lustan/

From March 2020 to July 2021, the then barely year-old company with less than P600,000 capitalization bagged 13 COVID-19 contracts. Its capital was not even one percent of the value of the deals it had with the government.

READ: Duterte defends Pharmally Corp. in alleged overpriced deals

However, both the company and Yang were defended by Duterte, who stressed that “it’s business,” referring to the COVID-19 deals bagged by Pharmally. He said: “What is clear is that there was a contract, there was delivery. The specifications were complete.”

Based on data from COA, the biggest contract that Pharmally Pharmaceutical Corp. had with the government was P3.82 billion in May 2020 for millions of PPE sets worth P1,910 each.


Last month, the Ombudsman recommended the filing of charges against Duque and Lloyd Christopher Lao, who was then the head of the PS-DBM, over the “illegal” transfer of over P40 billion from March to December 2020 from the DOH to PS-DBM.

As the Ombudsman said in its May 6 decision, it was in violation of the Anti-Graft and Corrupt Practices Act and that Duque and Lao “acted with evident bad faith or gross, inexcusable negligence.”

The Ombudsman likewise said Duque and Lao were guilty of grave misconduct and conduct prejudicial to the best interest of the service, for which they were meted the penalty of perpetual disqualification from employment in government.

Duque and Lao’s retirement benefits were forfeited, too.

READ: A welcome, if overdue, resolution

But on Monday, June 3, Duque told a committee at the House of Representatives that it was Duterte who ordered the transfer of over P40 billion in COVID-19 funds.

“Publicly, the order to transfer funds from [the DOH to PS-DBM] was made by the President in our meetings in the weekly Talk to the People [Program],” Duque pointed out, referring to the then program aired on TV featuring Duterte and his updates on COVID-19.

For former senator Richard Gordon, who led the Senate investigation into the government’s COVID-19 contracts, the transfer “could not have happened without Duterte.”

READ: Gordon: Duque can be gov’t witness vs Duterte

He said “Duterte started the wheels of corruption.”

‘Highly needed’

But for Duque, the transfer was legal, saying that “given the severity of the public health crisis, we deemed it best to rely on the expertise of the PS-DBM and its network of suppliers.”

He said that the decision was based on recommendations from the Interagency Task Force for the Management of Emerging Infectious Diseases, pointing out that it was within his authority to effect the transfer.

READ: A corrupt deal confirmed

Duque stressed that the overriding consideration then was to prevent, if not mitigate, the risk for health care workers waiting for local suppliers whom they knew had no capacity, initially, to supply large volumes of PPEs needed.

As stated by the Ombudsman, however, the PS-DBM was only allowed to buy common use supplies (CSE), a category that did not apply to the COVID-19 supplies bought with the over P40 billion allocation.

The Ombudsman said the 2020 General Appropriations Act defined CSE as those included in the Electronic Catalogue of the PS-DBM and those which will be regularly updated to include all items commonly procured by agencies of the government.

“There is no indication that when GPPB (Government Procurement Policy Board) Resolution No. 03-2020 was approved on 09 March 2020, or immediately thereafter, the items declared as CSE are already available at the PS-DBM,” the Ombudsman stressed.

It said the resulting arrangement between the DOH and the PS-DBM added a layer by bringing in PS-DBM as DOH’s Procurement Agent.

“Instead of a simplified process, the procurement mechanism that involves PS-DBM became more complicated and therefore, inconsistent with the purpose to hasten project implementation,” the Ombudsman said.