Ex-DBM exec Lao arrested, posts bail in Pharmally case

BRIEFLY DETAINED Mugshots of Lloyd Christopher Lao —Photo from PNP-CIDG

MANILA, Philippines — Police on Wednesday arrested Lloyd Christopher Lao, the second former high official linked to the Pharmally procurement scandal at the height of the COVID-19 pandemic.

Lao, who headed the Procurement Service of the Department of Budget and Management (PS-DBM), and former Health Secretary Francisco Duque III were charged with violating the antigraft law by the Office of the Ombudsman last month.

READ: Ombudsman denies appeal of ex-DBM exec Lao on Pharmally case

The Criminal Investigation and Detection Group (CIDG) of the Philippine National Police served the Sept. 12 arrest warrant issued by the Sandiganbayan on Lao in Davao City and brought him to its regional forensic unit office.

Out on bail

After being detained briefly, Lao posted a P90,000 bail.

Lao and Duque were charged with alleged irregularities in the transfer of P41 billion from the Department of Health (DOH) to the PS-DBM to purchase COVID-19 medical supplies at the height of the pandemic.

The fund was for the procurement of medical supplies, including personal protective equipment (PPE), COVID-19 detection kits, nucleic acid extraction machines, mechanical ventilators, surgical masks, and cadaver bags, among others.

Lao was charged with graft for accepting the transfer and subjecting the DOH procurement to a 4-percent service fee amounting to at least P1.65 billion.

Lao also approved contracts in favor of Pharmally Pharmaceutical Corp., despite the company’s small capitalization and lack of experience in government deals. Pharmally was incorporated in September 2019 with an authorized capital of P10 million and a paid-up capital of P625,000.

Blue ribbon findings

A Senate blue ribbon committee investigation found that Pharmally won contracts amounting to P11.5 billion, the single biggest chunk of government contracts for pandemic supplies awarded to private companies at the time.

The contracts included 8,000 BGI Real-Time Fluorescent RT-PCR test kits amounting to P600 million; 2,000 A*Star Fortitude RT-PCR test kits worth P688 million; and 41,400 BGI Real-Time Fluorescent RT-PCR kits worth P2.877 billion.

“At the time of dire need, the people were looking up at respondents’ offices for relief but have instead entertained suspicions due to their failure to follow the prescribed rules and procedures. Their actions cast the DOH, PS-DBM and the public service in a bad light,” according to the Ombudsman.

Ombudsman-approved

Ombudsman Samuel Martires had approved an Aug. 14 resolution by a prosecution panel to charge 13 officials and private individuals with causing “undue injury” and giving “unwarranted benefits, advantage or preference” to a private party under the antigraft law.

Investigators said Lao had “intentionally failed to secure the most advantageous price and terms of contract for the government” and awarded the contract to Pharmally.

Grave misconduct

“Respondents’ concerted and conspiratorial acts enabled the award of a multibillion worth of contracts to Pharmally notwithstanding the existence of other corporations that are financially and technically capable [of] supplying and deliver test kits at an equal or lower prices,” according to the panel resolution.

The Office of the Ombudsman also found Lao and Duque liable for grave misconduct and “conduct prejudicial to the best interest of the service.” They were punished with perpetual disqualification from government service and forfeiture of their retirement benefits.

Duque last month said that his indictment was “baseless” and “unfair.” He defended his actions at the time, saying that they were prompted by the need to timely procure PPE and other pandemic supplies “for the protection of the Filipinos.”

Lao joined the administration of then President Rodrigo Duterte as undersecretary of the Presidential Management Staff before moving to the Housing and Land Use Regulatory Board as chief executive officer and commissioner in 2017.

In 2019, he was appointed budget undersecretary and executive director of the PS-DBM in January 2020. He resigned from his post in June 2021.

Debt of gratitude

During the Senate hearings on the Pharmally case, Lao was grilled by senators on how he secured his former post and who recommended him. He said no one recommended him and he only applied for the position.

But Duterte defended the appointment of Lao and other people from Davao City to various government posts, saying he was only repaying a debt of gratitude.

He said that it was his prerogative to appoint people he knew and trusted. Duterte pointed out that Lao was his “fraternal brother” who was a member of his campaign team in 2016 and who had provided legal assistance when he was still Davao City mayor.

Gordon: Should be plunder

In a statement, former blue ribbon committee chair and Sen. Richard Gordon welcomed Lao’s arrest, calling him “one of the architects of the plunder-plagued Pharmally scandal.”

“I suppose other perpetrators will soon be arrested as well,” Gordon said. “However, the bail set at P90,000 appears to be very small compared to the billions of pesos stolen from the Filipino people, when Mr. Lao and his cohorts: Michael Yang, Mohit and Twinkle Dargani, Lin Weixiong, and Linconn Ong, among others, conspired to plunder more than P11 billion.”

“I still submit that the charges filed must not be mere violations of the antigraft law, but plunder—making the offenses nonbailable, given the amount involved…”

“They conspired to steal the money. And the Anti-Money Laundering Council failed to do its job by not following the money trail given the amounts involved. Then President Duterte intimidated the COA (Commission on Audit). The perpetrators, emboldened by (Duterte’s) protection, as shown by not allowing his Cabinet members to testify in the blue ribbon committee hearings, operated with impunity.” —with a report from Inquirer Research