COA confirms DOH, PS-DBM ‘lapses’ in Pharmally deals

Commission on Audit (COA)

MANILA, Philippines — The Department of Health (DOH) and the Procurement Service of the Department of Budget and Management (PS-DBM) committed several lapses in the handling of funds and purchase of COVID-19 supplies at the peak of the pandemic, a special audit by the Commission on Audit (COA) has confirmed.

Sen. Juan Edgardo Angara said the two agencies’ “shortcomings” were explained in detail in a nine-volume report on the COA’s audit of the government’s multibillion-peso deals with Pharmally Pharmaceutical Corp., the supplier at the center of an overpricing and corruption scandal in 2021.

Angara, chair of the Senate finance committee, made the disclosure as he defended the COA’s proposed P13.53-billion budget for 2024 during plenary deliberations.

Under Senate rules, only the sponsor of the agency, in this case, Angara, can speak on its behalf during the debate.

“[The report] is quite long, because they’ve really tackled each individual officer — the findings regarding the former secretary of health, former [undersecretaries] — as they have various participation,” Angara said.

Sen. Risa Hontiveros had asked the budget sponsor for an update on the COA’s audit of the P11.5 billion in alleged anomalous purchases of COVID-19 supplies starting in 2020.

Several failures

Reading from a note handed to him by the COA officials, Angara said the special audit had determined, among other findings, that the DOH “failed to coordinate with PS-DBM on the timeliness of the procurement, schedule of deliveries and periodical consumption of supplies.”

He said the DOH was also found to have not “exert[ed] effort in monitoring liquidation of fund transfers to PS-DBM” amounting to P42 billion.

PS-DBM, the report found, had failed to “determine the availability and capability of the supplier (Pharmally) to provide the required quantity” and had made “no request for further negotiation from two entities who offered to supply the contracts.”Angara said his committee would release a copy of the COA findings.

In 2021, the Senate blue ribbon committee launched an investigation into several contracts for medical supplies, such as face shields and COVID-19 test kits between PS-DBM, then headed by officer in charge Lloyd Christopher Lao, and Pharmally, a company founded only in 2019 with a paid-up capital of P625,000.

The monthslong inquiry led by then Sen. Richard Gordon culminated in a draft committee report that endorsed criminal charges against several public officials and private individuals and accused then-President Rodrigo Duterte of betraying the public trust. But the report was archived at the close of the 18th Congress in June 2022 for not having enough signatures.

Last August, however, the Office of the Ombudsman recommended graft charges against three PS-DBM officials, including Lao and several Pharmally executives.