Senators: Lloyd Lao liable for anti-graft law on Pharmally deals

Job Manahan, ABS-CBN News

Posted at Oct 28 2021 09:19 PM

MANILA - Former Budget Undersecretary Lloyd Christopher Lao is liable under the Anti-Graft Law after Pharmally Pharmaceutical Corp. won billions of pesos worth of contracts in pandemic supplies, senators said Thursday. 

During the Senate Blue Ribbon Committee hearing, Sen. Panfilo Lacson said Pharmally secured contracts beyond its net financial contracting capacity (NFCC). 

The Senate earlier found out that Lao was in charge of handling some P42 billion in funds that the Department of Health (DOH) transferred to the Department of Budget and Management's procurement service (PS-DBM) without proper documentation.

On Thursday's hearing, Senate records showed that the Pharmally only had P599,450 in net working capital in 2019. 

This means that the threshold or the maximum worth of contract Pharmally should get is only P5,994,500.

But Lacson said the firm was able to get at least P13.86 million in its first contact alone, which comprises of 500,000 pieces of surgical masks worth P27.72 each in 2020. 

 Screengrab from the Senate Blue Ribbon Committee hearing
Screengrab from the Senate Blue Ribbon Committee hearing

The second contract costs P54 million from 2.4 million pieces of surgical masks priced at P22.50 each. 

In total, Pharmally was able to bag P11,110,643,256 in 2020 and 2021. 

"So ang maximum na dapat nakuha na kontrata ng Pharmally ay hindi lalabas ng P5.9 million. Bakit unang-una pa lang na delivery nasa P13 million pa mahigit. Mayroong violation po dito," Lacson explained. 

The lawmaker pointed out that such threshold is an administrative requirement "that was not followed." 

"Hindi dapat nabigyan ng kontrata ng mas mahigit pa sa times 10 ng kanilang net working capital... they have no financial capability pero pinapasok nila," he added. 

Senate Blue Ribbon Committe Chairman Richard Gordon described it as the result of "favoritism." 

Many officials from PS-DBM were not present in the day's hearing due to the memorandum order of President Rodrigo Duterte barring executive officials from attending the hearing. 

Lao was absent in the hearing, and was not able to respond to the allegations. 

DBM's former inspection chief Jorge Mendoza III said he is not familiar with the procurement process under Bayanihan 1 or Bayanihan 2, where the funds were sourced, but said the NFCC should be recognized. 

Lacson also said the NFCC should be followed because it is a "part of the eligibility documents of bidders" in the Government Procurement Policy Board (GPPB) Resolution 16-2020.

The Senate body is investigating Pharmally after records showed that the budget department's procurement service awarded billions of pesos worth of government contracts to the company that only had less than a million pesos in paid-up capital.

The Duterte administration has denied there was overpricing and said the deals were above board.

The panel has so far recommended the filing of various charges against Pharmally's officers, Chinese businessman and former presidential economic adviser Michael Yang, and Lao, among others, due to the allegedly anomalous transactions.

The Senate hearing will resume on Nov. 4 for its 14th day.

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