'Pharmally admission it borrowed money could lead to corruption charges'

Benise Balaoing, ABS-CBN News

Posted at Sep 13 2021 11:34 AM

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MANILA – The admission of Pharmally Pharmaceutical Corp. to the Senate Blue Ribbon Committee that it had insufficient funds to deliver pandemic supplies could lead to the filing of corruption charges, a procurement specialist said Monday.

Pharmally, a company that supplied face masks, face shields and other medical equipment to the government, is being investigated by the Senate for bagging P8.68-billion worth of contracts with the Department of Budget and Management (DBM) despite having a paid-up capital of only P625,000 in 2019. 

Last week, Pharmally executives disclosed the company borrowed money from Chinese businessman and former presidential economic adviser Michael Yang despite the latter's denial that he was involved in the Pharmally deal.

“It’s an indicator and it should have been a red flag for the procurement service to look into them. Because before you award the contract, you have to ensure that you are financially capable,” said Atty. Zoilo Andin, a procurement specialist certified by Government Procurement Policy Board.

“Now there’s nothing fundamentally wrong with suppliers borrowing money, but they should disclose this to the government procuring entity, or in this case the Procurement Service, so the procurement service can assure itself and exercise the necessary diligence to safeguard the funds to be used in the procurement, by ensuring that although the entity itself is not sufficiently funded, there is a disclosure that it has credit worthiness to be able to finance,” he said.

Andin said the fact that this was not checked during the procurement service means that someone “dropped the ball.”

“Now if there was no disclosure of this fact during the time of procurement, then there is somebody [who] dropped the ball. Somebody forgot to check on these aspects because the fact that you’re in emergency procurement does not mean that you throw every caution out the window. Hindi pwedeng bara-bara kahit na nagmamadali,” he said.

Andin also said Pharmally’s admission--that it had to borrow money from Chinese businessman Michael Yang to finance the procurement of face masks and RT-PCR test kits--could lead to corruption charges against officials who signed off on government’s deal with them.

“It could, because under Republic Act 3019 it is a punishable act to award a person undue benefits or be manifestly partial to a particular individual,” he said.

“If they decided to close their eyes against that reality that it’s insufficiently funded and it has no other, there is no other proof to show that as to how it will fund the contract it is gunning for, and then eventually in-award yung contract, then it may lead to charges of conduct prejudicial if there was prejudice to government or manifest partiality to an undeserving person or entity.”

Pharmally’s admission that it needed funding from Yang to deliver on its contracts is also an indication that someone in government was manifestly partial to them, Andin said.

“There was somebody [who] decided, ‘No. Let’s ignore the fact that they do not have the funds’ which is not the objective of Congress in Bayanihan Law 1 when it granted the president emergency powers to procure this COVID-19 response items and at the same time exempt them from the requirement of public bidding under Republic Act 9184.”

“Surely Congress wanted to empower the government to be able to respond to the pandemic. However, it did not mean and I am sure Congress did not intend for the executive to throw every caution in the wind, flushing down the toilet. I am sure Congress still--even if it did not write it in the law--expected and it is basic requirement that you take care, you still exercise the necessary diligence,” he said.

Andin also said Pharmally should have disclosed at the onset Yang would be financing them.

“I am not sure if he still was a presidential adviser at that time. I am not sure about that. But definitely, there is a certain sense of propriety. If there was nothing to hide, then why hide? If there was nothing wrong with it, you are in private sector, you had the resources to partner with the bidder, there’s nothing wrong with that. It’s a purely business transaction,” he said.

“That his relationship to the president to my mind was incidental. But there should have been disclosure. If it was a purely private transaction. But you see they did not disclose that fact. This is where the suspicions come in.”

President Duterte earlier defended Yang, saying the country needs investors. 

"Michael Yang has been in business here in the Philippines for 20 years. Nag-umpisa 'yan sa Davao...Akala ko ba we are inviting investors?" he said. 

As they continue their probe on the controversial Pharmally deals, senators should look into the prices of the items bought from the firm, Andin said.

“They should really look, zero in on the pricing. Because at the end of the day as I said, the lapses committed point to possible culpability for anti-graft. Now, how do you establish this as a matter of fact? You look into the prices prevailing at the time. Were they given favorable concessions, buying it at a higher price when there were others available at higher prices?”

“That is where the damage comes in because an essential element to charges of this nature would be the evidence of loss to government and damage to government and if it is established that it is overpriced then you have cause of action. There is damage to government because the neglect in fulfillment of duty resulted in this damage,” he explained.

--ANC, 13 September 2021