Senators seek Ombudsman probe into PS-DBM's ₱8.6-B deal with firm

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Metro Manila (CNN Philippines, August 27) - Senators on Friday grilled a former budget official due to his previous decision to award a multi-billion peso procurement contract to a company with "questionable" qualifications.

The Senate Blue Ribbon Committee resumed its hearing on the Health department's alleged misuse of COVID-19 response funds, during which lawmakers cornered Lloyd Christopher Lao, an ex-Budget undersecretary and former Officer-In-Charge of the Procurement Service of the Department of Budget and Management (PS-DBM).

"This should be investigated by the Ombudsman for possible violation of the anti-graft law, for awarding contracts (that are) patently disadvantageous to the government and (for) not exercising prudence to prevent the losses of government funds," Senate Minority Leader Franklin Drilon said.

Committee Chairman Richard Gordon agreed.

In the hearing, Lao admitted he may have been negligent when he awarded Pharmally Pharmaceuticals, Corp. an ₱8.68 billion deal to obtain personal protective equipment and testing kits that were later found to be overpriced.

Senators pointed out that PS-DBM bought face masks at ₱13 and ₱27 each while the Red Cross purchased them at only ₱5. Lao reasoned that the Red Cross may simply have had better access to suppliers.


However, senators were more perturbed by Lao's failure to do a background check on Pharmally after they found out that the firm was only six-months old when it bagged the contract and had a capital of only below ₱600,000.

Lao also revealed that during the bidding, he neither required the company's general information sheet nor did he study its articles of incorporation.

"If you look at the articles, you would notice it was only incorporated in September 2019 with the capital of less than ₱600,000, and it ended up with the contracts worth ₱8.6 billion," Drilon said.

Drilon also said when the committee tried to serve a subpoena to Pharmally's executives, the addresses provided were fake.

Senator Panfilo Lacson suspected collusion.

"You threw out of the window lahat ng [all of the] requirements so either you did it on your own or somebody ordered you to award those contracts to those suppliers," Lacson said.

Lao explained that Pharmally was the chosen bidder since it offered the "cheapest" price at the time and it was one of the firms referred to PS-DBM by some embassies.

History and ties

Lao was also questioned about his qualifications, as he claimed he became an undersecretary simply by applying for the position upon the advice of the Presidential Management Staff where he used to work.

Drilon also said Lao was accused by anti-corruption officials of extortion during his stint at the Housing and Land Use Regulatory Board.

Lao said he resigned as Budget undersecretary in June this year and was subsequently relieved from his OIC post in PS-DBM when he took a leave of absence.

There was also talk of Lao's alleged links to senator Christopher "Bong" Go. Lao said he had previously worked in the Office of the Special Assistant to the President, previously headed by Go.

Go denied that he was colluding with the former DBM official, but he mentioned that Lao had worked with President Rodrigo Duterte in his 2016 campaign, and that he knew he was also from Davao.

"Kailanman hindi siya directly nagrereport sa akin," Go said. "Kilala ko siya pero hindi ko siya aide."

[Translation: He never directly reported to me. I know him but he is not my aide.]

Lao earlier said his previous work in government should not be "politicized."