From COA to Congress: A look into govt's questionable pandemic deals

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Metro Manila (CNN Philippines) — Both chambers of Congress have launched an investigation into the government's questionable purchase of overpriced medical supplies during the COVID-19 pandemic.

CNN Philippines takes a look at how the findings of state auditors turned into long-running hearings – mixed with a little drama.

The Commission on Audit flagged the Department of Health in August for “deficiencies” in its management of pandemic funds worth over ₱67 billion in 2020, noting that these contributed to the challenges faced by the agency in responding to the ongoing health crisis.

This COA finding has triggered an investigation in the Senate and the House of Representatives.

The House Committee on Good Government and Public Accountability conducted four “motu proprio” hearings into the allegedly anomalous pandemic supplies procurement of the government, with the last one held on Oct. 4.

The Senate Blue Ribbon Committee, meanwhile, continued its investigations “in aid of legislation” beginning Aug. 16.

At the center of controversy is the supposed anomalous deal between the government and Pharmally Pharmaceutical Corporation.

The state auditors noted that Department of Health transferred ₱42 billion to the Department of Budget and Management-Procurement Service to buy face mask, face shield and other personal protective equipment last year.

Meanwhile, then PS-DBM head Christopher Lloyd Lao awarded the ₱8.6 billion million supply deal to Pharmally in April 2020, which was only six-months old at the time and had a capital of only over ₱600,000.

However, senators flagged that the face masks sold by the company to PS-DBM cost around ₱27 apiece, when other suppliers sold the same at only ₱13.

They also linked former ex-presidential adviser Michael Yang as one of the “actors” who helped the new pharmaceutical firm bagged a billion worth of deal from the government. In a 2017 video clip presented at the Senate, Yang was seen with President Rodrigo Duterte meeting with Pharmally officials.

Duterte vs. Senate

Amid the controversy, the President decided to speak up and defend Yang from all allegations, saying the Davao-based trader was the person who helped the government close deals.

Moreover, Yang is a businessman “who knows how to use his money,” and he has contacts with big companies in China that he helped enter the Philippines, Duterte noted.

RELATED: 'Cheap politician': Gordon slams Duterte for defending Yang, Lao in COVID-19 fund controversy

In several briefings, Duterte maintained that “no crime” was involved in the purchase of COVID-19 supplies, even accusing senators of just wanting exposure in view of the upcoming 2022 elections.

He threatened to “find what’s wrong” with senators involved in the procedures.

Lawmakers maintained they were not affected and continued digging the issue, which faced continued rants from Duterte.

The President's weekly pandemic briefings often highlighted these, like how his Cabinet members had to attend these long Senate hearings, impeding the government’s COVID-19 response.

This prompted Duterte to issue a memorandum order directing the executive department to ignore summons of the Blue Ribbon Committee, which has been challenged before the Supreme Court regarding its legality.

Insisting that it is his Cabinet members who are his real concern, the President told senators they can imprison Pharmally executives, especially after it was discovered some of them did not pay taxes.

Duterte also made specific criticisms, especially against the Blue Ribbon Committee chairman, Sen. Richard Gordon.

He claimed that the committee head failed to settle misused public funds when the latter was chairman of the Subic Bay Metropolitan Authority. He threatened to file a case and ordered for the collection of ₱140 million in government funds from the senator.

In response, Gordon said he is not ashamed of anything and is ready to face authorities regarding the issue.

Asked about this exchange of jabs between the President and the Senate, political analyst Maria Ela Atienza said “it shows that the President and the executive branch do not respect the principle of checks and balances and do not wish to make themselves accountable to a body that is supposed to represent the people.”

Atienza said she hopes more people can follow the developments in the hearings since this could help them assess the performance of the Duterte administration, especially in terms of COVID-19 pandemic and accountability, as the 2022 elections draw nearer.

For another political expert Michael Yusingco, the chief executive’s tirades helped in catching the public’s eye and gave senators, specifically Gordon, the platform to directly inform Filipinos of their findings.

“Overall, the so-called ‘rift’ helped publicize the issue even more," Yusingco noted, "which may have facilitated even more dramatics during the hearings. It has certainly been an opportunity for some senators to make their case for 2022.”

Custody and arrests

In one of the Senate hearings, Pharmally executive Krizle Mago testified that her company changed the expiry dates of the government procured-face shields. But two days later, the Blue Ribbon Committee could no longer reach Mago.

On Oct. 1, Mago was under the protective custody of the House of Representatives. She later on retracted her statement that Pharmally tampered with the expiry dates of face shields before the House Committee on Good Government and Public Accountability.

The Senate hearings also led to the arrest of some personalities involved in the mess.

Pharmally president Twinkle Dargani and corporate secretary and treasurer Mohit Dargani were cited in contempt for refusal to submit documents subpoenaed by senators. The firm’s director, Linconn Ong, was also cited due to his evasiveness to answer the Senate panel’s queries.

Ong was immediately arrested and detained at the Senate. On the other hand, the Dargani siblings went “in hiding” after they were cited in contempt.

On Nov. 14, the Darganis were scheduled to board a chartered plane to Kuala Lumpur, Malaysia, but were intercepted by the Senate security team at the Davao City International Airport. They were both detained at the Senate.

Mohit and Ong were later transferred to Pasay City Jail, while Twinkle remained at Senate custody due to mental health reasons.

Following the arrest of the Darganis, Mago was released from the lower chamber’s custody.

On the other hand, Lao was also cited in contempt and ordered arrested by the Senate for snubbing committee hearings. The former DBM official started to miss the hearings after Duterte barred Cabinet officials from attending.

Gordon said Lao is already considered a private citizen and should not be covered by the President’s memorandum.

The Senate panel rejected Lao’s motion for reconsideration of his contempt citation and arrest order. Gordon told Lao to submit himself to the Senate security personnel as soon as possible if he wants the panel to act on his motion.

Moreover, the former presidential adviser Yang was also cited in contempt and ordered arrested for failing to show up in the hearings and for avoiding questions of the senators.

The Chinese businessman asked the Supreme Court on Nov. 25 to nullify the arrest orders issued against him as well as the Immigration Lookout Bulletin Order. He also sought the high court’s intervention to stop the Senate from compelling him to attend the hearings.

What’s next?

The House Committee on Good Government and Public Accountability has yet to release its report on the hearings it conducted. But committee chair DIWA Party-list Rep. Michael Aglipay earlier said that they will be fair in reporting its findings.

Meanwhile, the Senate Blue Ribbon Committee eyed charges against Yang, Lao, and Pharmally officials based on its preliminary findings in October, and investigation of the panel is still ongoing.

“I think the Senate is doing everything within its power under the circumstances to conduct a thorough investigation…" Yusingco said. "This is understandable given the amount of drama, in relation to the conduct of the hearings.”

He emphasized the Senate “should leave no stone unturned” and that the final report should include recommendations to improve governance.

“This is not merely a criminal or prosecutorial investigation but an inquiry in aid of legislation," Yusingco added. "So, at the end of it, the public must see proposals on how to improve government.”

For Atienza, the probe has to be finished before next year’s elections, not to mention other pending hearings that also involve possible corruption.

The upper chamber also still has a lot of digging to do to expose the “mastermind” and file appropriate charges against all parties responsible for the mess, she also said.

"We are still talking about the involvement of small bureaucrats and business people who can be considered possible fronts of bigger personalities," Ateinza noted.

"This is important because government public funds are involved as well as lives, health and welfare of people are involved,” she added.