The move of Pharmally Pharmaceutical Corp. to deliver 500,000 surgical masks to the government even without a request or purchase order (PO) was not standard procedure, a retired officer of the Department of Budget and Management admitted Monday to a Senate panel.
This was as Senator Francisco Pangilinan said government procurement personnel had been ordered to sign inspection documents for personal protective equipment from China even before the items were delivered or inspected.
“Some inspection reports were signed even if the delivered goods were not actually inspected,” Pangilinan said, noting that the goods were still in China when the reports were signed.
Jorge Mendoza, whose contract as inspection chief at the Procurement Service of DBM (PS-DBM) was not renewed, revealed that he remembers two instances when documents were signed as guarantee to Chinese suppliers.
Philippine law requires actual inspection before the signing of inspection documents and before the PPEs can be delivered and paid for.
Mendoza identified former PS-DBM accounting Chief Raul Catalan as the one who asked him and fellow inspectors to sign the papers.
This developed as former presidential economic adviser Michael Yang, the “guarantor” between China-based suppliers and Pharmally, which bagged the billion-peso medical supplies procurement contract from the Department of Health through DBM-PS, failed to attend the Senate hearing Monday due to hypertension.
Speaking on behalf of Yang, lawyer Raymond Fortun said his client was advised by his doctor to stay at home and rest for five days.
COVID-stricken Pharmally official Linconn Ong also revealed on Monday he and his family were threatened with death if he would not admit his links with “the Chief Executive.”
Appearing during the 6th hearing of the Senate Blue Ribbon committee, Ong said he had been getting death threats since he testified on alleged irregularities in the government’s purchase of billions worth of COVID-19 medical supplies.
Senate Minority Leader Franklin Drilon said it was “clear” that Pharmally was given “advantage” despite having a paid-up capital of only P625,000.
“No matter how this is twisted, it was clear that Pharmally was given advantage,” he told Teleradyo.
Pharmally bagged P8.7-billion worth of contracts from April to June 2020 to supply the Philippines medical supplies in response to the COVID-19 pandemic.
A procurement specialist said the admission of Pharmally to the Blue Ribbon Committee chaired by Sen. Richard Gordon that it had insufficient funds to deliver pandemic supplies could lead to the filing of corruption charges.
Last week, Pharmally executives disclosed the company borrowed money from Chinese businessman and former presidential economic adviser 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 lawyer Zoilo Andin, a procurement specialist certified by the Government Procurement Policy Board.
Fortun said if another Senate hearing would be scheduled within the five-day period of Yang’s “bed rest,” he would instruct his client to attend.
“He looks healthy enough. He is still under contempt. He is under arrest for contempt, and he would have to appear. I think blood pressures go up and down,” said Gordon.
Ong admitted before the Senate panel that he feared for his life and his family.
“Mr. Chairman, a lot of people are getting swept up with what is happening to us. I’m frightened. Mr. Chairman, I’ve been receiving text messages,” said Ong.
In the first message, Ong said he was given a week. “You and your family will be killed if you won’t admit your connection with the Chief Executive,” he said, reading a message from his cellphone.
But nobody among the senators asked who Ong thinks was the “Chief Executive” being alluded to by the anonymous sender.
Ong said another text message read: “Mr. Linconn Ong, we will give you a week of time, we’ll make sure you have a Merry Christmas six feet under the ground.”
The message added: “The agencies are locating you and your family…’
Ong said he shut off his cellphone because he was already afraid of what was happening.
Prior to his disclosures, Gordon inquired from Ong who lent Pharmally money for the purchase of COVID-19 supplies. But Ong replied by claiming that he had been receiving death threats and read text messages from his cellphone.
Meanwhile, Senate President Vicente Sotto III told reporters the arrest warrant against Ong was already served, but Ong was made to stay in his residence as he tested positive for COVID-19.
Fortun said he was supposed to meet Yang 30 minutes prior to the scheduled Senate Blue Ribbon hearing.
“On the way, he had texted me and then subsequently called and said that his blood pressure had suddenly shot up and for that reason, he was advised by his doctor to just stay at home,” Fortun told the Senate panel chaired by Sen. Richard Gordon.
“Apparently because of the proceedings, his health has been affected,” stressed Fortun.
Yang had said he had nothing to do with contracts that Pharmally had entered into but admitted that Ong had sought his help to introduce him to other Chinese businessmen who supply medical items.
Gordon said they also summoned Yang’s associate Lin Weixiong and his supposed wife Rose Nono Lin.
But the committee’s director-general Rodolfo Quimbo told Gordon they failed to serve the subpoenas to the Lins.
The subpoena server went to the Lins’ supposed office address at Warehouse Eight of the La Fuerza Makati compound, but a security guard said that the Lins were not holding office there.
Senator Risa Hontiveros said Rose Nono Lin seemed to be contemplating a run for congresswoman of Quezon City’s 5th district, since her tarpaulins have been plastered around the area.
She said Rose Nono Lin also had her own YouTube channel and was currently active on social media.
Meanwhile, Sen. Panfilo Lacson said despite starting up with a little over P600,000, it was still a puzzle how Pharmally cornered nearly P12 billion in contracts from the government for medical supplies to address the COVID-19 pandemic.
Lacson noted the amount was a huge chunk of the P42 billion that DOH transferred to PS-DBM to procure the items.
He told Pharmally chairman Huang Tzu Yen and director Linconn Ong to submit to the committee official records showing how many contracts
Pharmally bagged, and how much were involved.
“Just make sure you base your figures on official records,” he said, even as Ong cited “records” showing Pharmally might have gotten some P11 billion.
Citing figures from the Government Procurement Policy Board, Lacson said Pharmally was awarded at least seven contracts amounting to P8,625,496,016. “If we add the computations of Senators Franklin Drilon and Gordon, it could reach P12 billion,” he said.
Earlier, Lacson said the initial information he got indicated only 50,000 face masks would be supplied by the Sitaldas company and 100 million pieces by the Ferrer-owned EMS, though only 25 million pieces were received.
A big part of Pharmally’s contract involved P3.82 billion for two million sets of personal protective equipment (PPEs) that Pharmally bought for P1,150 per set and sold at P1,910 for a profit of P760/set — or a total of at least P1.5 billion.
Lacson, in pushing for an accounting of the P42-billion transfer from DOH to PS-DBM, also noted a large part involved loans that would have to be paid by future generations of Filipinos.
It was also found that Budget Undersecretary Christopher Lloyd Lao, former head of PS-DBM, failed to declare his income during the time his Statement of Assets, Liabilities, and Net Worth (SALN) increased despite being a government official.
Senator Imee Marcos demanded Lao to explain why he had zero income from 2017 to 2019.
“Your income tax return with the BIR (Bureau of Internal Revenue) showed that you did not declare income, zero income from 2017 to 2019.
Can you please explain why you had earned income from the sale of memorial lots, yet no income was reported in the tax return?” said Marcos.
“Why is your income zero but there is an increase in your net worth?
What is the truth?”
In response to the senator, Lao said he earned his income from selling “memorial lots and golf course property.”
Drilon for his part said they could possibly look into the bank accounts of Lao and other personalities in these DOH anomalies.
Gordon told Fortun that senators expected Yang to appear and participate in the hearing because they have many questions for him.
“We’re not gonna give him a free pass, he can appear, he is not under pressure, he is in Davao where he is comfortable. He can bring his doctor if he wills and we wanna see him,” related Gordon.
“When somebody is under investigation they come in in a wheelchair and say they cannot appear,” noted Gordon.
“As far as I’m concerned, I think he (Yang) can face the music so please tell your client that we would expect (him) to appear in the course of the hearing especially when we have questions against him,” said Gordon.
Yang was first linked to the controversial procurement of medical supplies after a 2017 video showed him introducing Pharmally officials to President Rodrigo Duterte in Davao City.
But in his testimony last September 7, Yang strongly denied any link with Pharmally and its operations.
Meanwhile, Senate Minority Franklin Drilon told the Gordon panel to request the Bureau of Immigration to issue a “watch order” against Yang.
