Pharmally Inc. of presidential Chinese friend Michael Yang was an influence peddler. “Laway lang ang puhunan,” investigating senators said. Yang, President Duterte’s special economic adviser, pulled political strings. Pharmally acted as go-between of Chinese traders and the admin’s Procurement Service-Dept. of Budget and Management. It cornered P12 billion in sales to the government of pricey pandemic gear.
In one deal alone of seven in 2020, Pharmally profited P1.5 billion. Senator Panfilo Lacson revealed records. It sold two million sets of personal protective equipment (PPEs) at P1,910 each. The supplier in China was paid P1,150, for 66-percent mark-up of P760 per set.
“We need to scrutinize if the government and taxpayers were defrauded,” Lacson said. “Our children and their children will be repaying the loans for the PS-DBM purchases. Was the people’s money properly spent?”
Despite financial-technical incapacity, Pharmally was the favorite. Goods were paid for even before delivery, Senator Francis Pangilinan said. Pharmally then used the cash bonanza to buy the contracted supplies. The Chinese suppliers were not manufacturers but mere traders. Filipino makers and dealers of medical gear repeatedly were elbowed out, as no public biddings were announced and held.
From puny cash capital of P625,000 Pharmally grossed 19,000 times its worth. The P12-billion windfall surfaced at Monday’s hearing of the Blue Ribbon committee. Earlier hearings had fleshed out only P8.7 billion, then P10 billion.
Pharmally’s first deal was on March 25, 2020, a week into the government’s Luzon-wide lockdown. It was only six months old, with no office, experience, inventory, import permit, letter of credit or bank guarantee.
Circumstances showed irregularities, Minority Leader Franklin Drilon said. PS-DBM emailed Pharmally at 2:24 p.m. seeking price quotation on 500,000 pieces surgical masks, not to exceed P28 apiece and budget of P8 million.
Three hours later, 5:11 p.m., Pharmally delivered the truckloads of stocks, employee Krizle Mago claimed at the Senate. “Like ordering a sandwich by Grab Delivery!” Blue-Ribbon chairman Richard Gordon remarked.
It did not matter to Pharmally that the request was only for a quotation. Meaning, that the PS-DBM email presumably was sent to other sellers who might quote lower prices and thus bag the deal.
Nor did it matter that the PS-DBM figures were defective: 500,000 multiplied by P28 was P14 million, not the stated P8-million ceiling. Such lapse would have spurred further inquiries from email recipients. PS-DBM should have corrected itself for clarity and legality. At 1:19 p.m. the next day, March 26, Pharmally emailed its price quotation: P27.72 x 500,000 = P13,860,000.
Only on April 6 did PS-DBM email a purchase order. On April 15 Pharmally collected the amount, minus five-percent VAT and one-percent warranty retention. In a report by the Commission on Audit, the PS-DBM purchase order was issued April 16, the day after payment to Pharmally.
Drilon suspected ghost delivery. Pharmally director Linconn Ong claimed to have arranged the speedy trucking from Tiger Philippines Inc. He refused to reveal the acquisition price and stammered that he knew the Chinese owner and longtime friend only as “Brother Tiger.”
PS-DBM head Lloyd Christopher Lao swore to have been surprised with the delivery but deduced that it was Pharmally’s way of impressing them of its capability. Supposedly he did not accept nor pay the stocks at once.
In a recent telecast Duterte said Lao, a college fraternity-mate, provided legal services to Davao City Hall during his 22-year mayoralty. In 2016-2021 he appointed him to three successive Malacañang positions “out of utang na loob” (debt of gratitude). Duterte added that he met Yang 20 years ago doing business in Davao.
PS-DBM inspection reports were signed even before supply deliveries. Inspection chief Jorge Mendoza admitted doing so twice, under questioning by Pangilinan. PPEs from China had yet to arrive in Manila but higher-ups ordered them to certify the merchandise. Assistant Mervin Tanquintic confirmed the anomaly. PS-DBM accountants allegedly made them sign without seeing the goods to speed up payment to the Chinese.
Of the P12-billion sales, Pharmally filed only P10 billion in its 2020 income tax return. Suspecting tax evasion, Senator Imee Marcos requested records from the Bureaus of Customs and of Internal Revenue.
Unfamiliar with medical supplies, Pharmally’s deliveries were faulty. Test kits arrived unusable because the swabbing and extraction accessories arrived two months later, Pangilinan said. At that time frontline health care workers were getting infected and dying due to lack of test kits and substandard PPEs.
Drilon sought subpoena of PS-DBM and other agency files on four Pharmally deals:
• 41,400 RT-PCR test kits, at P69,500 each, for P2,877,300,000;
• 17,000 RT-PCR test kits, at P45,550 each, for P774,350,000;
• Three million N95 face masks, P100 each, for P300,000,000; and
• 312 DNA/RNA extraction kits, P787,968 each, for P245,846,016.
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