Duque, Lao face raps over COVID-19 supplies

MANILA, Philippines — The Office of the Ombudsman has ordered the filing of a graft case against former health secretary Francisco Duque III and former Department of Budget and Management Procurement Service (PS-DBM) executive director Lloyd Christopher Lao.

The order was in connection with the alleged irregularities in the Department of Health’s transfer of P41.46 billion to PS-DBM at the height of the COVID-19 pandemic in 2020.

In a 49-page resolution dated May 6 and approved by Ombudsman Samuel Martires on May 8, the anti-graft agency said probable cause exists to prosecute Duque and Lao in court for violation of Section 3 (e) of Republic Act 3019 or the Anti-Graft and Corrupt Practices Act.

Section 3 (e) of RA 3019 prohibits public officials from giving unwarranted benefit, advantage or preference to a private party or from causing any party, including the government, undue injury.

Meanwhile, in a separate decision also approved by Martires on May 8, the ombudsman found Duque and Lao guilty of the administrative offenses of grave misconduct and conduct prejudicial to the best interest of the service, still in connection with the P41.46-billion fund transfer.

Duque and Lao were meted with the penalty of dismissal from service, but since they were no longer connected with the DOH and PS-DBM, respectively, the ombudsman said the dismissal is convertible to a fine equivalent to their salaries for one year.

The ombudsman also ordered the forfeiture of all their retirement benefits and perpetual disqualification from reemployment in the government service.

The ombudsman, on the other hand, dismissed the graft and administrative complaints against nine other officials of the DOH – undersecretaries Ma. Carolina Taiño, Myrna Cabotaje, Roger Tong-an and Leopoldo Vega, directors Crispinita Valdez, Napoleon Arevalo, Enrique Tayag, chief accountant Lorica Rabago and Financial Management Services-Accounting Division officer-in-charge Filipina Velasquez for lack of evidence to establish their participation in the allegedly anomalous fund transfer.

The ombudsman’s investigation on Duque, Lao and the other DOH officials stemmed from a 2020 Commission on Audit (COA) report and the complaint filed by Sen. Risa Hontiveros and former senator Richard Gordon in 2022 following months of hearings by the Senate Blue Ribbon committee.

In its 2020 annual audit report on the DOH, the COA flagged several “deficiencies” in the health agency’s utilization of P67.32 billion in COVID-19 funds, including the unspent P11.89 billion intended for the procurement of various medical equipment and supplies, payment of benefits of health workers and the P41.46 billion transferred to PS-DBM despite lack of the required Memorandum of Agreement and other supporting documents.

In their complaint, Hontiveros and Gordon said that of the funds received by PS-DBM from DOH, P11.5 billion was paid to startup company Pharmally Pharmaceutical Corp. for the supply of face shields, face masks, test kits and other medical items for the government’s pandemic response.

The supply contracts were allegedly awarded to Pharmally despite the company’s lack of sufficient capital. The procured items were also allegedly overpriced while some were already expired upon delivery.

In its resolution, the ombudsman said Duque and Lao acted with “evident bad faith” in carrying out the fund transfers from DOH to PS-DBM from March to December 2020 totaling P41,463,867,117.52.

For one, the ombudsman said Republic Act 11469 or the Bayanihan To Heal as One Act (Bayanihan 1) and the Government Procurement Policy Board Circular 01-2020 and Circular 03-2020 all state that the DOH shall have the obligation to acquire and distribute medical goods essential for the government’s COVID-19 response.

Secondly, the ombudsman agreed with the COA that the fund transfers were not supported with any valid MOA between the DOH and PS-DBM as well as proof that the DOH at the time did not have the capacity to undertake the procurement itself.

Lastly, the ombudsman said Duque and Lao have caused “undue injury” to the government, specifically to the DOH, in the amount of P1.658 billion, corresponding to the service fee imposed by the PS-DBM on the “illegal, unjustified and unwarranted fund transfers.”

“Instead of abiding by the rules governing fund transfers, respondents ran around them in the guise of expediting transactions in the procurement of COVID-19 related items,” it added.

Duque and Lao, however, may still file a motion for reconsideration.

The ombudsman had earlier ordered the filing of three counts of graft against Lao and other former officials of PS-DBM, together with officials of Pharmally in connection with the alleged anomalous award of three supply contracts in the total amount of P4.165 billion to Pharmally for the procurement of reverse transcription-polymerase chain reaction (RT-PCR) test kits.

Formal cases, however, have yet to be filed before the anti-graft court Sandiganbayan as of Friday.

Asked to comment on the ombudsman’s order, Duque, in a text message to The STAR, said: “Wala pa, cause we will study the resolution tomorrow morning with my lawyers.”

Gordon thanks ombudsman

Gordon yesterday thanked the ombudsman for including in its graft case Chinese businessman Lin Weixiong, a key player in the alleged Pharmally contract mess.

Ombudsman’s latest order moved to include Lin in the graft indictment after he was appointed financial manager for Pharmally, a domestic corporation, despite being a Chinese citizen and for not being a stockholder or board member.

Gordon said Lin evaded Senate hearings and that the Chinese trader “went into hiding, while his wife, Rose Nono Lin, enjoyed the fruits of their plunder by living in Forbes Park as a neighbor of Michael Yang, and riding in luxury cars like the Dargani siblings.”

Gordon was referring to former president Rodrigo Duterte’s economic adviser Yang, while the Dargani siblings refer to Pharmally president Twinkle Dargani and treasurer and secretary Mohit Dargani. The Darganis attempted to flee the country during the Senate investigation.

“How could Lin Weixiong amass all that wealth without the help of key people in the Duterte administration, aside from Lao and (former DBM procurement director Warren) Liong?” Gordon asked. “There was definitely a conspiracy, which leads to the highest levels of government.”

“Clearly, the award by Lao and Liong was rigged in favor of an undercapitalized company formed only in 2019 and with no past contracts with the government,” Gordon said. — Marc Jayson Cayabyab