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Drilon asks Lao: How did small firm bag P8.68-billion deal for PPEs, test kits?

Senate Minority Leader Franklin Drilon on Friday grilled former Department of Budget and Management-Procurement Service (DBM-PS) Christopher Lloyd Lao after his office awarded an P8.68 billion contract for the procurement of face masks and face shields to a firm that has P625,000 paid-up capital.

“Totoo po pala (I think it is true) that government contracting is a very lucrative business. Pharmally Pharmaceutical Corporation can attest to that after it cornered government contracts to a tune of P8.68 billion,” he said at a Senate hearing.

According to Drilon, the amount of contracts that Pharmally bagged was relatively high compared to the other companies that had secured the contracts for the procurement of personal protective equipment.

“Malayo po ang nakuha ng next-in-rank supplier, P1.9 billion lamang. Para pong tumama sa lotto ang Pharmally,” he said.

In 2019, Drilon said Pharmally’s income soared from zero to P284.9 million in 2020.

Pharmally’s assets “jumped” from P599,000 in 2019 to P284.9 million in 2020, he added,

“Is it all thanks to PS-DBM? How could Pharmally, a trading corporation without track record, because it was only incorporated in September 2019, bag P8.68 billion worth of government contracts? How could Pharmally, a corporation which has no sufficient capital, with paid up capital of only P625,000, close government deals worth P8.68 billion?” Drilon asked.

“To PS-DBM, why close a deal with a company that has capitalization grossly below the acceptable limit to assume risks for the items to be delivered?” he pointed out.

Apart from this, Drilon said that Pharmally’s products were overpriced.

According to records he gathered, Drilon said Pharmally sold face masks at a P27.72, while the same item was sold by other suppliers to PS-DBM at P13.5, P16, and P17.50 during the same period in 2020.

It likewise sold test kits at a price of P1,720 when the kits can be bought at P925.

Drilon added that the firm sold the PPEs P1,910 each when the cost of the material in the market cost is at P945.

“Ang nakakapagtaka ay kahit overpriced ang mga produkto ng Pharmally, bili pa rin ng bili ang PS DBM dito,” he said.

The lawmaker pointed out that the Bayanihan To Heal as One Law stated that, “Procuring entities must negotiate the most advantageous price to the government based on --- preliminary market scanning done by the agency showing prevailing market prices and practice.”

“Kung kayang ibigay ang masks at P13.5, bakit po bumilli ang Pharmally at P27.7?” he asked.

“Sino po ba ang tao sa likod ng Pharmally? Ang lakas ng loob nito or malakas it sa PS-DBM,” he added.

Senator Risa Hontiveros further scrutinized the background of Pharmally Pharmaceutical Corporation, asking Lao if the firm was affiliated to Pharmally International Holdings Corporation based in Taiwan.

Lao said he is not aware of any relations between the two firms.

According to Hontiveros, Pharmally International Corporation was charged of financial fraud.

“Kung ito ang parehong firm this is the same firm whose chairman has issued an arrest warrant. This is the same firm which was delisted on the Taiwanese Stock Exchange because of these charges of financial fraud,” she said.

Lao told the Senate panel that they were able to contact Pharmally Pharmaceutical Corporation through diplomatic channels.

“That was the time na sarado ang economy and wala pong supply. We have to relay it to our diplomatic channels. We have contacted our office contacted the embassies, our ambassadors, our special envoys, even Ambassador Huang [Xilian] of China. we even conducted, we have zoom meetings with diff ambassadors,” he said.

At one point of the hearing, Drilon mentioned that he requested the issuance of subpoena against officials of Pharmally Pharmaceutical Corporation.

However, some of the subpoenas were not issued as the officials of the company were no longer residing in the address in the country.

At the latter part of the hearing, Lao admitted that they did not look at the General Information Sheet, saying it is not required under the law.

Lao also said they failed to check out the article of incorporation.

However, senators are quick to point out that due diligence will dictated that the DBM-PS should checked the firm’s background.

At one point in the hearing, Drilon moved for the Senate to Blue Ribbon committee to ask the Office of the Ombudsman for a proper investigation on the transactions DBM-PS entered into with Pharmally Pharmaceutical Corporation for possible violations of anti-graft laws.

Drilon said Lao’s admission before the Senate panel gives them a prima facie evidence.

Gordon agreed with Drilon’s motion.

Apart from Pharmally, Drilon also interrogated Lao for awarding a contract for the procurement of face masks to a company that supplies mobile phones, computers, and other IT products.

Drilon was referring to Cosmic Technologies Inc.

“If you exercised ordinary prudence and just a simple examination of the articles of incorporation and the business of this company, you will immediately know that Cosmic Technology’s articles of incorporation will show that it is engaged in the business of trading mobile phones, computer and other IT products,” Drilon said.

“How in heavens name did they end up supplying face masks at an overpriced of 22.50 per piece?” he asked.

The minority leader asked Lao again if he examined the articles of incorporation of Cosmic Technologies Inc.

Lao admitted that they did not scrutinize these documents and they only “relied” to the Securities and Exchange Commission’s registration, Department of Trade and Industry documents, and the mayor’s permit.

“Based on our reliance, we made the award. That is the only thing that I can answer because that is the only thing we did. I cannot make any answer because I cannot source answer other than that,” Lao said.

He also explained that Cosmic Technologies Inc. were one of the lowest bidders during that time.

Drilon then expressed dismay that Lao didn’t even care to look at the articles of incorporation to determine whether the firm is competent and qualified to supply face masks or not.

“That only indicates the diligence you exercised in awarding contracts using government funds when in fact it is totally, the Pharmally, the biggest scale, they are totally unqualified given where they were in terms of their financial standing,” he said.

“That is why I have suggested that the Ombudsman to conduct an investigation because you ave admitted that you did not exercised prudence or he diligence necessary to guard public funds,” Drilon reiterated. —NB, GMA News