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‘High-risk’ observations flagged in Pharmally's 2020 earnings report

Community-led groups flagged several “high-risk” observations in the  2020 earnings report of Pharmally Pharmaceutical Corporation - the firm that supplied the government with supposedly overpriced medical goods amid the COVID-19 pandemic.

In an analysis, the Citizens’ Budget Tracker and Right to Know, Right Now! Coalition looked into the financial statement submitted by Pharmally to the Securities and Exchange Commission (SEC).

The groups noted five “high-risk observations” which were “serious risk management issues” that could lead to “substantial losses” from undeclared or uncollected revenues or misuse of public funds, and the serious violation of regulatory requirements.

The high-risk observations included:

  • Potential under-declaration of input value-added tax involving P402.2-million worth of purchases.
  • Insufficient contracting capacity.
  • Insufficient disclosures and details for donations declared as fully deductible expenses.
  • Missing and incomplete material disclosures in the 2020 financial statements.
  • Non-disclosure of the sources of interest expense and foreign exchange gains or losses in the 2020 financial statements.

“The company should disclose in its financial statements the sources of funding to shore up the needed capital to fulfill the contract requirements,” the analysis read.

“We also recommend that the approving signatory and agency release the documents and explain the rationale behind the approval of the contracts despite the insufficient contracting capacity,” it added.

The groups also cited a “medium-risk” observation on the reported amounts that cannot be matched in the disclosures, noting that this could lead to moderate losses and breaches of regulatory requirements

“We recommend that the company and the approving officers of the PS-DBM supply further information in response to our findings,” the analysis said.

GMA News Online has sought comment from Pharmally through its email indicated on its 2020 financial statement. No response has been received as of this posting.

The firm has been under scrutiny after Senate Minority Leader Franklin Drilon questioned the P8.68-billion contract with Pharmally for the procurement of face masks and face shields, even as the company only had P625,00 paid-up capital.

Based on the 2020 audit report of the Commission on Audit (COA), the PS-DBM ordered some 113.95 million surgical masks and 1.32 million face shields in April and May 2020.

Pharmally reportedly sold face masks at P27.72 apiece, even as other suppliers priced this at P13.5, P16, and P17.50 during the same period in 2020. It also sold personal protective equipment (PPEs) at P1,910 each, when the market price was P945.

Senator Risa Hontiveros earlier linked Pharmally to Michael Yang, former economic adviser to President Rodrigo Duterte.

Citing a news report from the Taipei Times and Taiwan’s Ministry of Justice, Hontiveros said Pharmally International Holdings Chairman Huang Wen Lie — also known as Tony Huang — is wanted for securities fraud, stock manipulation, and embezzlement.

His son Huang Tzu Yen — an incorporator of Pharmally Pharmaceutical Corp. and Pharmally Biological Inc — is also wanted for stock market manipulation, and has been sought by Taiwanese authorities since December 2020.

The younger Huang, currently in Singapore, was acknowledged present during the opening of the Senate inquiry on the allegedly overpriced medical goods on Tuesday.

The Commission on Audit (COA) last week said it will look into the P8.68-billion contract awarded to the firm under the term of former PS-DBM Head Lloyd Christopher Lao.

Lao was previously assigned to the Office of the Special Assistant to the President, under Senator Christopher “Bong” Go. Go has since denied that Lao was his former aide. — DVM, GMA News