No cure in sight: Three corruption stories under Duterte’s watch

Pharmally Scandal and PHP10 billion

AT THE height of the pandemic, amid the scramble for medical supplies, a new company made news as a supplier of face masks and shields. It was a new name, but it would soon become a household word, at least while the news of its business projected a face of corruption at its ugliest. 

What happened:

The Pharmally scandal was brought to light after the Commission on Audit’s (COA) annual audit report of the Department of Health (DOH) for 2020 was released on August 11, 2021. 

COA’s report flagged “various deficiencies” involving around PHP67 billion in public funds meant for DOH’s pandemic response.  

How did the government responded:

Both the Senate and the House of Representatives conducted separate hearings in aid of legislation. 

The Senate began an investigation into the mismanaged funds and questionable contracts in August 2021, with legislators questioning the contracts awarded to Pharmally in 2020 worth a total of PHP10 billion. 

The Senate also discovered the involvement of Chinese businessman Michael Yang who had been reported as a friend and economic adviser of then President Duterte. Pharmally executives revealed in hearings that Yang acted as their financer; after which Duterte issued an order barring Cabinet members from appearing at the hearings without his prior approval. Duterte’s order was heavily criticized and called “unconstitutional.” 

Lloyd Christopher Lao, Officer-in-Charge (OIC) of the Department of Budget and Management’s Procurement Service (PS-DBM) was in charge of vetting companies for government contracts. Lao was reportedly a “volunteer election lawyer” in Duterte’s presidential campaign. After Duterte won, Lao became Undersecretary to Christopher “Bong” Go, the President’s close aide and constant companion. Like many in the Duterte administration, Lao hailed from Davao and is a fraternity brother of Duterte.  

The Senate Blue Ribbon Committee Report

The results of the Senate and House investigations were released in early 2022. Representative Edgar Aglipay announced on January 31 that his Committee was recommending the filing of complaints against Pharmally executives, excluding Yang and Health Secretary Francisco Duque III. 

The Senate, in a draft Blue Ribbon Committee report, recommended charges not just against Pharmally executives, but also against Yang, Duque, and Duterte. 

But the Blue Ribbon Report had only seven Senators agreeing to sign the report in January, lacking two more signatures for it to progress to the plenary for approval. 

In late May, with the elections concluded and the end of the 18th Congress fast approaching, it was reported that former Senator Richard Gordon, then Blue Ribbon Committee chairman, was still trying to get the signatures to formalize the report. Some senators refused to sign the report because it said that the filing of charges should be “considered” against Duterte for his “betrayal of public trust.” 

Without the signatures the report has remained in limbo. 

For Senator Franklin Drilon, Senate Minority Leader in the 18th Congress, the Senate’s investigation into Pharmally “was not a waste of time” since the report and its findings could be adopted by the 19th Congress. 

COA, the agency whose annual audit report started it all, began its own investigation into Pharmally in September 2021. 

Media’s coverage of the issue in 2022

Post-elections, re-elected Senator Risa Hontiveros, one of the 19th Congress’ two-member Senate minority, told One PH’s “Sa Totoo Lang” that legislators can “re-investigate” Pharmally. Hontiveros was among the Senators who signed the draft report in the 18th Congress. 

CMFR cheered the Inquirer.net report by Kurt Dela Peña which featured the unapproved Blue Ribbon Committee’s report on Pharmally as an example of the dangers of a “rubber stamp” legislature. A political analyst warned that something similar could occur in the 19th Congress, which is dominated by administration allies. 

Reflecting on the new government to come, columnists at the Philippine Star, SunStar Cebu, and BusinessWorld Online also said out that the Pharmally scandal has yet to achieve closure.

Rappler’s Pia Ranada’s  review of the Duterte administration’s six-year term noted how Duterte’s defense of Yang showed up a weakness: “For all his talk of being impervious to private interests, Duterte had his sacred cows.”

Pharmally Executives

But not all media were engaged in the coverage of Pharmally issues. 

CMFR jeered dzRH for their relentless promotion of a candidate linked to Pharmally. Rose Nono Lin, a stockholder and executive of Pharmally Biologicals, a “sister company” of Pharmally, ran for Representative of Quezon City’s fifth district in the May elections. Lin’s husband is also Pharmally’s financial officer.

Obviously, the promotion did not mention the connection nor said anything about the scandal in which the company was involved. 

Post-elections, media reported the release of two Pharmally executives detained in the course of the investigation. The release was ordered as the 18th Congress came to a close and adjourned sessions on June 30, 2022. 

COA’s delayed audit report

Some news accounts brought up the delayed release of a COA special audit report. In January, COA announced that the report would be out in March. Eight months later in November, COA revealed that the report would be further delayed to January 2023. Hontiveros criticized the continued delay and asked the agency to ensure that this would be the last extension, lamenting that it had taken years: “It will already be 2023 – two years from what should have been a 2021 submission.”

As of this writing, COA has yet to release the special audit report.