CONGRESS EYES PROBE ON P52-B DSWD DEAL Firm with P62,000 start-up capital gets ‘ayuda’ contract

By ALFRED GABOT and BETING LAYGO  DOLOR

PASAY CITY – As the Senate and the House of Representatives are about to wind up its investigation into the controversial P11-billion Pharmally Pharmaceuticals contracts, the two houses of Congress are now setting their sight on a bigger alleged corruption under the Duterte administration, this time the P52-billion deal of the Department of Social Welfare and Development with Starpay Corp., a firm reportedly with only P62,000 start-up capital and was on the verge of bankruptcy.

This loomed as  Senator Emmanuel “Manny” Pacquiao asked the Bangko Sentral ng Pilipinas (BSP) and the Anti-Money Laundering Council (AMLC) to investigate reports that Starpay Corp. deposited with a private bank billions of pesos of government funds intended for the financial assistance to COVID-19 pandemic beneficiaries.

Pacquiao made the call during a Senate hearing on the P180-billion proposed budget of DSWD presided  by Sen. Imee Marcos and also asked the head of the private bank to clarify the deposit.

Lacson told the hearing the DSWD should have considered its capability and of local government units (LGUs) in the distribution of ‘’ayudas’’ before contracting the job to private financial service providers (FSPs) such as Starpay.

Senators grilled the DSWD officials during the hearing as they raised concerns over the awarding of contract to Starpay, which had paid-up capital of P62,000, for the distribution P52 billion under the social amelioration program (SAP) to 1,890,263 beneficiaries.

Pacquiao said at the hearing bigger and more established companies like GCash, PayMaya, RCBC, Robinsons Bank and Union Bank were awarded fewer beneficiaries under the program.

GCash was only awarded  286,551 beneficiaries, while PayMaya had 337,768, RCBC (682,639), Robinsons Bank (99,745) and Union Bank (537,668), it was reported.

The senators said the Starpay issue could be worse than the Pharmally Pharmaceuticals issue where the Chinese-owned company with capital of P625,000 was awarded a total of P11 billion contracts for the supply of medical supplies for the battle against Covid-19.

DSWD Secretary Rolando Bautista, a retired Armed Forces chief of staff, denied mismanagement of the billions of pesos of cash assistance under the second tranche in the distribution of the aid, pointing out that the LGUs did not handle the funds well, prompting them to engage the services of FSPs.

Bautista said they had received “technical assistance” from the BSP and that Starpay was chosen because it was present throughout the archipelago.

It was alleged that Starpay was granted a license only last 2018, and declared a loss in 2019 while its initial capital was allegedly only P62,000. The company is owned by businessman Joey Yeung, while its president is Lamberto Scarella and its chief financial officer is Ulysses Lao.

Bangko Sentral ng Pilipinos Governor Benjamin Diokno later claimed that Starpay had complied with BSP rules, including capitalization of P100 million which many, however, disputed.

“Starpay is licensed as an EMI (electronic money issuer) by the BSP,” Diokno said.

“It is not true that its paid-up capital is only P62,000. As an EMI, it has complied  with the required capitalization of  P100 million,” Diokno said.

While DSWD stated that Starpay distributed funds to 1.8 million beneficiaries, a 2020 audit report said the actual figure was only half a million beneficiaries.

Pacquiao first called for investigations by the Senate and other agencies like the BSP and the AMLC on Starpay transaction before he flew to the United States for his fight in Las Vegas.

Sen. Richard Gordon, chairman of the Senate Blue Ribbon committee, said then he was willing to conduct an investigation in aid of legislative once the request and documents are transmitted to his committee.

During the hearing, Pacquiao demanded to know who benefited from the interest on the bank deposit that stayed with the private bank for 10 months before it was refunded to DSWD.

Starpay handled P52 billion in financial assistance, or “ayuda”, for distribution to DSWD beneficiaries affected by the COVID-19 pandemic. It was among the six financial service providers (FSP) tapped by the agency to distribute cash aid through electronic wallets.

Pacquiao also questioned why there was a P50 ‘’service fee’’ for each transaction in the handing out of the cash aid to beneficiaries. If there were 6.7 million beneficiaries, Starpay alone would have allegedly raked in P250 million in service fees, he added.

Pacquiao, Lacson and other senators alleged there was ‘’poor’’ handling by DSWD of P96-billion financial assistance or “ayuda” to pandemic victims and asked for the Commission on Audit (COA) report on the DSWD  funds given out by DSWD to financial service providers (FSPs), including Starpay.

It was gathered the DSWD ha DSWD officials stressed that it had asked BSP for its technical assistance in the digital payment of Ayudas to beneficiaries.

Also at the hearing, Senator Francis Panglinan asked why DSWD chose Star Pay to disburse the bulk of the ‘’ayudas’’ when it had an alleged start-up capital of only P62,000 and was reportedly on the verge of bankruptcy in 2019.

Starpay Corp., the firm behind an e-wallet service used to distribute pandemic financial aid, had disputed the corruption claim made by Pacquiao.

Starpay emphasized that more than five million beneficiaries had been given cash aid through its platform “in a very short period of time..

Starpay stressed that it has already liquidated the funds it received and refunded the amount for unserved beneficiaries to the DSWD, totaling to P8.239 billion.

It was learned the DSWD handled a total of P206 billion in ‘’ayudas.’’

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By Beting Laygo Dolor

MANILA – Congress is set to investigate another suspected multi-billion peso scam involving a government agency-private sector tie up similar to the Pharmally Pharmaceutical Corp.-Department of Health deal.

This time, it is the Department of Social Welfare and Development (DSWD) which contracted a little known company that had declared bankruptcy just two years ago, but which received the largest share of the billions of pesos allotted to poor Filipinos as aid during the pandemic.

Both the Senate and the House of Representatives may formally investigate the DSWD’s contract with Starpay after it was learned that the small company had received a bigger share than GCash and PayPal in distributing the government’s cash assistance to the poor as part of its social amelioration program (SAP).

A lawmaker on Tuesday, Oct. 12, asked the House to start its own probe, even as the Senate was set to do the same at the request of Senator Manny Pacquiao, who earlier accused the DSWD of engaging in massive corruption in its cash payout program. The boxer-turned-lawmaker who is running for president next year said P10.4 billion in SAP funds were unaccounted for.

This makes the scandal potentially bigger than the P8.6 billion contract that Pharmally had won to supply pandemic supplies to the Health department. Pharmally stands accused of delivering either expired or substandard face shields, among others.

During the budget hearings this week, Pacquiao asked the DSWD to explain why large and established companies such as GCash, PayMaya, RCBC, Robinsons Bank, and Union Bank were given smaller shares of the funds for distribution to the poor, AKA ayuda.

Pacquiao noted that Staypay collected P50 as a service fee for each transaction.

With Starpay claiming to have five million beneficiaries, this would translate to P250 million earned in fees alone.

He added that a large chunk of the funds assigned to Starpay was deposited in a private bank and was not distributed for at least 10 months, thereby earning them substantial interest income.

Then there is the issue of countless beneficiaries saying they never received the ayuda promised them.

Senator Imee Marcos chimed in, asking the DSWD officials why they chose “never heard” Starpay instead of the more established financial institutions.

Senator Francis Pangilinan asked how a company that was bankrupt or nearly bankrupt prior to the pandemic was able to secure a P50-billion transaction.

Over at the Lower House, a full-blown investigation is in the offing.

Bayan Muna Rep. Carlos Isagani Zarate told local media, “there is no reason why Starpay should not be investigated as well.”

Starpay is an electronic money issuer licensed by the Bangko Sentral ng Pilipinas (BSP). It serves as an e-wallet that receives and dispenses payments online.

While its executives said their contract with DSWD was “legal and aboveboard,” they could not explain why Starpay received a P50-billion share of the funds, far bigger than what was allotted to GCash and PayMaya, both of which are far bigger than Starpay and are considered as leaders in the electronic payment industry.

For his part, Social Welfare Secretary Rolando Bautista said they had received “technical assistance” from the BSP and that Starpay was chosen because it was present throughout the archipelago.

Starpay was granted a license only last 2018, and declared a loss in 2019. The company is owned by businessman Joey Yeung, while its president is Lamberto Scarella and its chief financial officer is Ulysses Lao.

While DSWD stated that Starpay distributed funds to 1.8 million beneficiaries, a 2020 audit report said the actual figure was only half a million beneficiaries.