MANILA – President Rodrigo Duterte gave the go signal for a small private Chinese company to win multi-billion peso supply contracts in what could be a scheme or conspiracy to defraud the government of funds.

This in gist was the conclusion of the preliminary report of the Senate Blue Ribbon committee which it released this week after  extended hearings on contracts worth P8.6 billion to P11 billion awarded to the Chinese-owned Pharmally Pharmaceutical Corp. by the Department of Health through the Department of Budget’s procurement services.

It was, according to the panel, nothing less than a “grand conspiracy” wherein the president “allowed his friends to bleed this nation’s coffers dry,” said Blue Ribbon chairman Senator Richard Gordon during its latest hearing as the panel recommended the filing of charges against a former presidential economic adviser, Pharmally executives and Department of Budget and Management officials.

In the same hearing, the Senate panel ordered the arrest of siblings Mohit and Twinkle Gargani, both executives of Pharmally, for refusal to comply with orders of the Senate like submission of documents on their contracts.

At press time, the siblings had eluded arrest and are believed to be in hiding  as they were nowhere to be found by Senate Sergeant at Arms Maj. Gen, Rene Samonte in the condominium units that they owned in San Juan and Bonifacio Global City.

Malacañang immediately dismissed as “kuwentong kutsero” or hearsay the Senate committee’s claim on the alleged possible involvement of President Duterte in the supposed “grand conspiracy” on the medical supplies procurement deals with Pharmally which had a start-up capital of P625,000 but got P8 to P11 billion in contracts.

Presidential spokesman Harry Roque said the investigation by the Senate panel headed by Sen. Richard Gordon failed to prove overpricing in government’s purchase of personal protective equipment, adding that the Bayanihan pandemic law authorized Duterte to fast track the purchase of the safety gears.

“Malinaw po iyan, so kung wala pong paglabag sa batas at walang overprice, bakit magkakaroon ng grand conspiracy? Usaping kutsero po ng isang taong namumulitika (That is clear. If there is no violation of the law and no overpricing, why will there be a grand conspiracy? That is just hearsay by someone who is politicking.),” Roque said.

Sen. Gordon said that Pharmally Pharmaceutical Corp. had “unwarranted benefits” and enjoyed “favoritism.” He said the firm only had P625,000 and no enough experience when it bagged some P8 to 11 billion in government contracts last year.

The Gordon panel preliminary report also recommended possible charges against Pharmally Pharmaceutical Corp. executives Linconn Ong and Krizle Mago, former presidential economic adviser Michael Yang and former DBM procurement head Christopher Lloyd Lao.

The panel recommended the filing of cases to support the deportation proceedings against Yang for being an undesirable alien. The committee also recommended the filing of graft and corrupt practices charges against Lao, Yang, and other officers and directors of Pharmally.

“Ito po ay partial report at ayokong gamitin pa ito na mitsa na sabihin na tapusin na naman ang imbestigasyon. Marami na po diyan ang malalagay… si Michael Yang, si Christopher Lloyd Lao, Warren Liong, ang Pharmally Pharmaceutical directors and officers,” Gordon said at the resumption of the committee’s hearings.

Lao served as the officer-in-charge of the Procurement Service of the Department of Budget and Management (PS-DBM) until he resigned in June this year. Liong, meanwhile, was a former PS-DBM director.

The possible charges that could be filed against Yang and Pharmally executives Linconn Ong and Krizle Mago include perjury or false testimony, Gordon said.

Gordon also said former officer-in-charge of the inspection division of the Procurement Service-Department of Budget (PS-DBM) Jorge Mendoza and PS-DBM Inspector Mervin Tanquintic may be liable for falsification of public documents after they admitted in hearings that they signed inspection reports though the supplies were still in China.

“Disobedience to the summons, ayan sila [Pharmally executives] Linconn Ong, sina Mohit Dargani, Michael Yang, at saka Twinkle Dargani… violation of Bayanihan To Heal As One Act: Michael Yang, Pharmally Pharmaceutical [executives] Linconn Ong, Mohit Dargani, Krizle Grace Mago,” Gordon went on

While the Senate panel report was only preliminary, observers said it was clearly damaging to the Duterte presidency.

Pharmally legal counsel Ferdinand Topacio questioned the Senate Blue Ribbon committee’s “piecemeal release” of its findings, saying it was a political move to help re-electionists, specifically Gordon, who initially said he was retiring, but recently filed his certificate of candidacy for another term in the Senate.

Topacio said the house arrest order of the Senate should be recalled as a report had already been released.

To this, Gordon said the Pharmally lawyer should take his case to the Supreme Court.

Based on that preliminary report, Mr. Duterte was deemed to be at the center of the conspiracy, led by his friend and former presidential economic adviser Michael Yang, executives of Pharmally, and former and present budget procurement officers.

According to the Senate’s findings, the Pharmally contracts had all the markings of alleged scam as the firm is a newly-organized Chinese corporation with a minimal paid up capital of P625,000, and four of its top officers were facing charges in Taiwan with fiscal malfeasance.

Such a scheme could not have taken place “without the imprimatur of the president,” said Gordon.

Various executives of Pharmally have been placed or ordered placed under Senate house arrest, the latest of whom are the Dargani siblings of Indian descent who allegedly refused to surrender documents to the Senate.

Throughout the Blue Ribbon probe, Pharmally had attempted to stonewall the hearings on several instances.

 At the same time, President Duterte criticized several times the hearings and senators like Gordon and minority leader Franklin Drilon for various reasons and also ordered Cabinet members and government officials to snub the hearings.

Duterte has allotted big part of his recent national addresses to lambasting the Senate and denying allegations of irregularity and overpricing in the government transactions.

Yang had claimed that he did not speak English or Pilipino, but reports on a video of him chatting with the president in both languages showed otherwise.

Pharmally claimed that Yang was the source of their operating funds, which the Chinese businessman first admitted but later retracted by saying it was actually his “friends” who provided the necessary capital.

A middle executive of Pharmally admitted that they had cheated the government by supplying substandard and/or expired personal protective equipment. She disappeared briefly, then reappeared at the House of Representatives – which is holding a similar probe – where she also took back her admission to the Senate panel.

As for the Health department, the Commission on Audit determined that its transfer of P42 billion to the Budget department lacked supporting documents such as a memorandum of agreement.

Presidential spokesman Harry Roque said the contract with Pharmally was allowed because there was a national health emergency where medical supplies were badly needed.

However, the Blue Ribbon committee had determined that Pharmally was not a manufacturer of medical supplies, but only served as middleman by purchasing from actual manufacturers, adding a commission for itself, and then reselling to the government.

Pharmally chairman and president Huang Tzu Yen has denied that they were favored in the government’s procurement of medical supplies in 2020, saying the small company has been “unfairly prejudged.”
Also at the latest Senate hearing, a Chinese medical equipment supply firm admitted that it was not an accredited importer of the Bureau of Customs (BOC).
During the resumption of the Senate blue ribbon panel’s inquiry into the purchase of COVID-19 items, Hongzhi Han, country manager and chief representative of Xuzhou Construction, said that the firm has been supplying agencies in countries including Singapore, Malaysia, Indonesia, and Thailand when they are in need of medical supplies.

“No, I am not. We do not directly import, it’s the Department of Budget and Management (DBM) who gets from us. The clearance with Customs is handled by DBM,” Han said through an interpreter.

Asked if they were paying taxes, Han said, “the DBM deducts the taxes from them and gives them the balance.”