Auditor admits: I never saw Pharmally invoices

Lian Buan
Auditor admits: I never saw Pharmally invoices

SAVE THE PROFESSION. Iluminada Sebial, Pharmally's auditor, tells the Senate on October 19, 2021, that she did not have access to source documents before preparing the financial statement.

Screenshot from Senate Livestream

'I suspect this is where it is hidden, whatever it is,' says Senate Minority Leader Franklin Drilon, referring to documents to support Pharmally's P7-billion cost of sales

Iluminada Sebial, the auditor who signed the audit report attached to Pharmally Pharmaceutical Corporation’s bizarre financial statements, admitted to the Senate blue ribbon committee that she never saw source documents like invoices.

“Hindi po, listahan lang po talaga ‘yung chineck ko (I didn’t, I just checked a list),” Sebial said during the continuation of the Senate hearings on the pandemic procurement anomaly on Tuesday, October 19.

“One-time engagement lang po ako, tapos naka-prepare na po ng accountant, chineck ko lang po, pero hindi po ako nakakuha ng mga dokumento. Sabi ko ho, papadalahan na lang nila ako. Ngayon po na imbestigasyon, hindi pa po nila ako nabigyan ng mga kopya,” added Pharmally’s external auditor.

(I was only hired on a one-time engagement, and it was already prepared by an accountant, I just had to check it, but I didn’t get documents. They said they will send me the documents. Now, during the investigation, they haven’t given me a copy.)

The Senate panel’s resource person, tax expert Mon Abrea, urged senators to do another round of questions for Sebial. In the past, Sebial merely said that to the best of her knowledge, there was no misstatement in the Pharmally finances.

Abrea appealed to Sebial, his fellow certified public accountant (CPA), “Sa halagang P4,000 na-expose ka, dalawa po tayong CPA dito at ‘yung propesyon natin maisalba naman po natin.”

(You have been exposed for a fee of P4,000. We are both CPAs; let’s save our profession.)

Abrea had once called Pharmally’s financial statement as “not normal,” as other accountants doing investigative analysis peg a potential underdeclaration of P402 million in value added tax (VAT).

On Tuesday, Abrea said that based on the available financial statements of Pharmally and their suppliers, the government stands to collect P2 billion in taxes.

“It’s a mix of income tax, value added tax, documentary stamp tax, improperly accumulated earnings tax, and donor’s tax,” said Abrea.

Senators have been trying to get the source documents for Pharmally, such as invoices, vouchers, tax records but with the help of new media-savvy laywers, Pharmally has invoked their rights to corporate and data secrecy to snub these requests. Pharmally director Linconn Ong has also run to the Supreme Court to be able to get out of Senate detention.

For example, because Pharmally is a trader, even though it got P7.5 billion in sales in 2020, it incurred P7.09 billion cost of sales, but the Senate has not found receipts to support the cost.

“I suspect this is where it is hidden, whatever it is,” said Senate Minority Leader Franklin Drilon.

Despite being a new company – it was just created in September 2019 – and being undercapitalized, Pharmally is the government’s most favored pandemic supplier, getting P10 billion in deals so far. It was financed by Michael Yang, President Rodrigo Duterte’s former economic adviser, to continue paying both Philippines-based and China-based Chinese suppliers for a markup.

Past hearings have established substandard and expiring supplies, high markups despite available market supplies at lower prices, and multiple lapses in procurement procedure.

Senate blue ribbon panel chairman Richard Gordon said on Tuesday that their hearings have at least established the “imprimatur of the executive department from beginning to end,” referring to the Procurement Service of the Department of Budget and Management (PS-DBM) under Lloyd Christopher Lao, a lawyer from Davao City who helped in Duterte’s campaign and went on to get plum posts in government.

One of Pharmally’s suppliers, TigerPhil Marketing, may have also underdeclared sales by 30%, said Abrea.

No government participation

Senate has been trying to find Jeff Mariano, whom Sebial said was Pharmally’s in-house accountant. The Senate Sergeant-at-arms cannot locate him, even after seeking the help of the National Bureau of Investigation (NBI) .

Gordon asked: Are we not getting the government’s help here?

Gordon had noted that a lot of things would be answered if tax chief Caesar Dulay was just free to participate in the hearings. Duterte had barred his Cabinet members from attending the inquiry.

Senator Panfilo Lacson said even the Bureau of Customs has not responded to his written query about Pharmally’s import records.

Public health expert Tony Leachon said that if proven, it would be “the worst corruption in Philippine history,” because it happened at the expense of lives during a global pandemic.

Doctors have called on the Department of Justice and Office of the Ombudsman to thoroughly investigate the allegations. –

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email or tweet @lianbuan.