2 PhilHealth officials admit not telling ‘whole truth’ on overpriced network switches

JC Gotinga

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2 PhilHealth officials admit not telling ‘whole truth’ on overpriced network switches

PHILHEALTH IT CHIEF. PhilHealth IT sector chief and senior vice president Jovita Aragona at a Senate hearing on alleged corruption in the state insurer on August 18, 2020. Photo by Joseph Vidal/Senate PRIB

Senator Panfilo Lacson scores PhilHealth IT officials Jovita Aragona and Calixto Gabuya Jr for ‘continuously evading and lying’ to the Senate committee probing alleged corruption in the state insurer

Two information technology (IT) officials of the Philippine Health Insurance Corporation (PhilHealth) admitted they “did not tell the whole truth” about an alleged overpriced proposal to procure network switches for the state insurer’s IT system.

PhilHealth’s senior vice president and chief information officer Jovita Aragona and senior IT officer Calixto Gabuya Jr made the admission on Tuesday, August 18, during the Senate’s 3rd hearing on alleged rampant corruption in PhilHealth.

Aragona and Gabuya had insisted that they were planning to procure 15 units of a certain model of computer network switches, when documents and evidence presented to the Senate Committee of the Whole indicated that model was obsolete, and the procurement was actually for a newer model available in the market at a much lower price.

The proposal priced each Cisco 2960XR network switch at P348,000. The newer model, the Cisco 9200, has a market price of P62,000 apiece. 

At Tuesday’s hearing, Senator Panfilo Lacson confronted Aragona and Gabuya about their claims from the previous hearing on August 11.

“Last hearing, you were insisting that what you were procuring were 15 units of the [Cisco] 2960XR network switches for P348,000 each. Now I want to give you a chance to redeem yourselves because you lied under oath during the last hearing, and you were rebuffed by no less than the winning bidder, Microgenesis,” Lacson told Aragona and Gabuya.

Microgenesis earlier released a statement denying irregularity in its planned supply deal with PhilHealth. The product it stated was the Cisco 9200, not the Cisco 2960XR.

“Now I’d like you to redeem yourselves. Will you still insist that you were procuring the [Cisco] 2960XR? Because if you insist on that, I might move to cite you in contempt even if there is COVID-19 here in the Senate,” Lacson warned the two officials. Some senators and members of their staff had earlier been infected with COVID-19.

“Our specifications were generic. There was no brand. There was no model,” Gabuya replied, insisting it was the vendor that proposed the Cisco 2960XR.

Lacson then called on Etrobal Laborte, who recently resigned as head executive assistant of PhilHealth chief Ricardo Morales. Laborte is a certified IT practitioner.

Could the PhilHealth IT department really have proposed a procurement of generic network switches? Lacson asked Laborte.

“It couldn’t have been generic, Sir, because the project had been awarded [to a vendor], so it must have a model and required specifications by the agency,” Laborte answered.

Laborte cited documents from the bids and awards committee of PhilHealth’s national capital region (NCR) office, which was in charge of the procurements. The documents showed the plan was to buy the Cisco 9200 model, and it was submitted to Morales’ office.

“So they cannot lie because everything is in the documents,” Laborte said.

Turning to Aragona and Gabuya, Lacson asked, “So will you still insist? I’m warning you.”

When Gabuya launched into a lengthy explanation, Lacson cut him off. “It’s simple. What were you procuring?”

“Switches,” Gabuya replied.

“Yes, I know. But what were the specs? The [Cisco] 9200 or 2960XR?” Lacson asked.

“It was generic, Sir,” Gabuya insisted.

“How could it have been generic when the proposal had already been awarded?” Lacson said, beginning to sound upset.

Aragona then intervened. “May I, Sir? First of all, the procurement of those switches was handled by the NCR regional office, so we were not the ones procuring.”

Lacson repeated the question to Aragona: Were they about to buy the Cisco 2960XR, as the officials earlier insisted, or the Cisco 9200, as the documents indicated?

Aragona, too, insisted the proposal for the network switches was generic.

The back-and-forth went on a few more times: Lacson pressed them because the proposal could not have been generic, and Aragona and Gabuya attempted explanations.

Then Gabuya asked if they could refer the question to “the IT expert who procured.” Aragona echoed him, “May we request our NCR procurement team if they were the ones who procured the item?”

Lacson called on PhilHealth corporate legal counsel Roberto Labe Jr, who earlier said he flagged the procurement plan for the 15 network switches. Why did he flag it in the first place?

Although it appeared the initial plan was to get the Cisco 2960XR, it eventually changed to the Cisco 9200, Labe said. When the proposal reached the PhilHealth head office, Laborte saw it and told Labe that it was overpriced.

“So are you telling the committee now that [Aragona and Gabuya] are lying, that they continue to lie before the committee? They’re insisting that it’s the [Cisco] 2960XR, but based on the document, it’s the [Cisco] 9200, right?” Lacson asked Labe.

“Based on the document,” Labe said, agreeing with Lacson.

Cited in contempt

Addressing Senate President Vicente Sotto III, Lacson said, “Mr President, I move to cite in contempt of the committee Ms Jovita Aragona and Mr Calixto Gabuya Jr…for continuously evading and lying to this committee.”

If cited in contempt, Aragona and Gabuya would be detained in the Senate premises in Pasay City.

Gabuya then repeated his assertion that the IT department’s proposal was generic, even if in the previous hearing, Aragona, his boss, said the procurement was for the Cisco 2960XR network switches. As for the Cisco 9200 switches, it was the vendor that proposed it, he added.

Sotto cut in, telling Gabuya that all Lacson wanted to hear from him and Aragona was an admission that, in the end, the final proposal was for the Cisco 9200 and not for the Cisco 2960XR, and they would have known this all the while.

However, Aragona and Gabuya had been defending the plan to buy the obsolete, overpriced Cisco 2960XR.

“What I am saying is, what you awarded was for the [Cisco] 9200, not the [Cisco] 2960XR, right?”

“That is correct,” Gabuya replied.

“There, so you finally admitted it. Why do you continue to beat around the bush?” Lacson said, scolding Gabuya and Aragona for going around in circles with their attempts at explanations.

“Sorry po,” Aragona said. “If it is the end result of the procurement, then it is the [Cisco] 9200, yes.”

Lacson said this was all he had been asking Aragona and Gabuya since the first Senate hearing on the PhilHealth mess on August 4.

“You’re trying to fool us,” Lacson said. He accused Aragona and Gabuya of lying.

Aragona tried to deny this, which set off another argument with Lacson.

Sotto cut in again. “Why don’t you just simply admit that you made a mistake?” he told the two PhilHealth officials.

“Yes, as simple as that and we will forgive you,” Lacson added.

The alleged overpricing of the 15 network switches the PhilHealth IT department planned to procure – P348,000 apiece as opposed to the market price of P62,000 according to Laborte – was one of the major irregularities revealed during the Senate’s probe. Besides this, witnesses alleged that the agency’s P2.1 billion IT budget for 2020 was bloated by about P734 million.

Despite incisive interrogation by Lacson and other senators, Aragona and Gabuya refused to admit there was irregularity in the procurement plan for the network switches, which the Commission on Audit had already flagged as redundant. PhilHealth has 24 brand new network switches unused and “still in their boxes,” a 2019 audit revealed.

“We admit that we made a mistake,” Gabuya finally said.

“No – that you did not tell us the truth. Nevermind ‘lying,’” Lacson said.

“Do you admit that you did not tell us the whole truth before? Just say it and I am willing to withdraw my motion,” the senator added.

“Yes po,” Gabuya replied.

“Yes,” Aragona said.

Satisfied, Lacson thanked both PhilHealth officials, and withdrew his motion to cite them in contempt.

“Thank you, Senator Lacson, because we have not disinfected the detention centers of the Senate,” Sotto said. –

Editor’s Note: All quotes in Filipino have been translated into English.

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JC Gotinga

JC Gotinga often reports about the West Philippine Sea, the communist insurgency, and terrorism as he covers national defense and security for Rappler. He enjoys telling stories about his hometown, Pasig City. JC has worked with Al Jazeera, CNN Philippines, News5, and CBN Asia.