Budget Watch

What’s the DOJ waiting for to probe gov’t use of pandemic funds?

Lian Buan

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'We will take the cue from the Ombudsman,' says Justice Secretary Menardo Guevarra

Every time there was an issue about the pandemic, whether the spread of fake news or the overpricing of medical supplies in the free market, there was the Department of Justice (DOJ), asking the National Bureau of Investigation (NBI), an attached agency, to step in and conduct a probe.

So with new details surrounding the mismanagement of billions in pandemic funds, and a fishy young company that bagged the biggest government contracts, what is the DOJ waiting for?

“We will take the cue from the Ombudsman,” Justice Secretary Menardo Guevarra told reporters on Monday, August 30.

Guevarra said this in the context of a yet-to-be signed memorandum of agreement (MOA) among the DOJ, Office of the Ombudsman, and Commission on Audit (COA) to deploy resident prosecutors to agencies and deputize them as resident ombudsmen there. It’s part of a grand vision of President Rodrigo Duterte to curb corruption.

But there was no need for this cue, or for deputized ombudsmen, when the DOJ and NBI investigated Philhealth last year (Philippine Health Insurance Corporation). Their investigation quickly resulted in a complaint filed before the Office of the Ombudsman, accusing Philhealth executives of devising a scheme to prefer hospitals and clinics for its anomalous reimbursement system.

When this was pointed out, Guevarra said: “Because the prosecutors and auditors are deputized by the Ombudsman. Out of courtesy to him, we shall take the cue from him.”

Duterte assigned the DOJ as lead of an anti-corruption task force, and as Guevarra boasted at a speech for the Rotary Club on August 31, “to lead the investigation of corruption all throughout the government bureaucracy.”

When there were questions over the contract with Red Cross to provide test kits, Guevarra quickly said they would investigate and added that they were giving it “preferential attention.”

Asked what makes the recent pandemic funds issues different from the ones where they took a proactive approach, Guevarra said: “The task force against corruption which includes the NBI, and the resident ombudsmen to be deputized by the Ombudsman, will work hand in hand.”

Ombudsman Samuel Martires has not responded yet to Rappler’s requests for comment with regard to Guevarra’s statement. We will update this story once he responds.

On September 9, Martires told the House of Representatives they have opened a comprehensive fact-finding inquiry into Pharmally, Lao and the pandemic funds in general, a probe that will “spare no one,” said the ombudsman.

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‘No legal obstacle for a DOJ probe’

“There is no legal obstacle for DOJ/NBI to conduct an investigation regarding the DOH/PS-DBM fiasco,” former justice undersecretary Jose Justiniano told Rappler on Thursday, September 2.

Justiniano was referring to congressional investigations and audit red flags over how the Department of Health and the Procurement Service of the Department of Budget and Management (PS-DBM) spent their allotted COVID-19 funds. Findings included unauthorized transfers and overpriced purchases.

The biggest winner of the pandemic contracts is Pharmally Pharmaceutical Corporation, with at least P8.7 billion in contracts, half of which was given by the PS-DBM for the use of DOH.

Pharmally was incorporated only in September 2019, with barely any activity and a paid-up P625,000 capital, before it won billions in contracts. Rappler’s investigations show that Pharmally Pharma is connected through a network of companies to Duterte’s former economic adviser, Michael Yang.

Senator Risa Hontiveros has revealed that Pharmally Pharma’s biggest shareholder, Huang Tzu Yen, is wanted for stock manipulation in Taiwan. His father, Huang Wen Lie, also known as Tony Huang, is wanted for securities fraud, embezzlement, and stock manipulation. Tony Huang is the chairman of Pharmally International Holding Company and was present in a March 2017 meeting with Duterte and Yang in Davao City.

Duterte, his spokesman Harry Roque, and COVID-19 plan chief implementer Carlito Galvez Jr. have all defended the government deals with Pharmally, saying it was the supplier who could deliver at the time.

What’s the DOJ waiting for to probe gov’t use of pandemic funds?

Justiniano, who was a deputized prosecutor in the pork barrel case, said what the NBI did to investigate the Janet Lim Napoles case is what the NBI can do now.

“This is exactly what happened in the Napoles case where we investigated the case, made a case report, and referred the matter to the Ombudsman for preliminary investigation,” said Justiniano.

“The participation of the Ombudsman is only needed in preliminary investigation stage of the case, which is necessary before an information may be filed before the Sandiganbayan,” said Justiniano added.

The Office of the Ombudsman actually has its own fact-finding team, and like the DOJ, has motu proprio (on its own) powers to open the inquiry stage before a preliminary investigation. Former ombudsman Conchita Carpio Morales said the Ombudsman can step in now, too.

But the Ombudsman’s manpower is limited compared to the vast resources of the NBI, which has an anti-graft division also.

Both Guevarra and Martires have said before that they would rather wait for the compliance of agencies involved to the recommendations of COA.

Given new details about Pharmally executives being fugitives, we asked Guevarra again whether it would finally prompt an NBI investigation. He did not respond.

Senator Richard Gordon, chairman of the blue ribbon committee, said their investigation will not flinch from looking at Duterte and Senator Bong Go if it comes to that.

Guevarra has said before that even though the task force was constituted by Duterte, “The president has given the DOJ a free hand in filing cases, but if presidential appointees are to be charged, official courtesy demands that the appointing authority be informed in advance.”

Duterte has also defended his appointment to critical posts of former PS-DBM head Lloyd Christopher Lao, who signed for most of the deals, saying he owed Lao for being part of his 2016 campaign.

What’s the DOJ waiting for to probe gov’t use of pandemic funds?

– Rappler.com

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Lian Buan

Lian Buan is a senior investigative reporter, and minder of Rappler's justice, human rights and crime cluster.