Department of Budget and Management

Lao accused of extortion racket as housing exec

Lian Buan
Lao accused of extortion racket as housing exec

DBM undersecretary Christopher Lloyd Lao at President Rodrigo Duterte's 'Talk to the People' in May 2020.

RTVM screenshot

The former undersecretary says he doesn't know about the complaint filed with the Presidential Anti-Corruption Commission. Senator Risa Hontiveros counters: he's been asked to answer the complaint, so he knows.

Before lawyer and Davao boy Lloyd Christopher Lao became undersecretary in charge of the Procurement Service of the Department of Budget and Management (PS-DBM), he held another prized post as chief executive officer (CEO) and commissioner of the now-defunct Housing and Land Use Regulatory Board (HLURB).

If Lao is being grilled by senators now for his negligence in purchasing pandemic supplies for the health department at PS-DBM, this is not the first time he is being asked to explain questionable policies or transactions. As HLURB chief, some developers accused him of “racket.”

A complaint was filed with the Presidential Anti-Corruption Commission (PACC) against Lao in August 2019, accusing him of extorting from developers of socialized housing, documents obtained by Rappler show.

“Unfortunately, the additional cost which are otherwise unnecessary but forced on developers under the current HLURB administration is ultimately passed on to low income housing beneficiaries, including those belonging to the homeless and underprivileged sector of our society,” said the complaint.

The PACC confirmed the complaint, but said it endorsed the same to the HLURB in September 2019 for appropriate action. Rappler has reached out to Housing Secretary Eduardo del Rosario to ask what action was done on the complaint, and will update this story once he responds.

Hlurb Complaint by Nami Buan on Scribd

During the Senate blue ribbon committee hearing on Friday, August 27, Lao said he was not aware of such complaint.

“I’m not aware of that,” said Lao, saying that what he recalled was a case involving a decision against a homeowner’s association.

But Senator Risa Hontiveros later said in the hearing she had information that Del Rosario required Lao to reply to this complaint.

“So he (Lao) did know about it,” said Hontiveros.

Minority Floor Leader Senator Franklin Drilon said this complaint was relevant because, after his stint at the HLURB, Lao was assigned to head the PS-DBM, “given that this case was filed against you which involves questions of integrity.”

During Lao’s leadership, the PS procured overpriced face masks and face shields for the pandemic, a controversy now being looked into by the Senate, where he was grilled on Friday.

Del Rosario’s Department of Human Settlements and Urban Development absorbed the HLURB by the end of 2019.

Lao resigned from PS-DBM in June 2021.

Copy of PACC’s endorsement to Housing chief Eduardo del Rosario in September 2019. Sourced by Rappler.
Housing ‘racket’?

The complaint says that, in Memorandum No. 09 issued by Lao in May 2018, the HLURB required that the license to sell (LTS) of socialized housing be centralized in Lao’s office as CEO. The complaint said that before this the approvals of LTS for socialized housing came from regional HLURB officers.

Section 5.1.3 of the memorandum says, “The CEO of the HLURB or his designated officer shall first approve all socialized housing projects or programs that will be utilized as compliance.”

“This created a major traffic jam, forcing private developers to line up at the office of CEO Lao, waiting indefinitely for action on applications,” the complaint said.

“Eventually, in search of a solution, developers discover[ed] an express lane available where LTS applications may be expedited. This is the new program concocted by CEO Lao wherein the developer will make a financial contribution that is non-recoverable to a socialized housing project that is approved by CEO Lao under a joint venture agreement among a land owner, usually a local government unit, the developer and HLURB rperesented by CEO Lao,” said the complaint.

The complaint called it “an extortion racket…victimizing private housing developers engaged in socialized and low cost mass housing projects.”

The Balanced Housing Development Program law requires that developers allot a portion of its projects to socialized housing, the size depends on whether it’s a subdivision or a condominium.

The LTS for the non-socialized housing is dependent on the LTS for the socialized housing, the complaint said, claiming that centralizing it in Lao’s office became a “tedious process.”

Lao didn’t directly address the centralization issue, but he said that there was a history of developers not complying with the law that required their projects to have socialized housing segments.

The “express lane” referred to in the complaint was an option in Lao’s memorandum circular, where the compliance could be in other forms. It could be a joint venture socialized housing with either a local government unit or a government housing agency, or an equivalent investment in socialized housing projects.

For the investment option, developers would deposit the funds to an “escrow trust account with Pag-Ibig Fund or any commercial bank,” says the memorandum circular, adding that funds would be released to the third party contractor accredited by the HLURB.

Lao said the “escrow is fully signed by the developer and it can only be withdrawn by the developer themselves.”

“When they have that project already as verified by the LGU, they can cancel the escrow, hindi ‘yan pera ng government (that’s not government’s money,” said Lao.

The complaint alleged that developers were discouraged by the tedious process of the regular options, and just opted to “simply donate to the pet program of CEO Lao, otherwise referred to as the escrow scheme, the easiest way but with additional non-recoverable cost.”

The complaint urged a “diligent and professional investigation” into the “timing” of fund releases to contractors, and who authorized those releases, claiming that at least two major developers contributed P600 million to the scheme.

The complaint also alleged that in 2019 the HLURB issued cease and desist orders to cancel the LTS of developers which partnered with the National Housing Authority (NHA) as compliance with the law.

Fixers then offered developers to just opt for the escrow scheme. The complaint called this “Phase 2 of extortion racket.”

Before he was appointed to the HLURB and then to PS-DBM, Lao worked as an undersecretary in Senator Bong Go’s former office in Malacañang, the Office of the Special Assistant to the President. Lao is also from Davao City and a member of President Rodrigo Duterte’s fraternity, Lex Talionis Fraternitas, although they belonged to different chapters since the President is a San Beda alumnus.

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Lao accused of extortion racket as housing exec

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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.