MANILA, Philippines – The Office of the Ombudsman has recommended the filing of graft case against former Department of Health (DOH) secretary Francisco Duque III and former Procurement Service-Department of Budget and Management (PS-DBM) undesecretary Lloyd Christopher Lao.

The indictment stemmed from the allegedly irregular transfer of P41 billion of the DOH to PS-DBM for the procurement of COVID-19 supplies. In a resolution dated May 6, but publicized only on Friday, May 10, the Ombudsman said it found probable cause to recommend the filing of a case against the two former officials under section 3(e) of Republic Act No. 3019 or Anti-graft and Corrupt Practices Act.

Meanwhile, the Ombudsman dismissed the complaint against the following:

• Ma. Carolina Taiño
• Myrna Cabotaje
• Roger Tong-an
• Leopoldo Vega
• Napoleon Arevalo
• Enrique Tayag
• Filipina Velasquez
• Lorica Rabago
• Crispinita Valdez

Aside from the criminal charge, the Ombudsman also found Duque and Lao guilty of grave misconduct and conduct prejudicial to the best interest of the service. The Ombudsman dismissed them from service, with forfeiture of all their retirement benefits and perpetual disqualification from reentering government.

If officials ordered dismissed are no longer in service, they will be ordered to pay the Ombudsman a fine amounting to a year of their salaries.

Meanwhile, the Ombudsman also junked the administrative complaint against Taiño, Cabotaje, Tong-an, Vega, Arevalo, Tayag, Velasquez, Rabago, and Valdez.

Questions on procurement

The allegations stemmed from the complaints filed by opposition Senator Risa Hontiveros and former senator Richard Gordon. The allegedly irregular fund transfers were flagged by the Commission on Audit in 2020, and were questioned during a probe by the Senate blue ribbon committee. 

In the resolution, the Ombudsman said there was “no legal obligation nor compelling reason” on why the DOH transferred the funds and used the PS-DBM for the procurement. The Ombudsman explained that in times of emergencies like the COVID-19 pandemic when procurement was necessary, entities who need to buy supplies must negotiate directly with suppliers. 

This should have been done by the DOH since the PS-DBM did not have the stocks, so “there was no reason for DOH to still ask the PS-DBM to undertake the procurement.”

“In this case of national health emergency where time is critical and the regulations clearly prescribe direct procurement, the DOH, with its available funds, could have purchased the essential goods needed for COVID-19 response directly from qualified suppliers,” the prosecutors said.

The Ombudsman added that the DOH, as an agency, has the “expertise” and “knowledge” with regards to technical requirements of items that will be bought. It is given, the Ombudsman said, that it was in the best position to negotiate with suppliers about the features and specifications of items that they need. 

“For the foregoing considerations, DOH’s passing of the buck to PS-DBM is an action that does not evince a legitimate purpose or a bona fide intention to hasten the project implementation,” the resolution read. 

The Ombudsman also noted the lack of memorandum of agreement between the DOH and PS-DBM in the transaction in question. 

Service fee

According to the Ombudsman, the DOH funds were subjected to service fees. The Ombudsman explained that in the transfer of funds and the tapping of PS-DBM for the procurement, the PS-DBM subjected the transaction to 4% service fee. This “fact” was drawn from the testimony of former PS-DBM officer Jasonmer Uayan, and even Lao himself admitted the imposition of a standard fee. 

Four percent of the transaction was P1,658,554,684.7 – a large amount taken from DOH funds intended to buy equipment in response to the pandemic. 

“This means that the medical facilities, hospitals, personnel and communities under the DOH, some even indicating Emergency Procurement as method of procurement in their requests, have consequently been deprived of sizeable number of COVID-19 supplies and equipment that could have been utilized during the pandemic,” the Ombudsman said. 

Duque, Lao’s liability

In the resolution, the Ombudsman explained that the elements of graft are as follows:

• The alleged offender is a public officer discharging administrative, judicial, or official functions
• The officer acted with manifest partiality, evident bad faith, or gross inexcusable negligence
• The officer’s action caused undue injury or gave any party unwarranted benefits, advantage, or preference 

The Ombudsman said Duque and Lao met the first element since they were both in government service at the time of the allegations. The office added that the two acted with evident bad faith or gross inexcusable negligence when the transfer of funds happened. 

“Third, Duque and Lao’s actions caused undue injury to the DOH of at least Php 1,658,554,684.70 corresponding to the service fee imposed by PS-DBM on the illegal, unjustified and unwarranted fund transfers,” the resolution said. 

“This sizable amount was effectively taken out of the allocation for the acquisition of the essential COVID-19 goods specifically requested by end-user offices within the DOH to respond to the pandemic,” it added. – Rappler.com