With poor track record, PITC shouldn’t buy COVID-19 vaccines for PH, say senators

JC Gotinga

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With poor track record, PITC shouldn’t buy COVID-19 vaccines for PH, say senators

VACCINE. This handout picture taken on August 6, 2020 and provided by the Russian Direct Investment Fund shows the vaccine against the coronavirus disease, developed by the Gamaleya Research Institute of Epidemiology and Microbiology.

Handout photo by the Russian Direct Investment Fund/AFP

The Senate will launch a legislative probe into the Philippine International Trading Corporation’s involvement in government procurements from which it shored up P33 billion in now idle funds

Kung nahihirapan ngang bumili ng suka, bakuna pa kaya (If it’s having a hard time buying vinegar, what more if it’s vaccines)?”

Senate President Pro Tempore Ralph Recto posed this question Tuesday, November 24, as the Senate officially sought an investigation of the Philippine International Trading Corporation (PITC), a 40-year-old procurement firm attached to the Department of Trade and Industry (DTI).

The PITC is currently tasked with procuring P20 billion worth of COVID-19 vaccines once they become available. However, senators have raised concern over the firm’s “poor track record,” and the fact that it holds some P33 billion in funds of different government agencies.

In a privilege speech Tuesday, Senate Minority Leader Franklin Drilon proposed a legislative probe into the PITC and its involvement in procurements for a long list of government agencies. Drilon suspects these agencies “parked” their funds with the PITC in order to circumvent a policy that their unused funds must revert to the Treasury at the end of the fiscal year.

“While we scrimp on health expenses during this pandemic, there are over P33.4 billion worth of government funds ‘parked’ in this small trading firm, with an equity of just over P1 billion,” Drilon said.

By tagging their unused money as “obligated” and then putting it to “sleep” in the PITC, government agencies hide their lack of absorptive capacity for government funds, thus preventing future budget cuts.

“PITC effectively provides a mechanism to hide inefficiencies in government,” Drilon said. The firm is also “being used as a pawn” by allowing other government agencies to dodge liabilities related to procurements, he added.

The funds deposited with the PITC were tagged as “trust liabilities,” consisting of deposits from national agencies, such as P5.4 billion by the Philippine Army. Drilon said trust liabilities are prone to abuse, “especially since the PITC has a propensity to place funds…in money market instruments.”

In 2019, government agency funds held by the PITC earned P581 million in interest. Instead of remitting the interest earnings to the Treasury, the PITC recorded it as its income, violating its mandate, Drilon pointed out.

The PITC was originally meant to conduct international trade, and Drilon said he was surprised to find the firm has been procuring face towels, T-shirts, shoes, guns, X-ray machines, and firetrucks for different agencies. It has also been involved in infrastructure projects.

On top of these, the PITC charges a 1% to 4% service fee on procurement contracts it obtains. Its earnings from fees have increased over the years:

  • 2016 – P50 million
  • 2017 – P76 million
  • 2018 – P137 million
  • 2019 – P171 million

Drilon questioned the PITC’s authority to charge service fees, and whether the firm has remitted its earnings to the Treasury.

The “tremendous” growth of agencies’ deposits with the PITC – from P4.8 billion in 2015 to P33.4 billion in 2019 – must also be probed, he added.

For all these, the PITC has had a “poor track record,” Drilon said.

It received a 76% failing mark from the Governance Commission for GOCCs (Government-owned and -controlled corporations) in 2018 “for failing to achieve the minimum acceptable accomplishment in the areas of social impact, financials and internal processes.”

“It failed to deliver billions of pesos worth of fire trucks, fire stations, and firearms, among others,” Drilon added.

Noting how the Cabinet has begun mobilizing to secure vaccines for Filipinos, Recto said, “I hope they will dictate the tempo, and not the rank amateurs of PITC whose stint in office has so far been unblemished with success.”

Drilon and Recto have zeroed in on the PITC after the Senate’s deliberations on the 2021 national budget bill revealed questionable deposits held by the firm. They have cited audit reports by the Commission on Audit (COA) flagging the PITC’s handling of funds.

Subsidiary incurred losses for 13 straight years

Following Drilon’s speech, Senator Risa Hontiveros noted that the PITC subsidiary Philippine Pharma Procurement Incorporated (PPPI) has consistently incurred losses in the last 13 years.

“The PPPI’s condition has been adversely affected by continued losses for 13 years, resulting in a deficit of P448.973 million as of December 31, 2019, due to the agency’s inability to meet targets in its operational plans,” said Hontiveros, quoting a COA report.

Lalo ako nag-aalala sa kakayanan natin to procure the vaccines (It made me more worried about our ability to procure the vaccines),” she said.

“Can we really rely on an agency with continued losses since 2013 and running on a deficit to provide the Philippines with the COVID-19 vaccine? Why should we trust this agency?” Hontiveros added.

If the PITC does end up procuring P20 billion worth of COVID-19 vaccines, it would earn P200 million from the transactions, Drilon pointed out.

With the Executive planning to borrow billions of pesos for COVID-19 vaccines, Drilon said the PITC should just “return” the P33.4 billion it owes government agencies.

Senators Koko Pimentel, Panfilo Lacson, Francis Pangilinan, Francis Tolentino, Risa Hontiveros, Grace Poe, Richard Gordon, Cynthia Villar, and Juan Miguel Zubiri expressed support for Drilon’s call for a probe into the PITC.

The planned investigation will be led by the Senate committee on government corporations and public enterprises, along with the committee on trade, commerce and entrepreneurship.

Trade Secretary Ramon Lopez, who oversees the PITC, earlier said he would welcome an investigation of the firm. –

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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.