Corruption plagues Covid-19 health response in Philippine

Corruption put people's lives at risk.

Overpriced face masks, expired medicines, and government contracts riddled with anomalies.  

By Ina Alleco R. Silverio, Philippine correspondent, Maritime Fairtrade

Frontline health workers in the Philippines are more than fed up at what they said was the Duterte administration’s corrupt dealings even as the country continues to reel from the impact of Covid-19.   The target of their criticism and outrage are officials and businessmen close to the administration who are now being investigated for questionable procurement of personal protective equipment (PPE) and Covid-19 tests.

On September 23, the procurement service of the Department of Budget and Management (PS-DBM) was exposed of having signed a contract with the Pharmally Pharmaceuticals, which the Commission on Audit (COA) has discovered to be full of anomalies.  Pharmally Pharmaceuticals Philippines is connected to Pharmally International, whose officials met with President Rodrigo Duterte in Davao back in 2017. Pharmally International’s head has been charged with fraud in Taiwan.

When it won the contract, Pharmally only had P625,000 (US$12,300) in capital and had no previous record of dealings with the government. Despite this, however, it was able to secure a massive P11.7 billion (US$231 million) government contract under the Bayanihan 1 and 2 laws (the body of emergency laws rushed through congress to supposedly address the pandemic). When questioned, representatives of the PS-DBM could not explain how it happened.

Because it was just a small company with no capacity to manufacture face masks or to procure them, Pharmally functioned as a middleman between the Duterte government and other suppliers.  Two of the suppliers, Green Trends and Tiger Phil were discovered to have sold their face masks to Pharmally at P18 (US$0.36) and P23.90 (US$0.47) respectively, but the latter sold these to the government at P27.72 (US$0.55) each for its first delivery.       

Questionable procurement practice

In the meantime, the very process of procurement itself was found questionable. Pharmally was able to make an advance delivery of face masks within three hours after it was given a request for quotation and even without a purchase order. No background checks were also conducted. 

The face masks were not the only product Pharmally provided for in its contract. It sold the government test kits which were set to expire in six months. Pharmally brought them from a supplier in Singapore and sold them to the government for P1,720 (US$34) each. Two months later, the Department of Health (DOH) was able to buy the same kits from the same supplier at P925 (US$18) per unit.  The DOH already admitted that many of the kits that were first delivered became useless soon after and that P500 million (US$9.8 million) was wasted in other transactions for other tests kits. 

Healthcare workers demanded their much-delayed Covid-19 benefits,

A cast of suspicious characters

In Senate investigations, Pharmally was unable to give what observers call “believable answers” to queries as to how it was able to pay suppliers when it did not have sufficient capital. The company’s president Huang Tzu Yen said that he used his own money, but this was met with skepticism. 

Other Pharmally officials said that they borrowed funds from other partners, but they did not and would not divulge names as to who these partners were. The names that have been mentioned, however, are those of men close to Duterte. Among them was Christopher Lloyd Lao who headed the PS-DBM procurement service and facilitated the contract signing along with Michael Yang. 

Lao was Duterte’s election lawyer in 2016, and he later became part of the Presidential Management Staff (PMS) which was then headed by executive assistant and now senator Bong Go. Yang was Duterte’s former economic adviser, and according to Pharmally director Lincoln Ong, Yang gave the company the funds it needed to purchase millions of units of PPE.

Pharmally president Huang Tzu Yen was quoted as admitting that his company only had P625,000 (US$12,300) when it won the large pandemic supply contracts. Neither did he deny that Pharmally did not have the financial capacity when it was awarded the contract for P8.5 billion (US$167 million) worth of medical supply contracts. 

In Taiwan, Huang is said to have a standing warrant of arrest for breach of trust.   His father, Wen Lieh, is the chairman of Pharmally International. The elder Huang is also wanted by Taiwanese authorities for what is alleged to be one of the biggest securities fraud cases that involves a listed company in Taiwan.

It was also discovered that not long after winning the supply contracts, Pharmally executives bought luxury cars, including Porsches and Lamborghinis that cost P6 million (US$118,000) and P13.5 million (US$266,000) each.

Overworked healthcare workers express outrage

As more corruption revelations unfolded, health workers express their outrage and disgust. Nurses, doctors, and other frontline workers in the healthcare sector have been at war for months with the DOH and the national government over their much-delayed Covid-19 benefits and scarce supply of PPE.

The Health Alliance for Democracy (HEAD) and the Philippine Medical Students Association (PMSA) have held protests against what they said that was the “looting of crooks in the government and their conspirators.”

In an online briefing for the media attended by Maritime Fairtrade, the secretary general of HEAD Albert Pascual pointed out that as more anomalies and scandals of corruption are revealed, the deep-seated and systemic bureaucratic corruption of the Duterte government is also exposed. 

“We have not forgotten the countless anomalies of unauthorized perks given to Philippine Health Insurance (Philhealth) officials amounting to over P164 million (US$3.2 million), or the “ghost dialysis” cases over which Philhealth officials were charged with graft. The reports of the P15 billion (US$296 million) allegedly stolen by Philhealth executives are also still fresh in our minds.   Contracts that are products of immense corruption are lucrative business for government officials and their business partners,” he said.

Pascual said that the outrage of health workers and Filipinos in desperate need of healthcare is very justified. 

“The budget for health is only P245 billion (US$12 billion) for next year, and this already includes P79.99 billion (US$3.9 billion) in allocations for PhilHealth and the P16.99 billion (US$835 million) to the Assistance to Indigents Program. These are both implemented by the health department that is also a bastion of corruption, and we also worry for these funds,” he said.

Healthcare workers want more help from the government to fight the pandemic.

Corruption is putting lives at risk

Other groups such as the Solidarity of Health Personnel and Advocates for a Unified Plan to Defeat Covid-19 (SHAPE UP), Philippine Medical Students Association, Filipino Nurses United, and Alliance of Health Workers have also denounced the scandals.

Dr. Edelina Dela Paz of HEAD said that the country’s debt has reached P11.166 trillion (US$220 billion) as of June 2021. 

“A large part of these debts was incurred by the incumbent government to supposedly address the pandemic. If we divide this amount by the number of Filipinos now living, each of us would have a debt of P150,000 (US$7,300). Where has all the money gone? The audit findings revealed that the agencies tasked to address the pandemic only used a small percentage of their funds,” she said.

Also from HEAD, Dr. Omid Javier Shiamard said that the health sector is holding health secretary Francisco Duque accountable for the P67.32 billion (US$3.3 billion) released to the DOH for Covid-19 response that were found to be riddled with deficiencies.

“While Filipinos have been dying left and right from lack of sufficient healthcare, we hear that the DOH has P11.89 billion (US$584 million) of unobligated fund which should have been spent for most needed Covid-19 response! It’s also outrageous that P95.67 million (US$4.7 million) worth of medicines and drugs have expired or nearly so when the DOH bought them. Heads should roll,” he said.

The audit commission has reported that the DOH still has P11.89 billion (US$584 million) in unobligated funds (unspent funds). Since 2020, the DOH has come under severe criticism for its failure to intelligently respond to the pandemic. Different public hospitals and health facilities have made it known through the media that they continue to struggle because of lack of funds and they cannot cope with the increasing number of Covid-19 patients.   

Hospitals are understaffed

De la Paz from HEAD said that when the pandemic broke out in 2020, health workers repeatedly appealed to the health department to hire more medical personnel because public hospitals were understaffed.

“Even then, we were already in a crisis situation because we did have enough personnel. Since last year, many of us – nurses, doctors, medical staff, have been struggling against extreme physical and mental stress. The emotional fatigue that comes with watching so many people die has also been tremendous,” she said.

Latest data from the DOH has it that there has been a total of 104 deaths among healthcare workers who contracted Covid-19 in their work. As of September 2021, some 24,284 healthcare workers have tested positive for the virus.

De la Paz said that DOH has not acted on the call to hire more staff. “So many of us have already succumbed to Covid-19 in the conduct of our duties.  How then are we expected to respond when we hear about all these anomalies, about government funds that should have been used to fight the pandemic being unused? It’s very frustrating.”

“We want a swift investigation and decisive resolution of the many corruption issues that hound the DOH and Secretary Duque.  So many of the controversies and reports of corrupt practices in the DOH and PhilHealth have remained unsolved,” she said.

Healthcare workers have been struggling with extreme mental and physical stress.

Public health not a budget priority 

As the senate investigations on Pharmally continues and Filipinos continue to live under different quarantine and lockdown categories, congress has finalized the national budget for 2022.  The results have dismayed the health sector.

Dr. Eleonor Jara, co-convenor of the Solidarity of Health Advocates and Personnel for a Unified Plan to Defeat Covid-19, said that the proposed budget does not consider the health emergency.  “The health department is only eighth in the priority agencies getting the most funds.” 

Based on data from the House of Representatives, of the P5.024 trillion (US$99 billion) proposed National Expenditure Program (NEP) for 2022, only P245 billion (US$4.8 billion) is earmarked for the DOH, including the P79.9 billion (US$3.9 billion) budget for the controversial PhilHealth.  This is only 4.81 percent of the total budget.  The government’s Build Build Build program is getting P1.18 trillion (US$23 billion), and P531.54 billion (US$10 billion) is being set aside for debt servicing. 

“Filipinos deserve a budget that addresses the raging pandemic and the country’s deplorable health situation,” Jara, said.

For his part, the national president of the Alliance of Health Workers Robert Mendoza said that Filipinos will be getting only P3.86 (US$0.08) each per day for their health needs.  “This is not even enough for a vitamin tablet to help boost our immune system to fight the virus,” he added.

Mendoza also said that budget cuts for the Philippine General Hospital (PGH) – the country’s biggest public hospital – are also in the offing.  The budget on Maintenance and Other Operating Expenses (MOOE) of Covid-19 referral hospitals such as the PGH will be reduced by P130 million (US$2.5 million) even after it increased bed capacity to 320 from 220 for Covid-19 patients. 

There are also zero allocations for Covid-19 benefits for health workers such as Special Risk Allowance (SRA), Actual Hazard Duty Pay (AHDP) and Meals, Accommodation, Transportation (MAT) allowance for the year 2022.

“With this kind of budget, we cannot expect the Covid-19 numbers to significantly go down next year. The Philippine health sector is under siege and we are not getting the support we need. We want the deaths to end.  The government is not helping us in this goal,” Mendoza said. 

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Ina Alleco R. Silverio

Ina Alleco R. Silverio

Ina Silverio, our Philippine correspondent, is an award-winning investigative reporter. She is also the author of two books.

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