Thread by @lianbuan

ONGOING: Pharmally board members attend Senate hearing after two invitations and a contempt order. Twinkle Dargani (president), Mohit Dargani (treasurer), Linconn Ong (director) and Justine Garado (director says SEC records, but exec asst accdg to him) @rapplerdotcom

Michael Yang attends the Senate hearing from a hotel in Davao City.

Sen President Tito Sotto says PS-DBM and DOH did not submit to the blue ribbon committee a detailed inventory of their procurements and releases; says what the agencies submitted is a general breakdown of funds.

From video of Senate's inspection: Boxes of face shields in the depot of PS-DBM.

PS-DBM ex Usec Lloyd Christopher Lao says Pharmally was paid only after full delivery, no advance payments. Pharmally chairman Huang Tzu Yen says they financed the PS-DBM projects by having access to inventories of the suppliers.

Pharmally only had P625,000 capital in 2019.

Huang Tzu Yen says they have 7 full-time employees, and hired contractuals for the delivery of the supplies, and adds they pay statutory benefits to full-time employees. But Sen Joel Villanueva says he has records to show zero contribution to Philhealth, Pagibig and SSS.

The auditor who prepared Pharmally's financial statements, Iluminada Sebial, says she will have to check records if the company paid contributions to SSS, Philhealth, and Pagibig.

Senator Cynthia Villar says the blue ribbon committee must consider that if Pharmally is only a distributor of Chinese suppliers, they need not have big finances. It's a business model, said Villar.

Lao says it is not required in procurement to scrutinize the financial statements of a company who wants to get a govt contract.

Experts we talked to said it's only common sense to do so.

Lao is reiterating that emergency procurements as allowed by Bayanihan 1 required only some basic documents like business permits, adding that their goal was to get supplies as fast as possible. The safeguard to this, said Lao, is not pay until full delivery.

Philgeps head Rosa Maria Clemente said the status they give to contractors (Pharmally has platinum status) is meant only to ensure complete documents; the legal and financial soundness to bid is for the procuring entity to ensure, said Clemente.

If Pharmally was an importer, where is its importer's license, asks tax expert and CPA Mon Abrea who's a resource person in the Senate.

Abrea said while it's not illegal to have that much of a year-on-year increase, it's not normal either.

Pharmally's income jumped from zero in 2019 to P264 million in 2020.

Pharmally's input VAT was flagged to have potential underdeclaration of P402M.

This was an independent analysis of CPAs Jahleel-AN Burao and John Michael Lava, done with pool of procurement experts of Citizen's Budget Tracker and Right to Know, Right Now! rappler.com/nation/account…

Abrea said financial capacity and letter of credit would have been required to get an importer's license.

Senator Richard Gordon said Lao is "hiding" beneath the covers of Bayanihan Law, insists there is always a two-fold rule for procurement – check the legal and financial capacity. "Pagkakaibigan lang ang kapital," said Gordon.

Gordon also questioned why Overall Deputy Ombudsman Warren Liong, a CPA Lawyer who was director in PS-DBM when Lao was there, did not flag Pharmally.

In the expensive face masks and shields, the government's defense has been that it was really the Suggested Retail Price (SRP) at that time.

Sen Francis Pangilinan said: But SRP is different than wholesale price.

COA chair Michael Aguinaldo said auditors were not able to make a finding on pricing of face shields because there were no SRPs at the time.

Aguinaldo: Whether Pharmally should have gotten the contracts or not is an Ombudsman issue and not a COA issue.

Aguinaldo: We do not have the mandate to probe corruption, which is why we work with the Office of the Ombudsman and the DOJ.

Yesterday at the House budget hearings, Ombudsman Samuel Martires said he has expanded the fact-finding inquiry of the DOH to cover PS-DBM and Pharmally. Justice Sec Menardo Guevarra, head of anti-corruption task force, said they continue to observe Senate hearings.

Michael Yang denies that he is connected to Pharmally.

Rappler has found Pharmally Pharma chair Huang is a director also in Pharmally Biological. In the latter, Huang's co-directors are incoporators of Yang-led companies. rappler.com/newsbreak/inve…

Pressed by Sen Lacson, Yang said Pharmally approached him before, said he met Huang Tzu Yen at a previous meeting, and that he knows Pharmally director Linconn Ong.

Yang says he has nothing to do with the PS-DBM award of contracts to Pharmally. But eventually, Yang said he introduced "friends" to Pharmally's Linconn Ong to connect to Chinese suppliers.

Lacson is asking Linconn Ong if it's true that after Yang introduced him to Chinese suppliers, he no longer participated in the latter talks.

Ong has not given a direct answer.

Ong says that if they can't pay their Chinese suppliers, Yang guarantees for Pharmally.

Lacson: So hindi totoo na wala na siyang kinalaman.

Ong: Baka may na-miss ang interpreter.

Ong said, as extracted by Lacson, that it's Michael Yang who guarantees with the Chinese suppliers whenever Pharmally cannot pay the suppliers. Letters of credit scarcely used, it was mostly Yang, said Ong.

Ong: The truth is tumulong si Mr Michael Yang (sa mga Chinese suppliers), and I think he's really connected in China.

Ong confirms they did not use letter of credit to transact with their Chinese suppliers.

Lacson says it's hard to believe such a simplified system given that billions of government contracts were at stake.

Ong cannot recall what type of agreements they entered into with its partners.

Rappler found that in June this year, Pharmally bagged a new DOH contract worth P37.9 millon for face shields through a joint venture with Business Beyond Limits OPC, incorporated in Feb 2019.

Huang Tzu Yen says he has not been in direct contact with Yang since 2017.

Ong says Pharmally paid its Chinese suppliers through Union Bank.

Ong said that whenever they have difficulty paying its suppliers, they would borrow money from friends.

Lacson: There was really a grand scheme to allow Pharmally to get all these contracts. Unless Pharmally tells us the truth, we can just speculate what really happened.

Senate is back to discussing prudence and common sense. Lao insists that Bayanihan did not require them to check a company's net financial contracting capacity.

Lao, in raised voice: Common sense dictates we preserve the money of the government. We did not pay a single centavo until they delivered. That is the highest safeguard we could give to our country.

Drilon: Jesus christ, stop lecturing.

Huang Tzu Yen: The company borrowed money from Mr Yang, Linconn Ong was maybe just hesitant to say that because of courtesy, which is why he was evasive.

Huang: Since we were not able to finance these things, so we will not be blacklisted, Yang offered to lend us money.

Gordon points out that Yang has been insisting he did not have anything to do with Pharmally.

"But now, the cat is out of the bag, and until now you're being evasive," Gordon told Huang.

Yang, through interpreter: We didn't have anything to do to obtain those contracts, later on, we helped them pay the advances.

Yang explains that Pharmally Pharma is different from Pharmally Biological.

Pangilinan says what's in question is Yang's earlier statement that he had no link to Pharmally only to made to admit later that he not only acted as guarantor, but also lent money to Pharmally.

Senate takes a one-hour dinner break, will resume at 8:07pm.

Wanting to give Pharmally director Linconn Ong time to rest, because he has COVID-19, some senators want to suspend the hearing for today. Sen Lacson wants to continue, suggests excuse Ong and interpellate the rest tonight.

Ong is under arrest for contempt, Gordon said to send OSAA to his home and take custody of him there instead and place ambulance.

Senator Gordon, chairman of the blue ribbon committee, rules – suspend the hearing today, continue next week.

"We're all tired, but this has been a good day, we are reaching closer to the truth."