Did the Duterte Government Buy Millions in Pandemic Supplies from ‘Fugitives’?

The scandal adds to the already strained response in the Philippines as it grapples with its worst wave of infections yet.
September 3, 2021, 9:39am
Covid ward Philippines
This photo taken on April 6, 2021 shows a man wearing personal protective equipment walking into a makeshift ward built for COVID-19 patients at a hospital in Manila. Photo: JAM STA ROSA / AFP

Philippine lawmakers are demanding answers about massive government purchases of personal protective equipment and medical supplies from a company that senators say has ties to businessmen wanted in Taiwan, leading to controversy amid the country’s deadliest coronavirus surge to date.

What’s more, investigations claim those businessmen are connected to a friend and one-time adviser to Philippine President Rodrigo Duterte, raising further questions about the allegedly overpriced supply contracts.

The scandal has compounded suspicions of irregularity in the government’s handling of funds meant for its pandemic response as infections topped 2 million this week, making it one of the worst-hit countries in Southeast Asia

Government records available online show the government had entered into supply contracts totaling more than 8.6 billion pesos (about $172 million) with Pharmally Pharmaceuticals, a relatively new company with paid-up capital of only 625,000 pesos ($12,540), according to government registry documents published by the news outlet Rappler.

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The bombshell revelations came from a legislative inquiry by the Philippine Senate, findings by individual senators, and local reports. State auditors earlier flagged 67 billion pesos ($1.3 billion) in “deficient” health department funds that could have been used in the pandemic response, triggering the sleuth work by lawmakers and journalists to trace the funds’ whereabouts.

Opposition senator Risa Hontiveros released documents Wednesday on the identities of Pharmally’s businessmen and their backgrounds. The documents show Manila-based Pharmally Pharmaceuticals is 40-percent owned by businessman Huang Tzu Yen, who has a standing warrant of arrest for breach of trust from Taiwan’s Ministry of Justice Investigation Bureau. 

His father is Huang Wen Lieh also known as Tony Huang, the chairman of Taipei-based Pharmally International Holdings. According to Hontiveros, the older Huang is also the subject of an arrest warrant from the same Taiwanese agency for securities fraud, embezzlement, and stock manipulation.

A third executive, Zheng Bingquiang, is wanted in Taiwan for allegedly jointly manipulating the stocks of Pharmally International with Huang Wen Lieh, the senator said. Zheng is the chairman of the company Full Win Group that has a Philippine subsidiary led by Yang Hong Ming, also known as Michael Yang, a longtime friend and former economic adviser to Duterte.

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The Senate probe alleged that the health department transferred 42 billion pesos ($842 million) to the purchasing agency that contracted Pharmally Pharmaceuticals and other private suppliers. Senators said the fund transfer was illegal.

Registered in September 2019, Pharmally didn’t have the track record of supply delivery to qualify for such crucial projects, the senators pointed out. It also had too little capital to even be considered for those large contracts, they added. 

They also noted one glaring issue.

“Why is this government transacting with fugitives?” Hontiveros said in a media briefing Wednesday. “Why are we doing business with people who are the subjects of arrest warrants in another country?”

She criticized the purchasing agency for failing to run a background check on the company. “A simple Google search would have informed them that the father-son tandem Huang Wen Lieh and Huang Tzu Yen were on the run from the law,” Hontiveros said during the probe.

Pharmally Pharmaceuticals did not immediately respond to an email from VICE World News requesting comment on these allegations. 

Lawmakers also want more information about the relationship between the company and Duterte, pointing to a March 2017 video that has recirculated during the investigation. In the official presidential pool titled “Meeting with the Executives of the Pharmally International Holding Co. LTD,” the footage shows Yang introducing Duterte to company executives.

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A Chinese online publication also released photos of Duterte with Yang and Zheng touring an office in China in 2015, months before he became president. Hontiveros presented these findings to reporters.

Duterte may inevitably have to explain these associations, said Senator Richard Gordon, who is leading the inquiry.

“We’re not investigating the President, but the fact is, you have to connect when Pharmally came in, and when Pharmally came in was at the time the President saw them, alright?” Gordon told reporters, referring to the March 2017 video.

The timing of Pharmally’s entry into the Philippines and its success in securing public contracts during the pandemic leads one to ask whether the company benefited from its association with Duterte, Gordon said.

“Is it possible or not? That’s what we want to know,” said the senator, adding that Duterte should at least show interest in the probe and call out his associates who are tagged in it.

The official who authorized the contracts with Pharmally was closely associated with Senator Bong Go who is, in turn, Duterte’s right hand man. Gordon said the probe should include “what really is the role of Bong Go.”

But an incensed Duterte blasted the senators as he defended Yang and Pharmally during his weekly televised Cabinet conference late Monday night.

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“This was the lowest bid. What else do you want? Because it’s Michael Yang? The guy’s a businessman. He doesn’t throw money around. He’s got contacts with big corporations in China so he became the paymaster and made their entry here,” Duterte said.

“I thought we wanted to go to China and invite the investors here? So there, they invested, but during a pandemic. What’s wrong with that?” he continued, adding that Yang had been operating in the Philippines for 20 years.

However, Duterte also said he told his health secretary to dispense with tedious biddings for urgently needed medical supplies.

In a separate briefing, Carlito Galvez Jr, chief implementer of the pandemic response, said the government contracted Pharmally because it was the only company that could guarantee to quickly deliver millions of PPE sets when the country badly needed them in the early days of the health crisis.

Hontiveros later flagged the deal with Pharmally, saying it sold the PPE sets at double the price cap the government itself had decreed, while other suppliers were offering the same items at lower prices.

On Thursday night, Duterte said the contract prices were high because the supply of PPE at the start of the pandemic was low, and the demand had shot up suddenly.

The more virulent delta variant of the coronavirus has the Philippines’ hospitals swamped with patients as the health department reported a daily average of 17,000 new cases over the past week. A short supply of vaccines and inefficiencies in managing local outbreaks have many Filipinos concerned about whether the country is making a dent in the pandemic at all.