Ombudsman Recommends Filing of Graft Charges Against Duque and Lao for Illegal Transfer of Funds during COVID-19 Pandemic

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Former Health Secretary Francisco Duque and Budget Undersecretary Lloyd Christopher Lao Face Criminal Charges over Illegal Fund Transfer

In a significant development, the Office of the Ombudsman in Manila, Philippines has recommended the filing of criminal charges against former Health Secretary Francisco Duque and Budget Undersecretary Lloyd Christopher Lao. The charges stem from an alleged illegal transfer of P41 billion for the purchase of equipment and other items needed during the COVID-19 pandemic.

The Ombudsman’s special panel of prosecutors, in a 49-page decision signed on May 6, 2024, found Duque and Lao guilty of grave misconduct and conduct prejudicial to the best interest of service. The panel also recommended their dismissal from government service, forfeiture of all retirement benefits, and disqualification from reemployment. This decision comes after a complaint filed by former Senator Richard Gordon and Senator Risa Hontiveros, following an investigation by the Senate Blue Ribbon Committee on the illegal fund transfer of the Department of Health (DOH) to the Procurement Service of the Department of Budget and Management (PS-DBM) for the procurement of personal protective equipment, RT-PCR test kits, alcohol, and other supplies.

It was alleged that the transfers were approved and disbursement vouchers issued to the PS-DBM by the DOH without the necessary memorandum of agreements and certificates of previous liquidation. The complaint also highlighted the unjustifiable outsourcing of the procurement of COVID-19 related supplies to the PS-DBM, despite the DOH’s authority and organizational structure in place to procure its own supplies.

Upon investigation, the Ombudsman found that not all fund transfers involved the procurement of Common-Use Supplies and Equipment (CSEs), as it included other items such as cadaver bags, mechanical ventilators, and nucleic acid extraction machines that do not fall under CSEs. The Ombudsman also noted that Duque admitted during the Senate hearing that the reason for transferring the money to the PS-DBM was for it to purchase or procure the medical supplies and equipment on behalf of the DOH, with the PS-DBM acting as the procuring entity.

However, the Ombudsman stressed that despite the Government Procurement Policy Board’s (GPPB) declaration of some COVID-19-related items as CSEs, the PS-DBM failed to meet the requirements for these items to be considered as CSEs that can be acquired from the PS-DBM, in accordance with certain regulations.

The Ombudsman further highlighted that the DOH had no legal obligation or compelling reason to transfer funds and outsource its procurement to the PS-DBM. The Ombudsman referred to a circular issued by the GPPB after the enactment of the Bayanihan to Heal as One Act, which “prescribes for procuring entities to directly negotiate or procure from a legally, technically, and financially capable supplier of goods.” The Ombudsman emphasized that in times of emergencies such as the COVID-19 pandemic, where urgent procurement is necessary, the intended setup for procuring entities is to negotiate directly with the suppliers.

According to the Ombudsman, both Duque and Lao acted in bad faith or gross inexcusable negligence in the discharge of their duties when they affected the fund transfer, despite the DOH having the obligation to procure directly and not through the PS-DBM. The Ombudsman also found evidence of a conspiracy between Duque and Lao for the illegal transfer of funds.

In a separate decision, the Ombudsman ordered the dismissal of cases against Undersecretaries Maria Carolina Taino, Myrna Cabotaje, Roger Tong-an, and Leopoldo Vega, as well as several directors, due to lack of probable cause.

The Manila Times has reached out to Duque for his comment on the matter.

Insights and Commentary

This case involving the former Health Secretary and Budget Undersecretary sheds light on the alleged mishandling of funds intended for the country’s COVID-19 response. The Ombudsman’s recommendation to file criminal charges against Duque and Lao highlights the seriousness of the allegations and the potential consequences they may face if found guilty.

One of the key issues raised in this case is the outsourcing of procurement to the PS-DBM by the DOH. Despite having the authority and organizational structure to procure its own supplies, the DOH chose to involve the PS-DBM in the process. This decision has raised questions about the transparency and accountability of the procurement process, especially in times of emergency when swift action is required.

The Ombudsman’s finding that not all fund transfers involved the procurement of CSEs is significant. It suggests that there may have been a misuse of funds, as the transfers included items that did not fall under the category of CSEs. This raises concerns about the proper allocation and utilization of resources during a critical time when the country was in dire need of medical supplies and equipment.

The Ombudsman’s emphasis on the direct negotiation between procuring entities and suppliers during emergencies is noteworthy. It highlights the importance of expediting the procurement process to ensure the timely delivery of essential goods and services. By bypassing unnecessary intermediaries, the government can potentially streamline the procurement process and avoid any potential mismanagement or irregularities.

The alleged conspiracy between Duque and Lao for the illegal transfer of funds is a serious accusation. If proven true, it would demonstrate a breach of public trust and a violation of their duties as government officials. The Ombudsman’s recommendation for their dismissal from government service and forfeiture of retirement benefits underscores the gravity of their alleged actions.

It is worth noting that the Ombudsman’s decision also dismissed cases against other officials due to a lack of probable cause. This highlights the importance of a thorough and impartial investigation to ensure that only those responsible for any wrongdoing are held accountable.

Overall, this case serves as a reminder of the need for transparency, accountability, and proper governance in the management of public funds, especially during times of crisis. It is crucial that government officials act in the best interest of the public and ensure that resources are allocated appropriately to address the needs of the people. The outcome of this case will have significant implications not only for the individuals involved but also for the broader public perception of the government’s handling of the COVID-19 response.

Source: The Manila Times

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