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The flags are scarlet (2)

"The numbers say our leaders have a lot of explaining to do. Numbers do not lie ­— and cannot be disputed by trolls."

 

Kenneth Abante, Jahleel-AN Burao, and John Michael Lava are volunteers of the Citizens’ Budget Tracker. A few weeks ago, they released their analysis of the financial statements of Pharmally Pharmaceutical Corporation – that well-connected company established in 2019 with so little capitalization that cornered billions of pesos in pandemic-related government contracts. They detailed five high-risk findings and one moderate-risk finding after looking at the Pharmally numbers obtained through the Securities and Exchange Commission.

Earlier on, their group of volunteers looked at 581 government contracts, using procurement data available at the Government Procurement Policy Board website, amounting to P20 billion. The contracts were awarded between March and early August last year – the early days of the pandemic.

Their shocking but not surprising conclusion: Pharmally is not the only lucky one. 

A post on the Facebook page of the Right to Know Right Now Coalition, the group who helped CBT publish its analysis, shows a list of 19 other companies who cornered some of the juiciest deals during this difficult time (https://www.facebook.com/R2KRN/photos/pcb.373999967586820/373997224253761. 

“It is important to situate Pharmally as just one of many contractors. It may be at the top, but what we are seeing now is part of a larger pattern. It’s not just Pharmally that had these types of prices. And all of that information is publicly available, online,” Abante says.

Lava says the problem has its roots in the weak control environment among procuring entities. Now, even more so. “During a pandemic, when there is disruption to processes, organizations are more susceptible to internal control deficiencies, fraud or error. There is a higher chance that some people would circumvent key controls that were designed to mitigate the risk.”

Burao adds: “It’s true, you are in an emergency. But there is some window where you could still do a reasonable amount of due diligence. It does not take a lot of time to make sure that the companies we are transacting with, using people’s money, are capable of delivering to the public. In other words, pwedeng maging mabilis pero hindi kailangan magmadali.”

Ultimately, the solution to this ill lies on the leaders who are accountable to the people.

“We should look at appointments to key agencies that have such a huge decision making power over billions of pesos,” Burao says, saying that it is the appointing authority who bears that burden. “There are political appointees, not career civil servants, who are in charge of so much money but no one is really cross checking their capability to assume that position – they only do that for secretaries, not undersecretaries. There should be more scrutiny.”

It’s also a fairness and competence issue, she adds. Career servants give so many years of their lives to understand the system. When you replace them with political appointees, you slow down the bureaucracy. “It will result in chaos because they don’t have a deeper appreciation of the agencies and processes and how they work.”

Abante, who has been working with government data for more than a year, has been able to see the gaps in the procurement system that makes it easy for dishonest officials to cheat people out of the taxes they pay.  Sure, some procurements are uploaded to the site, but their descriptions could be so general and so vague that it is difficult to compare one item with another. 

But people do not need to wait a full year to find out that items had been bought for obscene prices. “As soon as a new contract is uploaded in GPPB, citizens can look at each line item, compare it with a continuously updating database, and look at the risks. The task is technical and meticulous, but it can be learned, can be done, and can be distributed among volunteers,” he says.

“We can do it in a scientific way; we have the technicals down pat. We developed that process in an open community.” 

Abante goes on about the possibilities. “Imagine a procurement-watching civil society space that watches receipts as much as election integrity movements watch the sanctity of the ballot. It’s hard but meaningful work. Imagine the power of having better-specified contracts and having a system of appeals. Citizens would know if this was what we really paid for. With the current database, we cannot know that, but it could be a very powerful movement if it is coordinated better.”

Burao says they tried to present findings in an objective and factual way. “Our tone is curious, not accusatory or speculative. We want to understand. Here is what we see and we are concerned.” They also want to give the public object data to react to. “Emotions are running high, and at the very least we can use our skills as professionals. We can provide people with something true. If they want to express strong feelings, these would be based on fact and not on misinformation, disinformation and crazy speculation.”

“There are red flags [in Pharmally’s financial statements]. The numbers say so – our leaders really have some explaining to do,” Burao adds.

Lava says that by sticking to pure numbers, they make themselves difficult to troll. The objective reports cannot be attacked by the usual suspects, who mostly employ loud and incendiary verbal tirades with practically no basis. “Accountants are not usually noisy, we just let the numbers tell the story. This is our opportunity to carry out our role.”

There has been one controversy after another during this very difficult time. I wonder: If these red flags -- and the subsequent gaslighting responses to legitimate questions -- are not enough to make us indignant, what would? 

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Topics: Adelle Chua , Kenneth Abante , Jahleel-AN Burao , John Michael Lava , Citizens’ Budget Tracker , Pharmally Pharmaceutical Corporation , Right to Know Right Now Coalition
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