Press Release
August 12, 2020

Transcript of the Senate Media's Zoom Interview with Senate Minority Leader Franklin M. Drilon

SFMD: The first two hearings basically concentrated, or the questions focused on the IRM and on the overpricing of the IT programs. My take is that indeed, there is at least prima facie case of corruption and that corruption is embedded in PhilHealth bureaucracy. The officials involved should take a leave of absence. At this point, all those officials named should take a leave in order to prevent them from having access to the documents. Many of what was revealed would involve documents and these are the evidence that can be used. The best thing that can happen is that people named should go on leave while all these investigations are ongoing. The large part of the inquiry referred to the IRM and the overpricing on the IT. my thinking is that, as I said, the personnel involved without passing their guilt or innocence, should take their leave to enable the investigators to have full access to the documents and to prevent them from tampering with the evidence. We already heard yesterday that one of them removed the signature page in one of the documents because it could be incriminating and this is in the approval on the purchase of IT equipment, which is allegedly overpriced. I must state and warn that at this stage that the officials involved in the IRM could be liable for violation of the anti-graft law. Those who are found to have participated in the formulation and implementation of the IRM could be liable under Section 3 (g) of the anti-graft law, that is (g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby." The IRM as asserted by no less than the COA chairman said that you have to liquidate within a reasonable period of time and the COA said it has been four months and up to now there is no liquidation. The way the IRM is implemented, favoritism is very clear, giving advantage to some regions while denying the same privilege to other regions.

Q: How about on the IT project?

SFMD: The same liability and provision of the anti-graft law can be cited.

Q: According to Dr. Susan Mercado, although ang sinasabi ng PhilHealth executive, hindi sila na-consult on IRM.

SFMD: Those who can be shown to have participated in the scheme, the IRM, whether in the formulation or implementation, may have to answer before the Ombudsman. Year in and year out, investigations take place. You will never know how this might be a bottomless pit. However, we can assert that corruption is endemic and systemic, so I doubt whether a change of president or board members would be sufficient. Systems must be in place. That is why I am in favor of the computerization of the PhilHealth records given its shortcomings. But again, charges of overpricing of IT equipment is being raised. So to me, we should just source out the computerization. If we have a reliable and competent IT company, we just contract it out so that all the PhilHealth will be doing is to get the desired results rather than buying the equipment themselves. This is not rocket science and it is being done. That is my strong suggestion.

Q: Last week you asked SVP Santiago who said that the PhilHealth may collapse but in this morning's interview, President Morales said remains aggressive insofar as its finances are concerned

SFMD: The statement of Santiago is not entirely baseless. Why? Number one, it is a natural consequence of the pandemic that there are more claims and less collection because of many people getting unemployed and business closing. The premium payment will naturally go down. The source of the PhilHealth subsidy is basically the excise tax on tobacco, which we crafted in 2012. As expected during the pandemic, the taxes on sin products will go down because of lack of consumption. Again it will put pressure on the national budget to augment available resources to PhilHealth. Today, the subsidy is P71B; in 2021 it is also P71B. Will there be sufficient funds? My own take is that the fund of PhilHealth will be very tight and will support larger assistance but they should clean up their mess. The fact is, they will incur losses in their operations this year and maybe next year. I would rather err by taking the position that indeed the funds are not sufficient and proceed from that basis rather than take the position of Morales that nothing is wrong with us and it is business as usual and we have enough funds. We should consider the finances of PhilHealth needing a closer look.

Q: Given all these things, what can you say about the leadership of Morales? Can he keep on his promise to clean up the agency?

SFMD: Let me make it clear. There is no evidence that Morales is directly involved in any of these shenanigans that are being unearthed. It is also clear to me that the people around him are doing something else. In the street language, napapaikutan si Mr. Morales. He should take stock of this. He should take strong and aggressive measures. My suspicion, he is siding with one group...it is quite obvious that the bureaucracy is split in PhilHealth. There are two groups fighting. This has become obvious to me why I complained about lack of support to Region 6, which is number 5 in the country in terms of infection. Yet, there is not a single one, except for one, requests were granted while in the other regions, kahit isa lang ang COVID-19 case, they got millions. To me, this indicates that Mr. Morales has somehow, wittingly or unwittingly, favored one of the factions. Therefore, that is not a very good indication of his leadership in PhiHealth.

Q: Meron po bang liability in terms of negligence si Mr. Morales?

SFMD: That is a matter of evidence. Indeed, negligence is punishable under the anti-graft law. The anti-graft law says "neglecting or refusing, after due demand or request, without sufficient justification, to act within a reasonable time on any matter pending before him for the purpose of obtaining, directly or indirectly, from any person interested in the matter some pecuniary or material benefit or advantage, or for the purpose of favoring his own interest or giving undue advantage in favor of or discriminating against any other interested party."

Q: On these factions or groups, what does it make of the institution?

SFMD: Number one, everybody is put on guard because the desk next to you can squeal on you so you try to do your job in the best way you can. On the other hand, such a faction would affect the efficiency of the organization. That is very evident. I go back to my example of my region where 33 requests were made and only one was acted upon after four months. The faction would result in inefficiency; on the other hand, it can also be a source of people making public as what they see as malpractices in the institution. This is a challenge to Mr. Morales.

Q: He also mentioned that the resources to reform PhilHealth is not within PhilHealth. What do you make of that?

SFMD: The key is to contract out the IT services. To my mind, that will solve a lot of problems of corruption. Having said that, I am willing to support in the budget whatever its cost in order to source out these services. PhilHealth is too valuable. The sourcing out, to me, is a critical issue and whatever it takes to fund it, I will support. I don't think it will be that significant.

Q: It was mentioned that maybe the AMLAC can be involved. How do we go about that?

SFMD: There must be an application with the Court of Appeals. There is procedure. That is feasible. I just don't know the details but you will recall in many pyramiding scams, the AMLA would go to CA and ask for the freezing of the accounts.

Q: There have been announcements of vaccine to be rolled out. How should the government approach this in such a way that we can benefit most from these developments?

SFMD: This is the first time in our history that we are confronted with this kind of a problem. We must act on the basis or our national interest. I cannot say more than that. We are being asked to participate in the testing. I would rely on the judgment of our health authorities to hand this request. What is important is we must have access to this vaccine once it is tested and accepted in the market. It is essential for the health of our people.

Q: At this point in the investigation, would it be fair to say that B.Braun is a conduit of this alleged corruption?

SFMD: There is prima facie case that B.Braun is the conduit. One of the issues that they must explain is there a bank account where these funds went? That is very unusual. On the surface, it would appear that there should be better explanation on what happened and why B.Braun appears to be the beneficiary. Having said that, one of the strong issues I had against the IRM is the favoritism. The dialysis centers are beneficiaries of the IRM that is supposed to benefit the pandemic. There is now way they are involved to activities related to COVID-19. Yet, there are hospitals in COVID-19 areas not given the same assistance. These facts clearly established that there is something wrong with the implementation of the program.

Also, the liquidation is long overdue. These are indications of the questionable nature of this IRM as a mechanism for emergency.

To me, this is a very frustrating exercise we are going through when all excuses are given to us.

Q: Do you see the need to invite Sec. Duque considering that this was not the first is embroiled under his leadership in corruption issues?

SFMD: Yes, he should attend, because, for example, the IRM is supposed to have been covered by a board resolution. Although there were questions raised as to when the approval came. Certainly, Sec. Duque would have to explain to the Senate how he conducted himself and whether or not due diligence was exercised as chairman of PhilHealth. In this regard, I will be asking questions from the GCG (Governance Commission on GOCCs) as to how they have implemented the very detailed provisions of the law insofar as overseeing the performance of PhilHealth is concerned. The law provides for the process of the appointment of people in the board. Was this followed? Sec. Duque must appear because many of these projects were approved by the Board and he is the chairman of the Board.

Q: Having conducted two hearings, have you seen any evidence that would link Sec. Duque to these irregularities?

SFMD: In fairness, none at this point. Certainly, this is a valid question to ask. Was he present in the meeting when the IRM is approved?

Q: Doon sa mga narinig, are there testimonies which you found appalling?

SFMD: To be candid, the assertion fraud is unavoidable something I found appalling and not acceptable to me. That statement is simply not acceptable. If you listened to the President who said "not even a whiff of corruption", but here you are the President and CEO of PhilHealth, which manages billions of pesos, is saying that fraud and corruption is an accepted circumstance in a fund like this. I find it appalling.

Q: Yung pag-resign ni Col. Laborte, do you think that is very of the situation inside?

SFMD: Yes, that is very telling of the situation inside. He was the one who recruited Keith, the lawyer. He is the head executive assistant. When Sen. Cayetano or Hontiveros confronted Morales, Morales said he trusted Laborte until he said all these things. Hindi naman siguro tama iyon.

Q: On the IRM

SFMD: There must be standards that must be set in order favoritism and with it, suspicions of corruption will not take place. Number two, there must be strict rules on liquidation. If PhilHealth is efficient in processing claims and paying them on time, you have no reason to launch an IRM or an advanced payment system.

Q: Were you surprised that a hospital in Davao City got the lion's share of the funds?

SFMD: Yes. At this point I have not seen the justification. Maybe it can be justified. I have not seen though, at this point, how did that happen. Certainly the fact that all these payments were made in a very relatively short period of time and the lack of liquidation at this point not only in the Davao hospitals but in all other hospitals is something of concern. This should have been liquidated given the fact that the funds were extended in the first week of April. There must be a liquidation of this as pointed out by the COA.

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