Former Department of Budget and Management (DBM) Undersecretary Lloyd Christopher Lao pleaded not guilty Thursday in a P4.16-billion graft case related to alleged anomalies in the procurement of Covid-19 supplies during the pandemic.

Lao, who maintained his innocence before the Sandiganbayan Fifth Division, was joined by Arnold James Dupla, a former officer-in-charge of the DBM’s Administrative Finance Group. Dupla also pleaded not guilty.

The case involves the alleged overpriced purchase of 51,400 RT-PCR test kits for P4.16 billion from Pharmally Pharmaceutical Corp. in 2020 and 2021.

An investigation by the Ombudsman found that the Procurement Service-DBM, then headed by Lao, had awarded a multi-billion-peso contract to Pharmally, a startup firm with a capital of only P625,000.

According to the Ombudsman, the PS-DBM and Pharmally allegedly acted in concert, enabling the company to secure the contract despite the existence of other firms that could have supplied the test kits at a lower price.

The Ombudsman’s resolution, signed by then-Ombudsman Samuel Martires in August 2023, stated that Pharmally had no business activity from September to December 2019 and incurred a net loss of P25,550 that year.

However, in 2020, following the contract award from the PS-DBM, the company earned a net taxable income of P318,337,099.

Some of Lao’s co-accused have posted bail, while others from Pharmally, including Twinkle Dargani, Huang Tzu Yen, Justine Garado, Krizle Mago and Lin Weixiong, remain at large.

Lao, who served under former President Rodrigo Duterte, faces other graft charges before the Sandiganbayan. These include an identical case involving irregularities in the purchase of Covid-19 supplies and equipment worth P41.4 billion, in which former Department of Health chief Francisco Duque III is a co-accused.