Former budget undersecretary Lloyd Christopher Lao pleaded not guilty on Thursday in a P4.16-billion graft case involving the alleged anomalies in the procurement of Covid-19 supplies at the height of the pandemic. 

Lao maintained his innocence and entered a not guilty plea before the Sandiganbayan Fifth Division, along with ex-DBM Administrative Finance Group officer-in-charge director Arnold James Dupla. Dupla also pleaded not guilty. 

Like Lao and Dupla, some of their co-accused have also posted bail and filed a motion to quash. While others, namely Twinkle Dargani, Huang Tzu Yen, Justine Garado, Justine Garado, Krizle Mago, and Lin Weixiong of Pharmally Pharmaceutical Corp., remain at large. 

The case involves the alleged overpriced purchase of 51,400 RT-PCR test kits for P4.16 billion from Pharmally during the peak of Covid-19 in 2020 and 2021.

An investigation by the Ombudsman revealed that the government, through the Procurement Service-DBM—then headed by Lao—had three deals with Pharmally,  getting the lion's share of deals for medical supplies, such as masks and face shields, despite being a startup firm with a capital of only P625,000. 

The Ombudsman earlier said that the PS-DBM acted in cahoots with Pharmally, enabling the award of a multi-billion-peso contract to the pharmaceutical firm, notwithstanding the existence of other corporations that are financially and technically capable of supplying and delivering test kits at an equal or lower price. 

The Ombudsman alleged that Pharmally's assets came from its irregular transactions with PS-DBM, noting that prior to its dealings with the latter in 2020, the firm had no business activity from September to December 2019 and that it even incurred a net loss of P25,550 at that year-end.

“But, in 2020, where PS-DBM irregularly awarded procurement contracts to Pharmally, the corporation earned a net taxable income of P318,337,099.00 with a declared net sales/revenues/receipts/fees of P74.8 billion,” read the resolution signed by then-Ombudsman Samuel Martires when he recommended the pressing of graft charges against PS-DBM and Pharmally officials in August 2023.

In May last year, Martires affirmed the resolution after Lao filed a motion for reconsideration. 

Lao, who served under former president Rodrigo Duterte, is facing multiple graft charges before the Sandiganbayan, including an identical case involving the supposed irregularities purchase of Covid-19 supplies and equipment to the tune of P41,463,867,117.52, with ex-Department of Health chief Francisco Duque III as a co-accused.

The most recent was the purchase of entry-level laptops for public school teachers, found to be outdated and overpriced at P2.4 billion. Similar to the Covid-19 supplies, this case was also a result of a Senate investigation, triggered by the findings of the Commission on Audit, into the anomalies in the government transaction through PS-DBM at the height of the deadly pandemic. 

Former Education secretary Leonor Briones stands as Lao’s co-accused in this case.