Philippine President Rodrigo Duterte is under scrutiny for alleged mismanagement or worse of Covid-19 funds. President Photo/Twitter

MANILA – Philippine President Rodrigo Duterte has approved a plan to relax strict Covid-19 lockdown measures imposed across major cities including Metro Manila in the past two weeks.

But while the premier aims to better balance health risks and economic recovery, reports of unspent government funds that could have boosted the government’s Covid-19 response have put his administration on a dangerous new political edge – one that could cut into his electoral chances in 2022.  

On Thursday (August 19), the Department of Health (DOH) reported the country’s second-highest daily confirmed Covid-19 cases at 14,895, bringing the total national tally to 1,791,003 with 30,881 deaths and 1,648,402 recoveries.

Amid the sickness, death and economic collapse, a recent report by the Commission on Audit (COA), a constitutionally independent body, claimed up to 67.32 billion pesos ($1.3 billion) of Covid-19 management and relief funds were either unspent or underutilized, including at the DOH.

The explosive report has sparked a series of legislative investigations into known corruption-tainted government agencies. Those findings, analysts say, could be political dynamite in the weeks ahead.

President Duterte has so far stood by his key allies and instead lashed out at the independent body for exposing the budgetary anomalies.

Presidential spokesperson Harry Roque claimed the COA annual audit reports (AARs) on various government agencies in 2020 were supposedly not final and should not be a cause of concern.

That’s political smoke and mirrors, however, considering COA annual reports are the summation of a year-long audit and are the same final documents it uploads on its website and submits to the Office of the President and Congress.

According to the COA, there were also huge budgetary discrepancies and anomalies under the departments of education, information communications technology, overseas workers welfare administration and others.

A relative wearing personal protective equipment attending to a family member with Covid-19 at a makeshift tent ward outside a hospital in Manila, April 6, 2021. Photo: AFP / Jam Sta Rosa

But the greatest source of public anger was the billion-dollar discrepancies in the scandal-tainted DOH, which has been at the forefront of managing the Covid-19 pandemic.

Over the past year, the department, led by Duterte crony Francisco Duque III, has come under fire for large-scale corruption scandals, including heavily over-priced purchases of Personal Protected Equipment for frontline health workers.

Duque, a close Duterte friend, was also the country’s health secretary under the corruption-infested Gloria Macapagal-Arroyo administration.

Earlier this year, long-time Duterte ally and former president of the ruling PDP-Laban party Senator Emmanuel “Manny” Pacquiao warned of endemic corruption in Duque’s department, triggering an ugly fight with the president thereafter.

“Let’s start with the DOH. Let’s take a look and scrutinize all the rapid test kits, the PPE sets, masks, and other items it procured,” said Pacquiao in a mixture of Filipino and Tagalog during his cross-examination of the health secretary in June amid an escalating conflict with Duterte.

“Are you ready Sec Francisco Duque to show everything that the DOH has spent? Where did all of the money we borrow for the pandemic response go?,” the boxer-turned-statesman dared the Duterte crony.

In response to the COA report, as in the past, Duterte immediately came to Duque’s rescue, openly threatening and disparaging any criticism of his crony and key government departments.

“I am not criticizing anybody, especially [this] COA. But I’ve been mayor…We have backlog in projects, so the paperwork will be difficult to complete,” declared Duterte in a national address this week, squarely standing by the embattled secretary.

“If that is flagged by COA, they say there’s a deficiency, it does not mean that the money is stolen. Deficiencies, really, in producing the necessary documents to complete the story,” he added, maintaining that it is “impossible” to steal 67.3 billion pesos.

Demonstrators march during a protest ahead of Philippine President Rodrigo Duterte’s State of the Nation Address (SONA) in Quezon City, Philippines on July 26, 2021. Photo: AFP via Anadolu Agency / Dante Diosina Jr

“I don’t know but it could also run counter to public policy if you don’t publish it. Just to inform the people of what is going on. But to the issue of whether the money has been stolen, that is pure [expletive],” he said

Emboldened by Duterte’s unwavering support throughout repeated scandals, Duque lashed out at the COA during a Senate hearing, presenting himself and his department as victims of political intrigue and malicious attacks.

“Since Wednesday, when this report came out, I haven’t been able to sleep. My colleagues at the DOH have barely slept. Why, you ask? Because we were shamed, we were bloodied and bludgeoned with this issue,” claimed the Duterte ally, warning that the “unfair and unjust” report may undermine his department’s ability to effectively respond to the pandemic.

“COA should also consider that we’re not operating under normal circumstances, we’re operating under a state of public health emergency,” he added, explaining away anomalies as a product of extraordinary circumstances.

“You’ve destroyed us. You’ve destroyed the honor of the DOH. You destroyed all my colleagues here,” exclaimed Duterte, as his voice began to break.

Despite growing intimidating and attacks by the government, COA chairperson Michael Aguinaldo, among the few independent-minded technocrats left under the Duterte administration, stood by the report and maintained that his agency followed “due process.”

“We understand fully well the concerns of the DOH. We still have the duty to ensure that funds are well accounted for,” he added, maintaining that they only noted fiscal discrepancies but never accused the department of embezzling unaccounted funds per se.

According to the COA report, the DOH failed to comply with existing regulations and legal stipulations regarding the disbursement of 67.32 billion pesos in Covid-19 response funds.

Purchases of up to 5 billion pesos ($100 million) lacked documentation, violating procedural requirements for large-scale purchases in accordance to the Government Procurement Reform Act.

The auditing agency also found up to 194.4 million pesos in overpriced purchases, while noting deficient sworn statements in contracts, a lack of transparency on relevant procurement information and an absence of technical specifications in major contracts.

Department of Health Secretary Francisco Duque III talks during the press conference at the Department of Health in Manila, February 3, 2020. Photo: AFP via Anadolu Agency / Dante Diosina Jr

Commentators have noted those unutilized funds could have also cushioned the pandemic’s economic blow.

Last year, the Southeast Asian country suffered one of the deepest economic contractions worldwide, which extended into the first quarter of this year.

Duterte’s government is now prioritizing economic recovery ahead of next year’s presidential elections with the incumbent likely to run as a vice-presidential candidate on the same ticket with his presidential aspirant daughter, Sara Duterte.

The easing of social distancing restrictions in the second quarter saw the economy jump year-on-year by 11.8%, effectively ending the Philippines’ deepest recession on record. Yet, recovery remains fragile and leading economists are warning of long-term scarring in labor markets.

Former Philippine economy minister and leading professor Cielito Habito has warned that the country is not out of the woods yet, since “[e]xpressed in constant 2018 prices (to eliminate the misleading effect of rising prices) and adjusted for seasonality, our second quarter GDP of 4.47 trillion pesos was smaller than the 4.53 trillion pesos posted in the first quarter.”

On a quarter-to-quarter basis, which better measures recovery trends, the Philippine economy shrank by 1.3%, the former top government technocrat noted.

To be sure, Duterte’s more pragmatic compromise on lockdowns, a departure from his maximalist approach last year, has been welcomed by millions of Filipinos reeling from economic uncertainty and dislocation.

Despite calls by medical experts to extend nationwide lockdowns amid record-breaking new daily infections, the Philippines’ Inter-Agency Task Force’s has opted for only modified enhanced community quarantine (MECQ) across major cities.

But that more moderate approach to lockdowns may not ease growing anger and frustration over unutilized pandemic funds and related corruption scandals at key government agencies.

Netizens quickly responded to the scandal by mocking the Duterte crony’s ‘crocodile tears’, with critical and satirical memes about the health secretary flooding social media.

Filipinos wait in line at a community pantry as they receive goods from Catholic church in Antipolo City, Philippines on April 22, 2021. Photo: Ryan Eduard Benaid / NurPhoto via AFP

Independent and opposition statesmen were quick to criticize Duterte, while defending the COA’s mandate to ensure transparency in government institutions.

“COA findings and recommendations are public documents. Transparency dictates that the public must be informed of how public monies are spent,” said independent Senator Panfilo Lacson.

“That said, the president is out of line in publicly castigating the COA, which is just performing its mandate and responsibility to the people and the constitution.”

Vice President Leni Robredo, who has consistently topped COA reports in terms of transparency, also criticized the government’s response.

“We should not take these reports the wrong way. In fact, we are being given the opportunity to answer, explain, and to make the systems and processes more transparent,” said Robredo, the de facto leader of the opposition.

“I am one with the people in encouraging our state auditors to keep up the good work, with the reminder that there is a reason why certain processes must be followed — and COA is an ally towards achieving good governance,” she added.