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CEBU CITY, Philippines – The Commission on Audit (COA) has requested the Cebu City Government to justify its decision to purchase more than 39,000 bags of rice from suspicious suppliers.
Government Auditors have discovered that the city has used approximately P90.8 million of public funds to purchase 38,478 bags of rice and distribute them to residents affected by the COVID-19 pandemic.
However, the COA stated in its 2021 annual audit report that on August 5, 2021, the city purchased a bag of rice from an unauthorized supplier.
In a 123-page report, government auditors found signs and circumstantial evidence that the supplier in question, Markabi Distributors Philippines Inc. (MDPI), acted only as an intermediary. This urged them to red flag the deal and encouraged the city council to instruct its bid and awards committee (BAC) to shed light on the issue.
"We encourage you to instruct the BAC to fully explain why it negotiated with MDPI, despite clear evidence that it only acted as an intermediary." Added.
"Clear evidence of middlemen"
The COA questioned the legitimacy of MDPI for two reasons.
Citing the supplier's Income Tax Return (ITR), state auditors say MDPI will be out of stock at the end of 2019 and 2020, and therefore will immediately deliver orders for more than 39,000 bags of rice from the city government. I discovered that I couldn't.
The COA also did not find any "signs of doing business" during a sudden inspection of MDPI's business address in the North Settlement Area.
"Integrating the above situation could justify the conclusion that MDPI is just an intermediary ... Ultimately, the city may not be able to obtain the most favorable terms and prices from this transaction. There is, "they added.
During the audit, city officials told COA that MDPI was an existing supplier. They also said that MDPI was the only one showing interest and willingness to support the city by procuring large quantities of supplies during peak COVID blockades such as 39,478 sacks of rice.
The COA disagreed with the justification they provided, acknowledging that mobility restrictions influenced the city government's decision to look for suppliers.
"There was no sign that BAC tried to contact other legitimate suppliers who refused to bid, so it can be said that only MDPI actually wanted to supply rice to the city government," they explained. ..
In return, they only reminded the city's BAC to subcontract or negotiate directly with "a reliable and legitimate non-intermediary to secure reasonable and profitable contracts for the city government."