Philippine Navy frigate procurement scandal On December 18, 2017, news broke out that
Philippine Navy Flag Officer-in-Command Vice Admiral Ronald Joseph Mercado, who was supposed to serve until his retirement until March 2018, was abruptly relieved by the
Armed Forces of the Philippines,
Chief-of-Staff, Gen.
Rey Leonardo Guerrero. The official confirmation of Mercado's relief was issued by the Armed Forces of the Philippines the following day. AFP spokesperson Col. Edgar Arevalo informed that the AFP was simply following instructions from higher authorities, and the reasons for Mercado's relief will be given in due time. Mercado would be replaced by RAdm.
Robert Empedrad, as Acting Flag Officer-in-Command. News within the day would detail that Mercado's abrupt relief came after his clash with
Department of National Defense officials over the PhP 15.7 billion Frigate Acquisition Project (FAP). The FAP was already signed and awarded during the Pres.
Benigno Aquino's administration to
Hyundai Heavy Industries (HHI) for the building of two frigates. However, delays in the construction was mainly in the final selection of the
Combat Management System. (CMS) The
Philippine Daily Inquirer was able to acquire documents where it proved that Malacanang already had special interest in the FAP as early as January 2017. Sec. Lorenzana sent a note to the Philippine Navy to respond to
Special Assistant to the President Sec. Bong Go's question on the CMS preference. Lorenzana's letter had an attached unsigned letter from Go, criticizing the selection of Tacticos by the Philippine Navy, and raised the positive features of Hanwha's Naval Shield Integrated Combat Management System. Sec. Go's letter also included a
white paper from Hanwha. Lao confirmed the authenticity of Sec. Go's letter to Sec. Lorenzana, and it was normal procedure for their office to take action when they receive a complaint. The complainant in this case at the OSAS and Presidential Management Staff was HHI over the preference of the Philippine Navy for Tacticos. Lao also confirmed that they have invited RAdm. Empedrad, who at that time was the chief of the Technical Working Group of the FAP, to
Malacañang Palace to provide clarification on the matter. The fallout put Go's influence and Lao's actions under scrutiny, causing the relief of a career naval officer, Mercado. President Duterte would extend himself and defend Go from the issue. Go offered to resign, but Duterte refused this. Mercado later defended Go and said he never had any discussion with Go over Hanwha or the FAP. During the
Congressional hearing of August 2021 on the COVID-19 pandemic government procurements, Probinsyano Ako Cong. Jose Bonito Singson would question Lao on his involvement in the FAP fiasco. Lao denied knowing anything about the issue twice. Cong. Singson presented a letter written by Lao to the RAdm. Empedrad on the CMS procurement. Lao would correct himself, confirm he wrote the letter, and admit that he was involved in the FAP mainly to address the complaint of the HHI. On August 6, 2024, former Senator
Antonio Trillanes IV, a former
Philippine Navy officer, filed a plunder case against former President Rodrigo Duterte, Sen. Bong Go, Defense Undersecretary Raymundo Elefante, former Navy Flag Officer-in-Command Vice Admiral Empedrad, and Lao.
Extortion at the Housing and Land Use Regulatory Board The
Presidential Anti-Corruption Commission received an anonymous complaint, and this was passed on to Sec.
Eduardo del Rosario, about the Department of Human Settlements and Urban Development in September 2019. Del Rosario only passed the information to the staff of Lao for their proper response to the commission. Lao mentioned that he was not aware of this.
Pharmally scandal Lao would gain prominence during the
Senate Blue Ribbon Committee hearing on the
Pharmally Scandal in the middle of 2021 headed by Sen.
Richard Gordon, during the
Senate Presidency of Sen.
Tito Sotto. ThePharmally Pharmaceutical Corporation was established in September 2019 with a paid up capital of PhP 625,000.00. Lao would favor Pharmally with contracts that would amount to the PhP 11 billion - the single largest recipient of government contracts during the pandemic. By the end of August 2021, the Senate Blue Ribbon Committee would uncover that the scam would not have been possible had it not been supported by top ranking government officials in the Executive Branch. Sen.
Franklin Drilon would expose the link between Lao and Pharmally. The PS-DBM would purchase from Pharmally overpriced items such as
facemask and
COVID-19 test kits. Sen. Bong Go meanwhile would deny that Lao was his aide, and that he was simply a volunteer lawyer of the Duterte campaign during the 2016 Presidential Elections, and later joined the
Presidential Management Staff. However, the staff was placed under the Office of the Special Assistant to the President, by the issuance of Duterte's Executive Order No. 1, which was headed by Go. Investigators from the
Office of the Ombudsman would uncover that Lao approved the transfer of funds from the Department of Health for a 4% service fee amounting to at least P1.65 billion. The ombudsman found Lao and
Department of Health Secretary
Francisco Duque III guilty of injury to the government, and forfeited all their retirement benefits and perpetual disqualification from reentering government On September 14, 2021, the
Department of Justice issued an Immigration Look Out Bulletin Order on Lao and his co-accused over the Pharmally Scandal.
Statements of Assets, Liabilities, & Net Worth Increase During the Senate Blue Ribbon Committee Hearing, Sen. Drilon presented the
Statements of Assets, Liabilities, & Net Worth of Lao, and took note that he had PhP 11 million increase in his five years receiving a government salary of PhP 100,000 to PhP 175,000 per month. Lao explained that he was able to sell some
memorial lots he had in stock, and that there were an increase of death during the COVID-19 pandemic, as well as disposals of a golf club lots. Sen. Imee Marcos also took note that Lao's
income tax return indicated he had zero income from 2017 to 2019, despite being under government payroll. ==Arrest and aftermath==