Reforms in PAGCOR

By Caroline J. Howard, ANC

Posted at Jul 23 2010 11:43 AM | Updated as of Jul 25 2010 01:05 AM

PAGCOR transactions under review, privatization eyed

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MANILA, Philippines - Investigations are underway into supposed anomalous transactions entered into by the previous leadership of the Philippine Amusement and Gaming Corporation (PAGCOR).

In keeping with President Benigno "Noynoy" Aquino's call for a crackdown on corruption, PAGCOR spokesman Atty. Jay Santiago, in an interview on ANC's "The Rundown" on Thursday night, says the investigation would include the controversial P21 million food order for policemen during rallies and demonstrations.

"We've gone through documents supporting the P21-million disbursement. We're trying to get in touch with the people involved to know how the transaction came about. The money, which was supposed to be reimbursed by this P21M, is supposed to cover a certain amount advanced by former [PAGCOR] chairman Efraim Genuino, so we're still trying to check the veracity of that allegation," he says. "Hopefully, in the next few weeks, we'll be able to render a report to the President."

Santiago says they are looking into reports that part of what he called a "highly irregular" food purchase meant for police activities and operations went to purposes other than what it was originally intended.

Former PAGCOR Chairman Efraim Genuino denies there was any anomaly in the transaction, adding disbursements made by PAGCOR during his term were all legal.

"There's a legally mandated allocation as far as the social fund is concerned. A certain amount should remain with PAGCOR for its operating expenses. The question is if operating expenses of PAGCOR have been used and properly accounted for, that's what we're looking at," Santiago says.

Santiago says PAGCOR's revenues are allocated by law. An estimated 5% goes to the internal revenue for franchise taxes, 50% to the National Treasury. There are legally mandated allocations for the Philippine Sports Commission, the Board of Claims [under the Department of Justice], Book Development Fund, and only a small percentage is left to the discretion of PAGCOR. Between 1.5 to 2% of revenues supposedly go to the President's Social Fund.

Over 200 consultants terminated

Santiago says they have terminated 205 consultants, including former police or military personnel, after uncovering a list of individuals who've been receiving an allowance from the agency on retainer basis.

Earlier this week, the agency said it had uncovered a P5-million monthly allowance for over 200 consultants of the agency, and a P29-million donation to the party-list group that fielded Genuino's daughter as its nominee in the May elections.

Genuino says there was nothing irregular in the hiring of consultants to help with PAGCOR's operations.

Santiago, however, says PAGCOR's donations to non-government organizations should not involve conflict of interest.

Pending PAGCOR projects under review

Santiago says they are currently reviewing plans of the previous administration to forge joint ventures for the construction of the PAGCOR Tower and Recreation Center. He says commitments that have been entered into would be respected.

"We have four proponents which have made commitments to start off construction on the Entertainment City, which is connected to the Bagong Nayong Pilipino," he says. "We are in the process of reviewing the contracts they've entered into, the business models that have been proposed, and we're looking at the lay-out of the project. Chairman [Cristino] Naguiat wants it to be more of a tourist attraction rather than a gambling destination."

Freeze on licenses eyed

Under the leadership of Cristino Naguiat, who replaced Genuino as PAGCOR Chair, Santiago says PAGCOR is also mulling a suspension on the granting of licenses, following the proliferation of so-called "mobile casinos".

"The president has intimated he's asked Chairman Cristino Naguiat to look into licenses that have been granted and to make sure that licenses or operations or new casinos don't proliferate the way it did in past administrations," he says. "Chairman Naguiat and the board have agreed that there should be a freeze now or suspension on the granting of licenses to make sure we're able to inventory all of the licenses that have been granted so far, and to make sure all of these licensees are not in violation of the license granted by PAGCOR."

Privatizing PAGCOR

Amid criticism over PAGCOR's alleged corrupt practices, the Aquino administration is planning to privatize the company's operations.

Santiago says PAGCOR's new board is studying different modes for privatizing the organization.

"The downside is, if we privatize the corporation, that might put an end to the financing of its social projects. What can be done later on is to include in the privatization plan that anybody who will acquire the operations of the corporation will have to make a commitment to continue social work projects through their corporate social responsibility. The upside is, if the financial model is well prepared, the government will be able to raise enough funds to sustain its project within the next 3 to 4 years."

Finance Secretary Cesar Purisima has admitted that the prospect of privatizing PAGCOR, one of the government's major revenue contributors (involving an estimated P1.6 billion to the country's coffers in the first two months of the year), could be costly for the government.