Genuino, exec air side on P1B coffee sales

ABS-CBN News

Posted at Jul 28 2011 03:42 AM | Updated as of Jul 28 2011 11:42 AM

Former Philippine Amusement and Gaming Corporation (PAGCOR) Chairman Ephraim Genuino in an exclusive interview with ABS-CBN's Karen Davila.

MANILA, Philippines – Former Philippine Amusement and Gaming Corporation (PAGCOR) Chairman Ephraim Genuino and a business executive aired their side on allegations about "overpriced" coffee purchases of the state-owned gaming firm during the Arroyo administration.

President Benigno Aquino III revealed in his State of the Nation Address (SONA) last Monday that the Philippine Amusement and Gaming Corporation (PAGCOR) spent P1,007,408,908.86 on coffee in a span of 10 years.

In an interview with ABS-CBN News, the amount was confirmed by Genuino. However, he said the information given by current PAGCOR Chairman Bong Naguiat to the President was incomplete.

“Hindi naman sinabi ni Chairman Naguiat na ginamit ‘yan sa 13 na casino. Ginamit ng 365 days ‘yan. Almost 25,000 players ang gumagamit ng kape sa araw-araw,” said Genuino.

Genuino explained that a billion pesos in 9 years amounts to a little over P111 million a year spread out over 13 casinos.

He said this translates to P8.5 million a month or P23,000 a day. And since PAGCOR's operations run 24 hours, it amounts to only P975 an hour.

“Lumalabas, 10 coffee cups every hour ang naco-consume ng bawat casino with the P1 billion na binanggit ni Pangulong Aquino,” Genuino said.

Branded coffee

The Commission on Audit (COA) said the coffee purchased by PAGCOR from the company Promolabels, which is owned by Carlota Tan, was overpriced by 70%.

Since Tan was the wife of a friend of Genuino's son, PAGCOR had a commitment to sell P50,000 of the Promolabels coffee every day.

“Hindi totoo ‘yan. Ang ginagamit na kape sa casino ay branded coffee. Kung ang gusto niya ay bigyan ng P5 na kape ang mga customer, prerogative niya ‘yun, wala akong pakialam dun,” said Genuino.

Genuino denied that the coffee is charged to PAGCOR, saying they get the payment from rebates from players.

Genuino said the coffee issue stems from a grudge which Naguiat still holds against him.

“Meron siyang axe to grind, kasi during my time, meron siyang ginawa na hindi maayos kaya siya’y tinanggal ko bilang empleyado,” he said.

Naguiat, however, insisted he resigned from PAGCOR in 2001 since he did not agree with how the agency was being run.

Coffee concessionaire

Meanwhile, the owner of the coffee shops inside PAGCOR Lot Manalo-Tan was shocked at the news that greeted her upon returning from a trip to the U.S.

She said President Aquino was fed the wrong information about the alleged P1 billion coffee anomaly in PAGCOR.

According to Manalo-Tan, she followed the normal procedure in applying as a coffee concessionaire in PAGCOR casinos.

She said no bidding was required in the process.

However, Manalo-Tan admitted that she used her maiden name, Lot Manalo, in the contract with PAGCOR to avoid any suspicion that she used her husband to obtain the deal.

Manalo-Tan's husband Johnny Tan is a close friend of Genuino.

In her Department of Trade and Industry (DTI) registration for Promolabels, which operates 7 PAGCOR coffee stores, Lot Manalo-Tan used her married name.

“I think I’m in the middle of a crossfire. Noong nag-apply ako, naisip ko, baka naman maraming mag-tsismis. I got this fair and square out of my merits as a person and I have a good brand to offer to PAGCOR,” Manalo-Tan said.

‘Not scandalous’

In 2006, a COA report addressed to Genuino stipulated that a long term contract with Promolabels and another coffee concessionaire should have been bidded out.

Tan said P1 billion in coffee sales over a period of 9-and-a-half years should not have been painted as scandalous.

Using PAGCOR's figures, this translates to annual gross sales of P105.26 million or P15 million for each of the 7 shops she operates, with gross daily sales of about P41,000, which is equivalent to 410 cups daily.

Tan said this is normal for a 24-hour coffee shop.

She stressed she did not earn P700 million pesos as PAGCOR claims but an estimated 5% of P1 billion or P50 million over 9 and a half years or P5 million annually.

She said this is the profit of a legitimate business operation.

“Walang nalugi, so I don’t know kung paano nila na-derive ang P700 million na income ko,” she said.

Chit Juan, who previously operated Figaro, Tan's franchisor, said their franchisees have to contend with other operating costs.

“Normal lang ‘yon. If you’re not earning that much, gross, in a coffee shop business, you will not survive with the high cost of rent, salaries,” said Juan.

Tan denied that PAGCOR management under Genuino had ordered casino managers to help sell her coffee to meet a sales quota.

She pointed out that compared to hotel prices, her coffee is cheaper, with the lowest price being P85 per cup.

Tan, who has been a businesswoman for about 2 decades, said PAGCOR could have asked her to explain her side before maligning her reputation.

She said the new management has refused to see her despite repeated attempts for an appointment.

Tan's contract with PAGCOR expires next year. -- Reports from Karen Davila and Ces Oreña-Drilon, ABS-CBN News