Graft charges filed vs Pagcor chief, officials over P950-M casino contract

Six left-leaning organizations filed plunder and graft charges before the Ombudsman yesterday against Philippine Amusement and Gaming Corp. (Pagcor) chairman Efraim Genuino and five other firm officials for their role in the "overpriced" rental of two hotels in Mactan and Cebu City.

Led by members of Plunderwatch and the Bagong Alyansang Makabayan, the complainants claimed Genuino, Pagcor president Rafael Francisco and directors Danilo Gozo, Manuel Roxas, Luis Carlos and Philip Lo acted in bad faith when they entered into a P950-million deal for the operation of casinos in two hotels owned by William Gatchalian.

But in a statement, the officials said the new contract Pagcor signed with Gatchalian’s Waterfront Hotel was "advantageous" to the government since it eliminated an "exclusivity" clause.

"I am wondering why we were the ones charged," Pagcor spokesman Edward King told The STAR.

The cancellation of the exclusivity clause, King explained, allowed Pagcor to put up arcades in other hotels in Cebu, an arrangement that has since earned the company P1.6 billion in revenue.

"As far as we are concerned, we started making money in the new contract. Because the exclusivity arrangement is not there anymore, we can engage in other hotels and we are not tied up to Waterfront," he said.

The complainants claimed the officials allowed the rental for the Waterfront Hotel in Mactan and Waterfront Hotel in Cebu to balloon from P459 and P399 per square meter respectively to P1,200 per square meter under the new contract.

"In an ensuing renegotiation of the lease contract, however, Pagcor ended up paying three times the rental rate per square meter. The rental rates were increased to P1,200 square meter for both hotels," they said.

Pagcor originally paid P60 million for its use of the two hotels in May 2001.

But after the contract was renegotiated, Pagcor had to pay an additional P274 million in 2002, P395 million in 2003 and P221 million in 2004, the complainants claimed.

The complainants said Pagcor was forced to take out "a P607-million loan from the government-run Land Bank of the Philippines and the Philippine National Bank" to pay for the increased rental.

The interest charges on the loan are "projected to reach P127 million" by 2008, they said.

The complaint was signed by Fr. Joe Dizon, Carol Araullo, Romulo Abaya, Ferdinand Gaite, Biyaya Quizon and Chit Valeria of the groups Plunderwatch, Bayan, Action against Corruption and Tyranny Now (Act Now), Courage, Student Christian Movement, and Promotion of Church People’s Response. — With Pia Lee-Brago