Ex-Pagcor officials face plunder, graft raps

MANILA (Updated 1:30 p.m.) -- The Philippine Amusement and Gaming Corporation (Pagcor) filed Tuesday plunder and graft charges against its former chairman Efraim Genuino and three others in relation to the excessively priced coffee products that were sold in at least five Casino Filipino branches.

Named respondents in the case filed before the Office of the Ombudsman are former Pagcor officials Rafael Francisco (president), Rene Figueroa (senior vice president and senior managing head of Research Development Department), and Promolabels owner Carlota Cristi Manalo-Tan.

A report on government website www.gov.ph said the 25-page complaint was initiated by the current Pagcor Board. The agency's Board authorized incumbent Directors Jose Tanjuatco and Enriquito Nuguid to sign and file the complaint.

According to the complaint, from 2001 to 2010, Genuino, Francisco and Figueroa, in their capacities as officials and/or employees of Pagcor, directed Casino Filipino branches "to enter into concession agreements with Promolabels with a view towards enriching themselves and coffee concessionaire Manalo-Tan through the sale and purchase of overpriced Figaro coffee products, to the damage and prejudice of the Filipino people."

Documents obtained by the present Pagcor management revealed that the previous Board headed by Genuino approved a resolution on May 16, 2001, granting the proposal of Figaro Coffee Company to set up coffee kiosks in its Casino Filipino branches wherein the prices of beverages "will be similar to the prices in the malls."

Pursuant to the said resolution, the previous Pagcor Board gave Figaro franchisee Promolabels concession agreements in seven Casino Filipino branches.

Manalo-Tan signed the agreements on behalf of Promolabels, while Genuino and Francisco signed/co-signed most of these contracts on behalf of the casino branches.

Manalo-Tan is the wife of Johnny Tan, a known ally of Genuino. Johnny Tan was in fact the second nominee of the Bida party-list, a political group identified with Genuino, during the 2010 national elections.

All seven contracts, which gave Promolabels a virtual monopoly as coffee supplier in Pagcor's casinos, were awarded to Manalo-Tan without public bidding, which is prescribed by law.

Promolabels was initially given three- to five-year contracts that were renewed and/or extended following the expiration of their original terms, likewise without the benefit of public bidding, the complaint said.

In the original contracts with Pagcor, it was stated that Promolabels was a duly registered corporation. However, Pagcor found out upon verification that it was not registered with the Securities and Exchange Commission.

The current Pagcor management called for an exhaustive audit following the discovery of the billion-peso coffee expenses incurred by the previous administration, the bulk of which went to Manalo-Tan's Promolabels.

Pagcor's audit team discovered that from 2005 to 2008 alone, five Casino Filipino branches paid at least P258 million to Promolabels for coffee products.

The prices charged by Promolabels for its Figaro coffee products were much higher than the prices at which the exact same products were sold by Figaro coffee shops operating outside the Casino Filipino branches during this four-year period.

This contradicted the original resolution issued by the Genuino-led Pagcor Board on May 16, 2001, that the selling price of Figaro coffee beverages will be similar to the prices of these products inside the malls.

"For the years 2005 to 2008 alone, Pagcor could have saved at least P78 million if only the prices of Promolabels' Figaro coffee products were the same as those of other Figaro franchisees," the state-owned gaming firm cited in its complaint.

The Pagcor complaint also cited that Genuino, Francisco and Figueroa were "repeatedly informed of the losses being suffered or incurred by the Casino Filipino branches as a result of their transactions with Promolabels, and they refused or otherwise failed to act to stem or prevent further losses."

Several Audit Observation Memoranda (AOM) prepared by COA Auditors assigned to the Casino Filipino branches and/or the Pagcor Head Office revealed that sometime in 2006, the Auditors already raised several concerns regarding the validity and implementation of the concession agreements with Promolabels. They stated that Pagcor should have conducted a public or competitive bidding as required by government procurement laws prior to awarding of the said agreements to Promolabels.

The AOMs also noted the material disparities between the prices of Promolabels' Figaro coffee products and those of other Figaro franchisees operating outside, the casinos that went as high as 74 percent. The AOMs stated that Pagcor could have saved considerable amounts of money if only Promolabels sold the products at the same prevailing prices of Figaro franchisees outside Casino Filipino at that time.

Pagcor also stated in its complaint that despite knowing the audit observations, "the respondents refused or failed to demand price reductions from Promolabels, and even went out of their way to give several justifications for Promolabels’ higher prices."

Moreover, the justifications were prepared in a matter of days from the respondents' receipt of the AOMs "which leads to a conclusion that the respondents did not even bother to conduct a full and exhaustive review of Promolabels' justifications for its excessively priced coffee products."

What made matters worse was when respondent Figueroa still allowed Promolabels to increase further the prices of its coffee products a year after despite COA's issuance of the AOMs, the complaint said.

"The respondents' acts of procuring coffee from, and "leasing" spaces to Promolabels without observing government procurement laws and their refusal to demand price reductions from Promolabels despite notices of irregularities affecting the concession agreement and the losses being suffered by the Casino Filipino branches under these contracts caused undue injury to the government and gave Manalo-Tan unwarranted benefits, advantages and preferences," the Pagcor complaint pointed out.

In filing the complaint, the current Pagcor management had to work back on all the documents pertaining to Promolabels transactions. The agency's Auditors had to validate and verify every invoice and receipt of Promolabels, particularly for the period covering 2005 to 2008.

The billion-peso coffee issue was first exposed by President Benigno Aquino III during his first State Nation Address last July 2011. (Sunnex)