Philippine Amusement and Gaming Corporation is the Philippines third largest contributor of revenue after the Tax and Customs Authority.

MANILA — Former chairman Efraim Genuino and two other former ranking officials of the Philippine Amusement and Gaming Corp. (Pagcor) are now facing P78-million plunder and graft charges before the Office of the Ombudsman.

The case stems from the agency’s purchase of overpriced coffee products for at least five of its casino branches during the Arroyo administration.

Among those charged with Genuino were former Pagcor president Rafael Francisco and former senior vice president and senior managing head of research development department Rene Figueroa.

Also charged as a private respondent was Carlota Cristi Manalo-Tan, a casino coffee concessionaire.

The 25-page complaint filed by current officials of the agency was signed by directors Jose Tanjuatco and Enriquito Nuguid as the complainants.

The charge stated that from 2001 to 2010, Genuino, Francisco and Figueroa directed Casino Filipino branches to “enter into concession agreements with Promolabels which is owned by Manalo-Tan with a view toward enriching themselves and the coffee concessionaire through the sale and purchase of overpriced Figaro coffee products, to the damage and prejudice of the Filipino people.”

In a statement, Manalo-Tan said they welcome the filing of the case in the Ombudsman “as this will provide us the chance and opportunities to present all the facts and necessary evidences that the court will require from us in the course of the ongoing investigation and similar judicial proceedings thereafter.

“Although this will be the first time that a mere concessionaire is being charged with plunder, we firmly believe that in the end, the current judicial system will allow us to prove our innocence,” the statement read.

“We have been maligned and ridiculed in public and our reputation as business persons has been tarnished as a result of the unending barrage against us and former Pagcor officials in which we have been charged guilty by association with and to whom fairness and justice should likewise be accorded,” the statement further said.

The respondent said they believe that truth and justice shall be provided to them as deserved by all ordinary citizens of the Philippines.

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

The previous Pagcor board gave Figaro franchisee Promolabels concession agreements in seven Casino Filipino branches with Manalo-Tan signing the agreements on behalf of Promolabels and Genuino and Francisco signing on behalf of the casino branches.

Manalo-Tan is the wife of Johnny Tan, a known ally of Genuino, 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 the conduct of public bidding as required by law.

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

Pagcor’s complaint noted that in the original contracts, Promolabels was identified as a duly registered corporation but verification later revealed that it was not registered with the Securities and Exchange Commission (SEC).

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.

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

Pagcor learned further that 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 the four-year period.

“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 complaint read.

The complainants also bared 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.”

74 percent higher

Several Audit Observation Memoranda (AOM) from the Commission on Audit (COA) revealed that sometime in 2006, auditors raised several concerns regarding the validity and implementation of the concession agreements with Promolabels because of the lack of public bidding.

Pagcor’s complaint said COA’s findings 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 the state-owned gaming firm could have saved considerable money if only the supplier sold the products at the same prevailing prices.

Pagcor further 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 concerns.

“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,” Pagcor’s complaint read.

In filing the complaint, the current Pagcor management said it had to work back on all the documents pertaining to Promolabels’ transactions with the agency’s auditors, validating and verifying every invoice and receipt for the period covering 2005 to 2008.

They said that from the time this billion-peso coffee issue was exposed during the State of the Nation Address (SONA) of President Benigno Aquino III in July 2011, the new management no longer entered into any coffee concessionaire contract in any of its casinos.

Before, the coffee was given for free by the concessionaire to casino customers, but Pagcor in turn had to pay the coffee concessionaire at an average of over a hundred pesos per serving.

Today, Pagcor casinos serve free coffee to all its customers at prices ranging from P9.36 for a cup of brewed coffee to P14.99 for a cup of premium flavored coffee, which has resulted in a dramatic cost reduction by about half.

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