Gaming firms in Cagayan freeport must pay CEZA P149-M in licensing arrears -COA

Published July 25, 2021, 2:14 PM

by Ben Rosario

The Commission on Audit (COA) has called on state-owned Cagayan Economic Zone Authority to immediately collect over P148 million in lease and other financial obligations owed by Cagayan Freeport business locators and gaming licensees, including the on-line and land-based gaming operator First Cagayan Leisure and Resort Corporation (FCLRC).

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COA, in its 2020 CEZA Annual Audit Report, noted that eight locators and licensees have been remiss in their financial responsibilities between 30 days to 10 years now.

COA said that as a result of the huge amounts in unpaid financial obligations, the locators and gaming licensees have deprived “the Authority of funds that could have been used in its operations.” Much of the arrears were incurred by major CEZA gaming licensees FCLRC and North Cagayan Gaming and Amusement Corporation (NCGAC).

“Analysis of the account revealed that the uncollected amount of P149.706 million or 95 percent of the total Accounts Receivable is due from First Cagayan Leisure and Resort Corporation (FCLRC), P139.586 million of which represents the Authority’s (CEZA’s) share from Interactive gaming and Land-based gaming, inclusive of fines and penalties for the late payments pursuant to the license agreement between CEZA and FCLRC,” COA said.

The NCGAC has an outstanding balance in the total amount of P1.271 million pertaining to the Authority’s share in the “Land-based Gaming inclusive of P0.678 million for fines and penalties,” the state audit agency said.

Audit examiners said that while CEZA’s license agreement for gaming operations with FCLRC and NCGAC provided for assessment of interest on unpaid amounts, the government-owned firm no longer imposed penalties from late payments from January to December 2020 in consideration of the economic disruptiion triggered by the COVID 19 pandemic.

The FCLRC also topped the list of firms with unpaid rental fees. As of December 31,2020, its rental arrears stood at P10,120,381.

The Internet gaming firm has a 25-year lease for a property composed of several buildings, structures and parcels of land in Sta. Ana, Cagayan. The area was developed by FCLRC as a gaming and tourism facility.

The Cagayan Welfare Export and Import Corporation had incurred rental arrears reaching P4.3 million for a parcel of land consisting at least 10,000 square meters in Port Irene, Sta. Ana Cagayan.

“The Audit Team noted that the CEZA Finance Division regularly sent monthly demand letters to its debtors, however, the receivables were not collected on time,” the COA disclosed.

Auditors called on the CEZA management headed by Administrator and Chief Executive Officer Raul Lambino to “intensify collection strategies to maximize utilization of funds for other programs/projects.”