COA: Pagcor lost P4-B in foregone revenues from Entertainment Complex deal

Published August 9, 2021, 5:57 PM

by Ben Rosario

The Philippine Gaming Corporation (PAGCOR) lost over P4 billion not by betting on a gaming table but as a result of the delayed implementation of the development of an Integrated Resort and Entertainment Complex in PAGCOR’s land within the Entertainment City in Manila.

Entertainment City

The Commission on Audit, in its 2020 annual audit report on PAGCOR, also found “lapses in the implementation” of the Matuwid na Daan sa Silid Aralan Project of the state-owned gaming firm.

State auditors said COA has not received an update on the status of the construction of 398 classrooms costing about P1.005 billion and that over P1.824 billion in PAGCOR funds given to implementing agencies remained unliquidated “despite the lapse of more than three years” from the supposed date of completion of the classroom project.

COA demanded immediate liquidation of remaining funds on the project and a refund of unutilized funds.

Responding to the adverse audit observation, PAGCOR said the Department of Public Works and HIghways had submitted liquidation reports on the project.

On the other hand, the Department of Education has not submitted reports “despite follow ups from PAGCOR,” the COA report said.

“The delay in the implementation of the Project Implementation Plan (PIP) and non-formulation of PAGCOR Share Development Timetable on the development of an Integrated Resort and Entertainment Complex on the land of PAGCOR within the Entertainment City as provided under Section 7.1 of the Joint Venture Agreement (JVA) dated May 7, 2010 between PAGCOR and a private venturer resulted in revenue foregone in an estimated amount of P4.018 billion as of December 31, 2020 to the disadvantage of the government,” the audit report stated.

The delay of two years was apparently caused by the approval of the PAGCOR Board of Directors of the request of the private venturer for the revision of the PIP for Phase 1 in Entertainment City.

Instead of the original schedule of 4th quarter of 2018, the completion date given was changed to 4th quarter of 2020.

Further, the private venturer was tasked under the JVA to complete the construction of the PAGCOR share within the latter’s Share Development Timetable.

However, as certified by the Assistant Vice President for Gaming Licensing and Development Department (GLDD) of PAGCOR, there was no Share Development Timetable Development developed by the state gaming firm.

“The same certification provided that there were no condominium unit(s) and/or parking slot(s) sold per selling period,” COA noted.

State auditors lamented that as a result of the failure of PAGCOR
 management to enforce the original schedule of the project implementation, the firm failed to earn a total P11.047 billion from 2010 to 2020.

“As of December 31, 2020, only P7.029 bilion were actually remitted by the private venturer to PAGCOR which would more or less just cover the cost of the land amounting to P5.345 billion, thus resulting in a revenue foregone in an estimated amount of P4.018 billion,” COA said.

Commenting on the COA observations, the PAGCOR management said the reported certification issued by the GLDD “were non-existent” or could not be found.

“Moreover, on the alleged delay in the implementation of the Project Implementation Plan, the PAGCOR board of directors approved the submitted revised PIP showing a completion date of 2025 instead of the 4th quarter of 2020,” the PAGCOR reportedly said.

The COA audit team acknowledged the PAGCOR management’s explanation but stressed that the firm should consider amending pertinent provisions of the JVA “to conform to the current and prevailing situation and ensur that the provisions thereof are not disadvantageous to the government.”