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Important perspectives to the Pagcor controversy
AS I WRECK THIS CHAIR By William M. Esposo
The Philippine Star 2012-02-28
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The usual carpers immediately grabbed the recent controversy Pagcor (Philippine Amusement and Gaming Corporation) got entangled in when two international gaming titans — American Steve Wynn and Japanese Kazuo Okada — held a battle royal between two non-virgins. As usual, the spin eclipsed the truth.
The usual President Noynoy Aquino (P-Noy) bashers lost no time making it appear that Pagcor Chairman, Cristino “Bong” Naguiat, had betrayed DAANG MATUWID (straight path). Steve Wynn cited Naguiat in his suit against Kazuo Okada as a recipient of alleged bribes, along with former Pagcor Chairman Ephraim Genuino.
From the February 19, 2012 Las Vegas Revue-Journal, written by Chris Sieroty, the following summary of events were secured:
1. The Wynn-Okada row started last January when Okada filed a suit demanding that Wynn open the Wynn Resorts records so that he could check on the $135 million donation Wynn made to the University of Macau Development Foundation, which Okada was questioning. Okada also wanted to know where his $30 million investment on a project was spent.
2. Steve Wynn then hired former FBI director Louis Freeh to make an investigation, which became the basis for the alleged corruption suit Wynn filed against Okada two weeks ago. Wynn accused Okada of engaging in corrupt practices — per US laws — in dealing with Pagcor officers since 2008. The suit alleged that Okada unduly influenced Philippine regulators with $110,000 in freebies.
3. Wynn then imposed a forced buyback of Okada’s 20 percent holding in his gaming corporation, Wynn Resorts. The forced buyback gave Wynn a 30 percent discount, payable in 10 years, at 2.2 percent annual interest. In the stock market, you paid on demand and no payment terms are extended. Worth on the market an estimated $2.77 billion, Wynn forcibly bought Okada’s stake for a mere $1.99 billion — a neat $780 million profit if Wynn resells these in the open market.
4. Wynn and Okada were about to embark on the Pagcor Entertainment City project. Obviously, Wynn opted to stay out of the Philippine project and went instead for the $780 million windfall from Okada’s stocks. Another perspective to this is that Wynn has too much invested already in Macau and probably feared that Entertainment City could affect their business.
This is your Chair Wrecker’s appreciation of the controversy after reviewing the available accounts:
1. Pagcor may have been dragged into the Wynn Okada row because our image as one of the most corrupt countries provided Wynn a plausible premise. We Filipinos shouldn’t allow Wynn to get away with that.
2. If you know the nature of the gaming business, especially how it started with Mafia capo Benjamin Siegel, then you’ll have to be careful not to immediately believe the big bosses of the gaming world.
3. The $110,000 alleged inducements to Genuino and Naguiat are very small compared to Wynn’s $135 million donation and use of Okada’s $30 million investment in another project. Wynn could well be leveraging for Okada to drop his suit.
4. The Freeh investigation report should be regarded as suspicious because a Wynn hireling and not the US government prepared it. It’s self-serving.
5. The courtesy free land transport and free accommodation are parts of regular industry practices in the gaming world. Wynn will have to explain how that can be considered a bribe. Pagcor should consider suing Wynn for his unfounded claims.
The most sanctimonious of the critics that preyed on this controversy alleged that it was wrong for Naguiat to have accepted the freebies. That’s bovine ordure. It was to Pagcor’s interest that Naguiat develop a good business relationship with Okada, based on reciprocity, because the gaming tycoon was key to the development of Entertainment City.
This debate is happening because of the anomalous situation of the government operating the gaming industry in our country. Naguiat is part of the government but for him to be an effective head of Pagcor, he has to play it by the international gaming rules. P-Noy didn’t create Pagcor. Marcos did and hindsight wise it was not a bad idea when you consider that big crime syndicates could infiltrate this operation and our people would thus lose all those benefits that Pagcor has been extending through the years.
P-Noy’s defense of Naguiat is justified after the president was briefed on what this Wynn-Okada controversy was all about. P-Noy knows Naguiat too well and until solid proof is presented, he cannot dismiss Naguiat for what’s easily seen as self-serving moves by Steve Wynn. P-Noy didn’t say this but he must have thought that he cannot just take the word of Steve Wynn who has a big profit to gain from that suit that he filed against Okada. People are known to cheat for smaller sums.
Under Naguiat, Pagcor realized savings of P688 million from January to April of 2011 — a period of 4 months. In less than a year, Pagcor was able to pay P1.66 billion in debts, ahead of its maturity in 2014. By doing so, Pagcor saved us a total of P101 million in interest payments. Many of these savings and increased revenues of Pagcor are earmarked for assisting P-Noy’s education program — building of new classrooms, school desks and so forth.
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