MANILA, Philippines - Senators on Monday grilled former officials of the Philippine Charity Sweepstakes Office (PCSO) for choosing to rent machines for its lottery operations instead of just buying them and saving government money.
 
Senate President Juan Ponce Enrile said PCSO's contract with the Philippine Gaming Management Corp. (PGMC)-Berjaya, a Filipino-Malaysian firm, gave PCSO an option to purchase the machines for US$25 million.
 
Instead, he said the PCSO has spent US$148 million for renting PGMC's machines so far since the deal was struck in 1995.
 
The contract was extended and will expire in 2013.
 
"Why did the PCSO not buy, when they knew the potential of the business and they could have made a wise judgment to acquire it?" asked Enrile.
 
Former PCSO General Manager Fernando Carrascoso, who gave Enrile documents related to the contract, said the deal was "disadvantageous to government."
 
Former PCSO chairman Manoling Morato, during whose time the contract was approved, said the agency decided not to purchase the machines because they would eventually be obsolete.
 
"Rapid technology changes in lotto operations would simply be too much for the PCSO to handle," he told senators.
 
Enrile questioned the officials, however, why the contract with PGMC was extended when PCSO should have conducted a public bidding for new machines.
 
Former PCSO General Manager Rosario Uriarte explained that the PCSO was supposed to hold a public bidding when the contract expired, but they had to cancel it because of technical issues raised by PGMC.
 
She said it would take more than a year to transfer vast amounts of data from PGMC's system to a new one and so the PCSO's opted to have an upgrade.
 
"Nagkaroon ng operation para ma-upgrade ang system at hindi matigil ang lotto operation," Uriarte said.
 
But Enrile was incredulous, insisting that a public bidding should have been conducted.
 
"Huwag n'yo kaming niloloko dito," Enrile warned the officials. "Pipigain namin ang utak n'yo dito."

PCSO money not liquidated
 
During the Senate Blue Ribbon Committee hearing on Monday, PCSO board member Aleta Tolentino admitted that the funds given to congressmen amounting to 2.25 percent of proceeds from small town lottery (STL) operations are not liquidated.
 
"You have no way of monitoring how much in pesos and centavos goes to the congressman concerned?" asked Sen. Panfilo Lacson.
 
"A receipt should be issued," Tolentino answered. "But as per the records that we have right now on the past STL remittances, we don't have it. There are just acknowledgement receipts."
 
Lacson also pointed out that giving money to congressmen on behalf of the districts they represent where there are STL operations is not supported by the PCSO's charter.
 
Blue Ribbon Committee chairman Teofisto Guingona III noted a 2008 report by the Commission on Audit (COA) stating that the funds are disbursed directly to congressmen instead of hospitals and other welfare institutions.
 
"Saan n'yo huhugutin kung wala ito sa PCSO charter? Ano'ng legal basis?" Lacson said.
 
Tolentino explained that the idea behind it is to let the congressmen distribute the money to their constituents who need financial assistance, instead of them going directly to the PCSO.
 
However, even COA said it has not audited the funds given to congressmen.
 
PCSO officials will submit a list of the congressmen getting PCSO funds to the committee during the next hearing.
 
Aside from congressmen, the Philippine National Police (PNP) also receives funds from STL, but both PCSO and COA officials admitted they do not know if the money indeed reaches its local police offices.