Posted at 03/27/12 9:20 AM

Steve Wynn, CEO of Wynn Resorts and Casino in Las Vegas and Macau, has accused former business partner Okada of ‘engaging in a longstanding practice of making payments and gifts to his two chief gaming regulators at PAGCOR, who directly oversee and regulate Okada’s Provincial Licensing Agreement to operate in the country’.

Henry Omaga Diaz finds out how PAGCOR is playing its cards as operator and regulator in one.

Wynn commissioned Freeh Sporkin & Sullivan LLP (FSS) to examine Okada’s efforts in connection with the creation of a gaming establishment in the Philippines.

In its investigative report, it stated that Okada and his associates made multiple payments to and on behalf of these chief regulators, former PAGCOR Chairman Efraim Genuino and current chief regulator Chairman Cristino Naguiat, their families and associates, in amount exceeding US$ 110,000.

Naguiat has thrice travelled back and forth to Wynn Macau and Wynn Las Vegas in his three years as chairman, all-expenses paid for by Okada. Accommodations were placed at US$6,000/day (P250,000) rooms and pocket money amounted to US$5,000 (P200,000).

Since 2008, a total of 36 visits to Wynn Macau and Las Vegas were recorded—22 visits under Genuino and 14 visits under Naguiat. Okada and his associates have taken measures to conceal both the nature and amount of payments according to the said report.

PAGCOR’s conflicting roles

The conflict of interest arises with PAGCOR’s two-fold role: as a player and as a regulator.

PAGCOR operates its own casinos (player) and gives license to private companies who want to run their own casinos and gaming facilities as well (regulator).

Francis Hernando, PAGCOR’s Vice President for Licensed Casino Development Department, asserts that such practice is part of an inter-casino courtesy.
“It is a practice not unique in this industry. There is reciprocity, meaning, if those same executives come to Manila, we also offer the same courtesy and kind of amenities,” he adds.

But could it be considered an “industry practice” or an outright unethical conduct considering PAGCOR’s regulatory function in rejecting and approving gaming investments in the country?

Professor Leonor Briones of the University of the Philippines College of Public Administration and Governance believes otherwise.

“The law is clear. The Anti-graft and Practices Act of 1969 and the Code of Ethical Standards articulate that receiving gifts whether monetary or not is not allowed to a public official and his family.”

Ramon Casiple, a political analyst, said PAGCOR has contradictory roles.

“The behavior expected of a ‘regulator’ is far from a ‘player’. As a regulator, you should try to be as far as possible from the one being regulated,” Casiple said.

In this regard, how will PAGCOR monitor its own operations?

“This is the reason why a lot of people suggest that PAGCOR should be fully privatized. If it is both a player and regulator, it will turn out that PAGCOR regulates its competitors. But is PAGCOR regulating itself?” Briones added.

Government investigations

Senator Aquilino “Koko” Pimintel, chairman of the Senate committee on games, brought the controversy to the attention of Congress and Malacañang.

Sen. Koko Pimintel discusses how PAGCOR should wear its hat as a regulator more than an operator.

“It is better that this incident surfaced so that now what we can do is to focus on the root cause of the problem. We have realized that it is because of the dual nature of PAGCOR.”

Despite the controversial issues, Pimentel still considers the importance and the potential of the pending project. Nonetheless, it is still subject to further questioning.

“PAGCOR Entertainment City Manila is under my jurisdiction. The purpose of the resolution I filed is for us to know the status of the project. We need to know who the licensees are. I’ve heard that there were already four. What are their contracts with each other and what
contract does PAGCOR have with each one of them? What are the terms and how will PAGCOR benefit? When will we finally see the promised benefits?” he said.

On the other hand, retired Archbishop Oscar Cruz, a known anti-gambling advocate challenged PAGCOR to come out clean.

“It’s hard to believe that in establishing a gambling city, there won’t be corruption. Just because you are the chief operating officer of PAGCOR, you’d be given luxurious treat. You’d be given expensive accommodations. You’d be given gifts. That’s standard operating procedure, they say. They tell me, ‘Don’t be too mad because that’s just customary.’ Customary? To receive bribes, customary? To accept gifts, customary?”

In the congressional hearings, Naguiat was acquitted of the charges against him. However, Malacañang is still conducting its own investigation. Accordingly, Naguiat has declined the offer to be interviewed.