Will the new government of President Benigno Aquino honour the ‘midnight deal’ struck by the previous administration with Japanese gaming entrepreneur Kazuo Okada?
That question is currently a hot topic in the Philippines gaming industry. Mr Okada insisted on a land ownership provision as a condition of investing in construction of a gaming resort at Manila Bay. It’s nearly two years now since Mr Okada’s company, Aruze Corporation, put down a hefty USD100 million in an escrow account for the project. The negotiations have been protracted because the Japanese fretted that without ownership of the land, the rug could have been pulled out from under them at any time by the Philippine Amusement and Gaming Corporation (Pagcor), the country’s gaming regulator-cum-operator.
The former Pagcor chairman, Efraim Genuino, put together a deal earlier this year with support from the then President Gloria Arroyo, allowing Aruze title to the land in a clear reversal of normal Philippines policy on overseas investment. It was seen at the time as an attempt by Dr Genuino to keep himself in a job and to secure his legacy as the man who transformed the local casino industry by bringing in internationally recognised partners. Mr Okada is a major player in the casino industry as a gaming equipment manufacturer, hotelier and director and shareholder of Wynn Resorts Ltd.
Politics can often trump business deals, however, and the administration of President Aquino is currently engaged in a wide ranging policy review of the local casino industry, including the possible sell-off or handing over of Pagcor casino venues to the private sector. A number of industry observers think if the new government baulks at the Okada land arrangement, then the Japanese entrepreneur may walk away from the deal.
At the heart of the government’s review of existing deals and insistence on a shake up is fear that the current Pagcor set-up isn’t delivering all the money it should for the public purse.
“We have uncovered several anomalies in Pagcor amid allegations that the government is not really getting its share of the revenues,” Mr Aquino told reporters during a briefing earlier this week.
Mr Aquino has made no secret of the fact he personally does not regard gambling in general as a socially useful activity. Like most politicians, however, he is pragmatic enough to realise it’s better to regulate and tax casino gambling than to drive it underground.
“Gambling is not a productive activity, but if Pagcor finds the way to properly donate their revenues to the government, then thanks,” he said during the briefing.
Mr Aquino added the policy review on Pagcor would examine why so many casino gaming licences had been issued. The suspicion is that the issuing of licences was a commercial activity benefiting Pagcor executives regardless of any consideration of the viability of the individual projects.
“There are so many casinos in places where there are no tourists,” Mr Aquino said.
The government has also chosen a new senior management team for Pagcor. In addition to Cristino Naguiat becoming chairman, Jorge Sarmiento replaces Rafael ‘Butch’ Francisco as President and COO. Three new directors have also been appointed—Jose Tanjuatco, Eugene Manalastas and Enriguito Nuguid.
We’ll try and bring you more on their backgrounds and what their appointment might mean in a later edition.
