In response to the apparent need for casinos to be covered by antimoney- laundering laws, the Philippine Amusement and Gaming Corp. (Pagcor) is amenable to privatizing its proprietary function of operating casinos.
The proposal to privatize Pagcor is meant to prevent the “absurd” situation wherein Pagcor would have to report the transactions covered by the anti-money laundering law, but which transactions Pagcor itself executed as an operator of casinos.
That proposal had been pending since the time of President Arroyo, and had only come to the fore again in the heat of the Senate’s investigation into the $81-million cyber heist of the Bangladesh government’s dollar account in New York, the proceeds of which found their way into the Philippines and ended up in the casinos here in Manila.
But Pagcor Chairman Cristino Naguiat said the proposed privatization should be done through legislation and not by mere executive order, as he confirmed that there is a recommendation within the Office of the President to privatize Pagcor.
“It’s their call whether they want to amend the law or not,” Naguiat told the BusinessMirror, referring to the senators and congressmen who, he said, would have the discretion on whether to amend Pagcor’s legislative charter.
Policy considerations
Presidential Decree 1869, or Pagcor’s legislative franchise, allows Pagcor to operate its own casinos and enter into joint-venture agreements for the operation of these casinos.
This function is seen by senators and congressmen as being incongruent with the intent of the law to make Pagcor as the regulator of gambling in the country, with the ultimate mandate of using the gambling business as a tool for boosting tourism in the country.
Pending bills in the Senate and the House feature various amendments to Pagcor’s charter, ranging from mandating Pagcor to only focus on regulating casinos to proposals to strip Pagcor of the authority to license casino operators altogether, and give that authority back to Congress.
During the continuing Senate hearings on money laundering, Sen. Aquilino Pimentel III pointed out that Pagcor’s operation of casinos and the grant of licenses to private casinos result in the situation wherein there is competition between Pagcor and its licensees for the same business.
It is also common knowledge that there is a proliferation of e-games outlets even in residential areas, defeating the intent of the law to minimize the adverse effects of gambling on the citizenry and capitalize instead on its potential to boost tourism.
In Republic Act 9487, or the law which extended Pagcor’s franchise for another 25 years in 2007, there is also an explicit prohibition by law that “the operation of slot machines and other gambling paraphernalia and equipment, shall not be allowed in establishments open or accessible to the general public.”
The only exception to this prohibition is when such slot machines or other gambling paraphernalia or equipment are operated within three-star hotels and resorts accredited by the Department of Tourism and authorized by the corporation and by the local government unit concerned, even as no exception is provided for the operation of these slot machines in residential areas.
Privatization recommended
As early as December last year, the Governance Commission on GOCCs (GCG) had already recommended to President Aquino the privatization of Pagcor’s proprietary function of operating casinos, and to focus instead on its function of regulating casinos so that the intent of the laws regarding gambling could be realized.
The recommendation to privatize Pagcor was among the 14 recommendations to either close down, privatize or merge government-owned and -controlled corporations (GOCCs) for various reasons, such as redundancy, inefficiency or nonprofitability.
Naguiat confirmed that there is, indeed, a pending recommendation at the Office of the President to privatize Pagcor, but he said that he believes that it is not within the GCG’s authority to effect the privatization of Pagcor.
The GCG’s legal basis for recommending the privatization of Pagcor through an executive order by the President is its own charter, which provides that it has the authority, among others, to review the functions of each GOCC and recommend either privatization, abolition and mergers.
The GCG’s position is that Pagcor is covered under the supervision of the GCG because its charter had provided it with oversight functions over all GOCCs and government financial institutions, including subsidiaries, except the Bangko Sentral ng Pilipinas, state universities and colleges, cooperatives, local water districts, economic zone authorities and research institutions.
“But that’s only their perception [that they can do that]. Anyway, any privatization would probably happen after my stint,” Naguiat said.