Former PCSO execs charged with graft

MANILA, Philippines—The Philippine Charity Sweepstakes Office has filed graft charges against former officials of the agency who approved a 50-year, P42-billion contract with an Australian company to supply the PCSO with the thermal paper it uses for lotto tickets.

Charged before the Office of the Ombudsman on Friday afternoon were Rosario Uriarte, former PCSO general manager and vice chair; and directors Jose Taruc, Raymundo Roquero, Ma. Fatima Valdes and Manuel Morato.

The five were members of the old PCSO board who signed Resolution 2171 approving the so-called contractual joint venture agreement (CJVA) between the PCSO and the Australia-based TMA Group of Companies.

Lawyer Aleta Tolentino, an incumbent PCSO director, noted that only Sergio Valencia, the PCSO chair at the time, did not sign the resolution.

“That’s why he was not included in the complaint,” she said.  “When the board of directors of the PCSO’s previous administration submitted the deal for approval in 2009, he (Valencia) had questioned it. He really didn’t want it.”

Also named respondents in the complaint were TMA Group officials and local representatives, including Anthony Karam, lawyer Ofelia Cajigal and Christine Fong, Tolentino said, adding that the complaint was signed by PCSO general manager Jose Ferdinand Rojas II.

Apart from the Anti-Graft and Corrupt Practices Act (Republic Act No. 3019), the respondents were also slapped with charges for violation of the Government Procurement Reform Act (RA 9184) and the Code of Conduct and Ethical Standards for Public Officials and Employees.

“This is just the first of the many charges that the PCSO is poised to file against the former board over irregularities,” Tolentino told the Inquirer in a phone interview.

The current board claims the deal with the TMA Group was “iniquitous and grossly disadvantageous to the government.”

In a resolution approved on April 15, the current PCSO Board of Directors declared the contractual joint venture agreement between the agency and TMA Group of Companies null and void “for patent violation of applicable laws, rules and regulations.”

“It was simply a supply contract in the guise of a joint venture agreement,” Tolentino said.

The joint venture agreement provided for the establishment of a thermal coating plant primarily for export sales of thermal paper. The plant was also supposed to provide the PCSO with thermal paper and other consumables for its gambling activities, including future games.

Under the contract, the Australian firm was to invest P4.4 billion in the project, while the value of the paper contract which the PCSO would pay more than 50 years would be P42 billion, said Tolentino.

“The mere fact that you are tying down PCSO for 50 years for the supply of papers exclusively from this particular group is indeed questionable,” she said in a previous interview.

“First of all, it’s not within the PCSO purpose and mandate to engage in the manufacturing or producing and exporting paper. Our mandate is to operate sweepstakes and lotto activities for charity,” Tolentino said. “Second, it violated the Procurement Act of the Philippines, which requires bidding for suppliers.”

“Let’s say it’s a good deal… but you don’t tie the office for half a century,” she added.

She also cited the recent opinion of the Office of the Government Corporate Counsel (OGCC), which also declared the agreement void and inexistent because “it is undertaken to circumvent Republic Act 9184 in the procurement of supplies and evade COA (Commission on Audit) audit.”

The OGCC added that the deal was not only grossly disadvantageous to government but also unfair to other paper suppliers and results in monopoly.

Tolentino said the PCSO’s contract with its existing paper supplier, Mark Sensing Corp, a TMA subsidiary, ends this year and getting the next supplier will have to go through the regular bidding process.

As early as 2009, former Senate President Jovito Salonga, representing Bantay Katarungan, a group of lawyers monitoring Philippine courts and quasi-judicial bodies, has been questioning the propriety of the deal.

Sought for comment, Morato denied the allegations and added that the filing of the complaint against him and his former colleagues was a “very welcome” development.

“It’s all right. In fact, I was wondering why only now. I’ve been challenging them since last year to bring the issue to court so we could answer them at a proper forum rather than them using government fund for a trial by publicity. They’ve allotted millions of PCSO funds for media binge,” he told the Inquirer.

Morato said the contract was legal and was even approved by the National Economic Development Authority (Neda) due to the benefits the government was supposed to gain.

“Actually under the contract, the PCSO would not spend even one peso. It’s actually the best government contract I have ever reviewed,” he said, adding that the deal was not for 50, but only for 25 years.

“It’s renewable for another 25 years but it has to go through a review and evaluation every five years,” he added.

Meanwhile, Tolentino bared that the PCSO is eyeing to file more charges against its former board members over other alleged irregularities, including the conversion of at least P150 million of PCSO’s public relations fund into intelligence funds that were not subject to state audit; and the irregular disbursements of money for the purchase of sports utilty vehicles supposedly given to different Catholic dioceses.

Tolentino said that former President Gloria Macapagal Arroyo may be included in the other charges that they will be filing in the coming days because “there are documents directly linking her to the use of the PCSO funds.”

Arroyo allegedly approved the P150 million fund  conversion. Earlier, PCSO chair Margarita Juico raised questions on Arroyo’s “OK” marginal notes on the January 4, 2010 letter of Uriarte, requesting the conversion of the said amount.

The request for the grant of SUVs for the dioceses was also coursed through Arroyo and forwarded to the former PCSO board for action, Tolentino added.