COA asks Pagcor to collect P66 M from casino junket operator

MANILA, Philippines – In its 2011 audit report, the Commission on Audit cited the Philippine Amusement and Gaming Corp. (Pagcor) for its record-breaking P36.659 billion income in 2011, its highest in 11 years.

But the COA also found that Pagcor was underpaid by P65.84 million in 2010 and 2011 because of the erroneous computation of rent to be paid by a junket operator in Hyatt Casino Filipino. A junket operator brings in foreign players to casinos in the country.

In its 2011 audit report, COA asked Pagcor to collect the amount from Fortunegate Holiday Philippines, Inc. (FHPI).

It said the rental fee due to Pagcor should be 15 percent of gross winnings from the foreign area for a particular month. But instead, the rental fee it collected was based on net/win loss or gross winnings minus the non-negotiable chips, commissions and incentives, contrary to the memorandum of agreement between Pagcor and FHPI. This resulted in a rental deficiency of P65.84 million.

The rental fees to be paid by FHPI were computed by Hyatt Accounting, the COA noted. FHPI submits daily win/loss results to Hyatt Casino Filipino. Hyatt Accounting summarizes the reports at the end of each month, and determines the rental fee that the junket operator should pay.

But the COA said that in May, during a meeting between Pagcor, FHPI and COA, there was an agreement that FHPI would pay the rental fee based on gross winnings effective September 2011, and the rental fee from April 2010 to August 2011 based on net win/loss. It added that it had agreed to this scheme on the condition that the computation of rent from April 2010 to August 2011 would be subject to approval by a COA cluster.

Despite the P65.8 million rental income deficiency, COA lauded Pagcor for its P36.659 billion record income last year.

“We commended management for their concerted efforts in achieving record-breaking gross income for CY 2011, and for exercising fiscal responsibility,” the COA said.

It said Pagcor’s 2011 performance also boosted the agency’s contribution of funds for socio-civic activities, subsidy to national government agencies, taxes, and mandated contributions for other agencies.

The COA said Pagcor’s exercise of fiscal responsibility was underscored by its request to the COA to restore the pre-audit of its transactions.

But COA chairperson Grace Tan, who scrapped the pre-audit practice in 2011, told Pagcor that she was not inclined to institute pre-audit on the gaming firm. Instead, Tan encouraged it to continue with ongoing reforms to strengthen its internal control system.

Such a strong system will help Pagcor achieve effective fiscal administration without the need for COA’s involvement in pre-audit, she said.