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By Malou Mangahas and Tita C. Valderama, Philippine
Center for Investigative Journalism
First of two parts
A COMPANY that has neither track record in the
gaming business nor proven financial capability to back up a
multibillion-peso enterprise is poised to become the newest investor
in the ambitious “Tourism City” project of the Philippine
Amusement and Gaming Corp. (Pagcor).
But what Bloombury Investments Ltd. lacks in
these top two criteria for investors in the Pagcor project, it more
than makes up for in terms of political connections, based on
records of the state-run corporation itself, as well as information
from those privy to the deals.
At least two close allies of President Gloria
Macapagal Arroyo have been linked to Bloombury: Jose ‘Pepito’
Ch. Alvarez, who is listed as the company’s president, and Enrique
‘Ricky’ K. Razon Jr., whose legal counsel in his family’s
International Container Terminal Services Inc. (ICTSI), Silverio
‘Benny’ J. Tan, is Bloombury corporate secretary.
Bloombury’s managing director,
meanwhile, is Donato C. Almeda, brother of Antonio Mariano C. Almeda,
the chief of staff and “horse trainer” of Pampanga Rep. Juan
Miguel ‘Mikey’ M. Arroyo, eldest son of President Arroyo. In the
May 2007 elections, Antonio Almeda was the No. 4 party-list nominee
of Ahonbayan, which had been tagged by militants as a group fielded
by the Arroyo administration.
Bloombury was supposedly counting on the
purse and gaming expertise of Publishing and Broadcasting Ltd. (PBL),
owned by Australia’s third richest man, 40-year-old James Douglas
Packer. Pagcor accepted Bloombury’s $1.14-billion proposal in
September 2007 reportedly on the basis of its partnership with PBL.
PBL’s gaming concerns have since been
put into a new Packer company, Crown Ltd. Last June 16, Crown issued
a press statement saying that neither the company nor Packer was in
“advanced talks” with Bloombury regarding the Pagcor venture.
(see sidebar)
Minus Crown, Bloombury for now is nothing
more than a paper entity.
In a recent interview with the PCIJ,
Pagcor President Rafael ‘Butch’ Francisco and Senior Vice
President Rene C. Figueroa said that what Pagcor accepted was only
Bloombury’s “concept.” Added Figueroa: “We haven’t granted
them anything pa. There is no license, no nothing.”
They also denied reports that “subtle
and not so subtle pressure” had been applied on Pagcor to bring in
Bloombury as an investor in Tourism City.
Still, the fact that Bloombury has managed
to get this far in Pagcor’s $20-billion project has raised
eyebrows even within Pagcor itself. It also calls into question the
process through which Pagcor chooses participants in a project that
was made possible only after the state firm acquired a new charter
last year.
With its budget deficit and debts, the
Philippine government cannot by itself finance the cost required to
build Tourism City, which the Arroyo administration hopes to be
comparable, if not greater than Macau, in terms of gambling and
entertainment. The key to the project’s success, argued its
proponents, lay in private investors, who would get licenses to
operate casinos from Pagcor — until recently the monopolistic
regulator and operator of legal gambling in the country.
Under its old charter, only Pagcor was allowed
to operate casinos. (The charter was also scheduled to expire –
along with the state firm — on July 11, 2008, which is why Pagcor
applied for a 25-year extension as early as 2002, renewable for
another 25 years.)
In February last year, on the last day of a
Congress special session right before the May 2007 polls, the House
approved Pagcor’s new charter, which gave the state corporation
the power to subfranchise its franchise to private investors.
The House majority, then led by current Speaker
Prospero Nograles, deemed the Pagcor franchise of utmost importance.
It passed way ahead of a pending wage hike bill and the
controversial cheaper medicines bill.
Pagcor has since lost no time to fast-track
Tourism City as well. It disclosed its terms of reference for
investors, including a four-stage evaluation process before the
issuance of a regular license.
In its terms of reference, Pagcor sought
investors with “the financial capability and a well-established
experience in the hotel and gaming business.”
Principal investors were also encouraged
to apply, but were required to partner with qualified hotel and
gaming operations entities with a “track record in organizing and
operating world-class hotel and gaming projects.”
The interested parties would need to
tender a $100-million bond each, to prove that they are serious in
their undertaking.
In early 2008, a year after the project
was first made public, Pagcor announced that four companies had
expressed interest to invest in Tourism City.
First was Malaysia’s Genting Berhad,
with partners Star Cruises and locally listed firm Alliance Global
Inc. The proposal was initiated by Andrew Tan of Megaworld
Philippines through Travellers International Hotel Group Inc.,
Pagcor said.
The group plans to build hotels with a
minimum room capacity of 2,000 rooms, along with a theme park. In a
disclosure, Alliance Global announced that its joint venture with
Star Cruises would cost around $1 billion. Of the four groups, only
this partnership has received a provisional license from Pagcor to
begin construction.
The second was Japan’s Aruze Corp.,
which proposed the development of the Okada Resort Manila Bay, a
casino resort with 2,000 regular rooms and 300 VIP suites. Aruze has
proposed to build what could become the world’s biggest oceanarium,
and a giant Ferris wheel similar to the London Eye.
Pagcor insiders say that the Aruze group
would get its provisional license in two to three weeks. Aruze, they
say, has found a local partner in a group represented by Ramon Ang,
president and chief executive officer of food and beverage giant San
Miguel Corp.
Third to come in was SM Investments Corp.,
a local holding company with interests in mall operations, retail,
banking, and property development. It has partnered with
Asia-Pacific Gaming of Australia to put up a luxury hotel in the
area. SM Investments operates the SM Mall of Asia, the country’s
largest shopping mall near the area.
And then there was Bloombury Investments
Ltd., which said it would have three luxury hotels with a combined
capacity of 2,400 rooms, plus 30 VIP suites, high-end retail shops,
and entertainment and sports centers. Bloombury also said it would
employ 9,600 persons directly, and 40,000 others indirectly.
Yet when Pagcor accepted its concept notes
nine months ago, Bloombury did not even exist as a company in the
Philippines.
It registered with the Securities and
Exchange Commission (SEC) only four months ago, on February 27,
2008, as Bloombury Investments Holdings Inc. (Bloombury reportedly
registered in the British Virgin Islands on May 3, 2007, but Pagcor
has not verified this.)
SEC documents show that Bloombury’s
authorized capital was all of P60 million, and its subscribed
capital, just P15 million.
Of the latter amount, P14.9 million is
listed as shares of Pepito Alvarez, who by many accounts is among
the Philippines’s most indefatigable serial entrepreneurs.
What is curious is that Alvarez has not
spoken in public or with Pagcor executives about Bloombury at all;
he has acted for the most part as an indifferent owner of the firm.
Alvarez does have a formidable business
pedigree. From logging, he has diversified to car making (becoming
one of the first foreign investors to build a car factory in
Vietnam), insurance, fertilizer production, bus transportation, and
even airlines. But hotels, gaming, and gambling are not among his
core businesses.
Some of those privy to the deal explain
that a far bigger serial entrepreneur, and a far closer Arroyo ally,
Ricky Razon, is the “real” influence behind Bloombury.
It was Razon, they say, who pitched the
Bloombury bid to Pagcor in late 2007. It was also Razon, they add,
who made sure that the law firm Picazo Buyco Tan Fider & Santos,
which boasts of ICTSI as a major client, worked on Bloombury’s
registration in the Philippines. And, they say, it was Razon who
looked for foreign partners for Bloombury, including Australia’s
Packer, and Packer’s partner in Crown, Lawrence Ho, son of
Macau’s gambling kingpin Stanley Ho.
Razon, says a high-level Pagcor insider,
would have had no qualms revealing himself as being behind Bloombury,
except that he had been linked to controversial deals, including the
botched, kickback-ridden National Broadband Network (NBN) contract
with China’s ZTE Corporation.
Says the insider: “There was resistance
from within (Pagcor) and so they brought in Alvarez to the
picture.”
Indeed, Alvarez’s role in Bloombury was
only inadvertently disclosed by Pagcor chief Francisco in an
interview a fortnight ago with the Hong Kong-based South China
Morning Post.Pagcor Senior Vice President Figueroa also told PCIJ
that Alvarez has not spoken for Bloombury at all.
But the two Pagcor officials skirted
questions about Razon’s role in Bloombury, which Figueroa stressed
is the “vehicle of Mr. Alvarez for this specific project.”
Asked why gaming industry insiders insist
that it is Razon who is behind Bloombury and who worked on the
partnership with Packer, Figueroa replied, laughing, “Rumor na ‘yan.”
“He (Razon) might have introduced
(Packer) or anything,” he continued. “He introduced (Packer) to
Pepito (Alvarez)…maybe that’s what he’s saying. But as far as
we are concerned, we have talked only to Mr. Almeda.”
According to Figueroa, it is Almeda who
makes all the presentations, writes letters, answers queries, and
speaks for Bloombury.
Francisco, for his part, said that while
he has not talked to Alvarez, he knows from the records that Alvarez
is “the principal of Almeda.” Francisco also said that it was
Almeda who brought Crown’s senior executives to Pagcor’s office.
But Pagcor’s executives offered
confusing statements about the weight they assign to Bloombury as a
“principal” in its claimed partnership with Packer.
At one point, Figueroa said, “As far as
we’re concerned, ang kausap namin dito is Bloombury.”
At another, Figueroa said Pagcor accepted
Bloombury’s proposal, even when gaming is not a core business of
Alvarez, because, “he is partnering with a very credible group.
Crown is very big that’s why, for track record, we look at
Crown.” Pagcor top officials, including chairman Efraim Genuino,
have also met, and dined, with Packer at least twice in Manila.
Based on Bloombury’s own papers,
however, the company seems to have more links to Razon than to
Alvarez.
It is in Bloombury’s letter of intent to
Pagcor that Razon’s legal counsel in ICTSI, Benny Tan, is listed
as corporate secretary, while Almeda is named as managing director.
Tan’s name does not appear in Bloombury’s SEC records, but
Almeda’s does, as one of its incorporators who put in P1 each. The
others are lawyers Fiorello E. Azura, Jhoel P. Raquedan, and Allen
R. Bauzon.
Azura is a senior partner of the Azura
Quiroz & Campos Law Offices, which lawyers for Pepito Alvarez,
who is also chair of Philippine Phosphate Fertilizer Corp. or
Philphos. Azura had also served as assistant executive of the Asset
Privatization Trust under the Joseph Estrada administration in 1999.
Raquedan and Bauzon are senior associates
of the Picazo Buyco Tan Fider & Santos lfirm, which has made a
reputation as “the counsel of choice for the lenders on various
projects and acquisitions in the country,” according to
www.iflrlegalwire.com, a reputable “guide to the world’s leading
financial law firms.”
Almeda, though, is possibly Bloombury’s
only tenuous link to gaming operations. At one time, he had served
as president of Waterfront Philippines Inc., which is owned by the
family of William Gatchalian, a close friend of former President
Estrada. Waterfront hotels in Manila, Cebu, Mactan, and Davao host
Pagcor casinos.
It is also Almeda who visits — albeit
rarely, said the person who fielded PCIJ’s phone call —
Bloombury’s “representative office in Manila,” which turned
out to be the premises of Mega Equipment, a company owned by Jose
Eduardo J. Alarilla and Medy Chua-See, until recently major
shareholders in Razon’s ICTSI.
That Razon has a line to Malacañang is an open
secret. On October 25, 2007, businessman Jose ‘Joey’ de Venecia
III testified at the Senate that he received advice on his NBN
proposal from Razon and President Arroyo’s brother, Diosdado
‘Buboy’ Macapagal Jr.
De Venecia quoted Razon as saying: “P...
ina kasi ‘yang (former Commission on Elections Chairman Benjamin)
Abalos na ‘yan. Sinabi pa niya kay (First Gentleman) Mike (Arroyo)
na mayroon siyang $70 million dito. Hindi ito makalimutan ni Mike
(That s.o.b. Abalos. He told Mike that he would get $70 million, and
now Mike can’t forget it).”
As for Pepito Alvarez, many still remember
him as the owner of the Learjet that reportedly spirited then
elections commissioner Virgilio Garcillano out of the country in
2005, at the height of the “Hello, Garci” controversy.
Official reports affirmed that Garcillano
took a chartered Subic Air Learjet to fly from Subic to Singapore on
July 14, 2005. Alvarez owns Subic Air, which maintains a fleet of
Learjets, Bell and Eurocopter aircraft, and BMW cars.
Garcillano later wound up in Latin
America, where Razon reportedly kept him occupied for months, and
away from the House of Representatives that was investigating
alleged attempts by Arroyo to cheat in the 2004 elections.
Razon ranks No. 11 in the 2007 Forbes
magazine list of the 40 richest Filipinos, with a supposed net worth
of $285 million.
The PCIJ repeatedly tried to secure
comments from Razon, Alvarez, Almeda, and the Picazo lawyers through
fax, mail, and phone calls but received no reply as of this writing.
Razon is on vacation overseas, according to his public relations
officer. A questionnaire faxed to eight companies known to be owned
by Alvarez yielded no reply.
Alvarez and Razon have kept quiet about
their role in Garcillano’s flight abroad, but talks persist that
they are both close allies of the president and First Gentleman Jose
Miguel Arroyo.
Alvarez’s brother Antonio, a congressman
from Palawan, is a member of Arroyo’s Kabalikat ng Malayang
Pilipino (Kampi) party.
In 2005, Rep. Alvarez voted, together with
157 other lawmakers, to junk three impeachment complaints against
the president.
In 2007, Rep. Alvarez voted, together with
112 congressmen, to give Pagcor awesome powers under a new charter.
Last April, Alvarez, who chairs the trade
and industry committee of the House of Representatives, openly
endorsed the Pagcor casino project. He said it would “put the
country in a position to catch a portion of China’s increasing
spending on gambling.”
“We also need jobs. We have 430,000 new
college graduates a year but not all can be absorbed by existing
companies,” said the younger Alvarez. With world-class casinos in
Manila, the congressman said rich Filipinos need not go to Macau or
Las Vegas and just spend their money in the country.
Some opposition lawmakers said money changed
hands prior to the plenary vote on the bill. Then Deputy Minority
Leaders Rolex T. Suplico and Joel Villanueva in particular said that
legislators were offered thick wads of peso bills, amounting to at
least P50,000 per bundle, and that Arroyo’s allies managed the
operations.
Asked by PCIJ about this allegation, Pagcor’s
Francisco gave a long, hearty laugh. “No, no, no, no,” he said.
“We applied for a charter in 2002...Can you imagine that? Could
you believe that?” – with additional reporting by Patricia M. de
Leon
(To be continued)
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