Apparent haste marked the approval in February 2007 of the new charter of the Philippine Amusement and Gaming Corp. (Pagcor), the state agency that enjoys monopoly over gambling and gaming operations in the country.
Pagcor, today the government’s third largest revenue agency, has unveiled its ambitious $20-billion “Tourism City” project, a gaming-entertainment complex that would rise on reclaimed land on Manila Bay.
Pagcor has accepted proposals from four groups of investors, including Bloombury Investments Ltd., a newly formed company with neither track record nor proven financial capability to roll out its $1.14-billion proposal.
Bloombury has, however, claimed a partnership with the former Publishing & Broadcasting Ltd. (PBL, now Crown Ltd.), that is chaired by Australia’s third richest man, James Douglas Packer.
The partnership was revealed a fortnight ago by Pagcor president Rafael Francisco in an interview with The South China Morning Post. Promptly, Crown issued a statement, denying that Packer or the firm was in “advanced talks” with Bloombury on the Pagcor project.
In this two-part report, the Philippine Center for Investigative Journalism (PCIJ) uncovers the mysterious and muddled ownership interests behind Bloombury, and gaps in Pagcor’s decision to enroll it as an investor in “Tourism City.”
At least two allies of President Gloria Macapagal Arroyo have been linked to Bloombury — businessman Jose ‘Pepito’ Ch. Alvarez, who is listed as president of the firm; and Enrique K. Razon Jr., whose legal counsel in the International Container Terminal Services Inc. (ICTSI). Silverio ‘Benny’ Tan, is listed as Bloombury corporate secretary.
The firm’s “managing director” is Donato C. Almeda, who has just a peso investment in Bloombury, is the brother of Antonio Mariano Almeda, chief of staff of Pampanga Rep. Juan Miguel Arroyo.
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 Corporation (Pagcor).
THE envisioned Tourism City on Manila Bay. [image courtesy of Pagcor website]
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.
Pagcor’s awesome powers
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.
Pagcor: It’s Almeda
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).”
Remembering ‘Hello, Garci’
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