House asked to look into Pagcor-Philweb contract

MANILA, Philippines – Two Mindanao lawmakers asked the House committee on games and amusement to inquire into the Internet gaming contract between the Philippine Amusement and Gaming Corp. (Pagcor) and Philweb Corp.

Cagayan de Oro City Rep. Rufus Rodriguez and his brother Maximo, who represents Abante Mindanao, made the proposal after the Commission on Audit (COA) reported that the contract was disadvantageous to the government.

Philweb is identified with Marcos-era trade minister Roberto Ongpin.

In Resolution 585, the Rodriguez brothers said the COA has urged Pagcor to renegotiate the deal so the government would receive its fair share of earnings.

They said COA found “Philweb’s fees and the cash management of Pagcor’s Internet gaming operations were disadvantageous to the government.”

Pagcor pays Philweb a significant amount for the cash management of the Internet casino even though Pagcor could better perform the task and that if Pagcor handled the job, it would have saved at least P14.8 million, they said, citing the COA report.

The Rodriguez brothers said under the Intellectual Property License and Management Agreement signed in 2006 between Philweb and Pagcor, Philweb would get 40 percent of net earnings from Internet casino operations.

Additionally, Philweb got paid a 10-percent software license fee even if it acted only “as a middleman between Pagcor and Real Time Gaming Holdings, Ltd., which owns the software,” they added.

The Rodriguez brothers said Pagcor violated its agreement with Philweb when it agreed to increase the latter’s software fee from 2.5 percent to 10 percent of earnings.

The lawmakers noted the comments of Philweb president Dennis Valdes on the COA findings.

They quoted Valdes as claiming the deal is advantageous to the government since the income sharing is 60-40 in favor of Pagcor, and that this year alone, Philweb would remit about P1.3 billion to Pagcor with the former spending for all operating costs, they added.

In the face of conflicting claims between the two parties, “there is thus a need (for the House) to look into this deal and determine whether the government is being short-changed or taken advantage of and to ensure that the government is getting what rightfully belongs to it,” the Rodriguez brothers said.