Berjaya girds for legal battle with PCSO over lotto license

MANILA, Philippines - Berjaya-led Philippine Gaming Management Corp. (PGMC) is ready to “go to war” with the Philippine Charity Sweepstakes Office (PCSO) for allowing another entity to enter its supposed exclusive Luzon territory without any public bidding.

“I can reassure you we will go all out,” said Paulino Soo, president of PGMC and Berjaya Philippines country head.

PGMC earlier filed a contempt suit against the PCSO for alleged deliberate disobedience to an order issued by the Makati Regional Trial Court stopping the implementation of the deal entered into between the state-run charity organization and Pacific Online Systems Corp.

Under the deal, Pacific Online, which is partly owned by high-end leisure developer and gaming firm Belle Corp. of the Sy family, will lease to PCSO lottery equipment for online lottery operations in Luzon.

PGMC, the local gaming unit of Malaysian conglomerate Berjaya Bhd., said the deal allegedly violated the exclusivity agreement they entered into over the Luzon area and a prohibition against entering into government contracts without any bidding.

The agreement, which provides for PCSO to pay PGMC rentals from all of the state gaming firm’s online lottery operations in Luzon, has yet to expire in August 2015.

Jose Bernas, legal counsel of PGMC, said the PCSO, under its present management, has been “relentless in its efforts to bring PGMC down, demanding the company, to reduce the rental rates on the lotto equipment from 10 percent to 6.5 percent.”

PCSO subsequently revised the figure to 7.85 percent and demanded that PGMC absorb the paper cost, currently borne by PCSO, which is equivalent to 1.5 percent, effectively demanding that PGMC bring its rate down from 10 percent to 6.35 percent.

Bernas claimed rival firm Pacific Online, the government’s lottery equipment supplier for Visayas and Mindanao, was made to lower the rentals on its existing terminals in Visayas-Mindanao to just 9.85 percent. In addition, Pacific Online was allowed to intrude into Luzon, supplying machines at 7.85-percent rent without the cost of paper.

Pacific Online’s contract was also extended indefinitely beyond March 2013, PGMC further claimed.

“We have all the documents to prove our allegations and we are now prepared to go all out to expose what PCSO has been doing against a foreign investor and its local shareholders. We are doing this after exhausting all means to resolve these issues with the present PCSO,” Bernas said.

When asked for comment, Pacific Online chairman and president Willy N. Ocier, said: “Let’s do charity, not war.”

In 1993, PGMC won the bidding for the whole Philippines to provide the lottery equipment to the PCSO. However, the government decided to split the contract, giving PGMC and Pacific Online exclusive jurisdiction over Luzon and the Vis-Min area, respectively.

“You now have a situation where the losing bidder, whose contract expires in a few months, has effectively been given the whole country on a silver platter. The real winner, PGMC, is about to lose even Luzon,” Bernas said.

In August, the PCSO said it would no longer extend the contracts entered into with PGMC and Pacific Online for lotto operations. These contracts have been the subject of criticism by the Commission on Audit for being disadvantageous to the government.