Supply contract masquerading as joint venture

In the 27 June 2012 issue of the Philippine STAR, particularly in the Hidden Agenda column of Ms. Mary Ann LL. Reyes entitled “Another Black Eye,” she alleged that the Philippines is fast becoming an unreliable investment destination citing as example PCSO’s decision to “turn its back on its commitment without any justification” on the joint venture agreement with TMA, an Australian company.

We refute the unfair imputations to the PCSO particularly on the present Board.

The present Board reviewed all contracts and agreements including the Contractual Joint Venture Agreement (CJVA) with TMA and discovered that the CJVA was really a supply contract which finding was supported by the OGCC Opinion No. 079 dated April 4, 2011 declaring the CJVA “void and inexistent because it is undertaken to circumvent R.A. 9184 in the procurement of supplies and evade COA audit.” As a result, the Board passed Resolution 118 revoking the approval of the CJVA between PCSO and TMA.

This decision by the present Board finds support in the Senate Blue Ribbon committee’s findings that,

1. the profit-oriented CJVA entered into by PCSO violates its own charter;

2. the PCSO-TMA CJVA does not have pooling of resources but is simply a supply contract wherein PCSO’s only contribution is to “commit all its thermal paper and other specialized paper products and consumables for all current, future and other gaming activities for the next 50 years”;

3. the mere commitment to purchase paper is not a contribution in the form of “money/capital, services, assets as envisioned in the definition of the Joint Venture in the 2008 Guidelines and Procedures for Entering into Joint Venture agreements between government and private entities; and

4. the provisions of the contract are highly disadvantageous to government. Note that TMA’s investment is set at approximately P4.4 billion over the life of the joint venture, which is 50 years. If PCSO’s commitment to buy thermal paper is considered as its investment, then based on the calculations of the current Board, PCSO’s total contribution would be P42 billion. x x x It is therefore unacceptable that while the government contributes approximately 91% of investments of the joint venture, it only get 20% of the profits.

These findings are contained in pages 80 to 86 of the Senate Blue Ribbon committee report.

PCSO welcomes anyone seeking to find answers and clarifications on any issue, but we have not been given that opportunity. Nevertheless, the present PCSO Board stands by any decision to defer/cancel implementation of any contract or agreement it finds disadvantageous to government. We owe it to our indigent beneficiaries, we owe it to the Filipino people to be vigilant in the performance of our duties and ensure that no single peso of government funds is misappropriated under this present Board, we owe it to our President and to ourselves to take the “daang matuwid.”

We have come across transactions masquerading as anything but its true nature, but we saw through them and these transactions for what they truly are.

Although we find The Philippine STAR as one of the reputable papers in the country, we are deeply saddened by how it allowed an unverified and obviously subjective article to find the light of day in its pages.  

We hope that this clarification finds space in your editorial in order to set the record straight.