P-Noy’s ‘Daang Matuwid’ and Pagcor’s Naguiat

Japanese billionaire and pachinko king Kazuo Okada and American gambling tycoon Steve Wynn used to be close business associates and are now engaged in a bitter legal fight. President Aquino and former President Gloria Macapagal-Arroyo used to be close political allies (maybe not so close) but are now the bitterest of enemies, engaged in even more deadly legal battles.

In the Okada-Wynn battle, Philippine Amusement and Gaming Corp. and its chair Cristino Naguiat Jr. have gotten caught in the crossfire, as Wynn has charged Okada with making illegal payments to him (Naguiat) and other Pagcor officials over a 3-year period. In the Aquino-Arroyo war, the latter is not only in jail (charged with electoral sabotage), but her “midnight” appointee Chief Justice Renato Corona is also standing trial on impeachment charges—and it can be argued that he, too, is caught in the crossfire.

Both Naguiat and Corona have averred their innocence, of course. What is remarkable, though, is that P-Noy has pronounced Naguiat innocent, with the same lightning speed with which he pronounced Corona guilty, in both instances seemingly satisfied with just hearing one side of the story (Corona still has to present his evidence). Such a rush to judgment in both cases is what makes me uncomfortable.

It must also be noted that the charges regarding Naguiat’s involvement in what are alleged to be illegal payments were based on a “multi-month” investigation report to the Wynn board on Feb. 18, 2012. The inquiry, which was commissioned on or about Oct. 29, 2011, was conducted by the law firm of former FBI Director Louis Freeh and involved conducting dozens of interviews (including one with Okada) and reviewing “thousands of documents and e-mails.”

Contrast this attention to detail with the impeachment charges against Corona which were prepared over a weekend and sent to the Senate after a 7-hour process of approval.

Among the improprieties detailed by the Freeh report, and carried by the international press, were the more than $110,000 worth of payments made on 36 separate occasions (including, by the way, a $4,642 bill run up by then President Arroyo’s husband Mike Arroyo, who must have been there under Pagcor auspices) for “luxury lodging, extravagant dinners, shopping, and cash to spend” for both the former and current Pagcor chairs, as well as the occasion when “Okada arranged for Pagcor Chairman Naguiat, his wife, his three children, his nanny, other senior Pagcor officials, one of whom also brought his family, to stay at Wynn Macau.”

With regard to the latter incident, the Freeh report goes on to say how Okada and his associates “refused to provide the Wynn Macau management with the name of Chairman Naguiat and tried to conceal his identity (he was registered as ‘Incognito’).” It adds: “At Okada’s … direction, Chairman Naguiat and his entourage were provided with the most expensive accommodation, food, and star treatment. In addition, Okada’s associates asked that each guest be provided with $5,000 cash advance during their stay.” Moreover, after the Naguiat group had left, Okada aides asked the hotel to reduce the bill of charges that had been run up because they feared an investigation and did not want their principal to get into trouble (the request was refused).

If the reader is interested in what is meant by “the most expensive accommodation, food and star treatment,” a Bloomberg news headline tells it all—“Okada Put Philippines Gambling Official in $6,000 Macau Suite, Wynn Says”—and goes on to describe the suite as the most expensive at Wynn Resorts Macau, with a 700-square-meter floor area and known as “Villa 81.” The amenities include three master bedrooms, a private casino and a beauty salon. Bloomberg even provides a video of the $6,000 suite. The international press has really gone to town on this one.

Naguiat denies that he got cash gifts and claims that he returned others (e.g., a Chanel bag). As for the rest of the perks, these were dismissed as SOP, i.e., “industry practice.”

The President has apparently accepted Naguiat’s explanation, ignoring the important distinction between your run-of-the-mill casino owner/operator and the head of a government agency like Pagcor that not only runs casinos but regulates, authorizes and licenses gambling operations. This is a distinction that the international press does not miss, or it wouldn’t have made such a big issue of the Pagcor involvement in the Okada-Wynn battle. Neither has the Freeh report, which apparently concludes that Okada et al. “appear to have engaged” in violation of the US Foreign Corrupt Practices Act in the Philippines (and maybe also in South Korea).

But the real kicker is in the findings of an independent investigation and risk assessment of the gaming industry in the Philippines commissioned by the Wynn Resorts Compliance Committee in January 2011, as contained in the Wynn complaint against Okada: “a) Official corruption in the Philippine gaming industry is ‘deeply ingrained;’ b) Doubts that newly elected President Aquino’s stated plans for reform would eliminate corruption in the gaming industry; c) The country’s legal/regulatory frameworks were not closely aligned with American compliance and transparency standards; and d) Despite a general refusal by witnesses to discuss Okada’s role in the Philippines (many refused to comment), other information created the suspicion that persons acting on Okada’s behalf had engaged in improprieties.”

So goes the “Daang Matuwid” 20 months into P-Noy, and 26 years after our Edsa Revolt.