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CEZA head replies to Tulfo’s allegations

By: Sec. Raul L. Lambino
Administrator and CEO (CEZA)

First of 3 parts
I WRITE to set the record straight following the malicious accusations (not criticisms) of outrageous corruption in the Cagayan Economic Zone Authority (CEZA) raised by Mr. Ramon Tulfo in his column in the Feb. 20, 2020 edition of The Manila Times, and in his Facebook account on several dates.

1. Regarding the P2.1-billion leftover CEZA funds as of July 2017 and only P140-million balance as of July 2018, let me cite the 2018 Commission on Audit (CoA) Annual Audit Report. The report is readily available online. (https://www.coa.gov.ph/index.php/gov-t-owned-and-or-controlled-corp-goccs/2018/category/7319-cagayan-economic-zone-authority)


What do these figures mean?

Upon assuming office as CEZA administrator and chief operating officer (CEO) on July 24, 2017, I immediately stopped the offshore gaming operations of CEZA-registered companies that were then operating in Metro Manila and Central Luzon.

Hence, at the end of fiscal year 2017, CEZA earned only P214.58 million from its operations or a decrease of almost P712 million from its income from operations in 2016, which registered a mark of P926 million.

(https://www.coa.gov.ph/index.php/gov-t-owned-and-or-controlled-corp-goccs/2017/category/6696-cagayan-economic-zone-authority)

The CoA report figures show a different story in 2018, after I instituted the necessary reforms, which saw CEZA more than double its receipt of income from operations, primarily not from offshore gaming anymore, to P555 million (from P214 million in 2017).

I call particular attention to the last item in the matrix. As of Dec. 31, 2018, CEZA’s cash on hand at the end of the year was more than P1.8 billion, not P140 million cash on hand by the end of July 2018 as alleged. This surpassed by more than a hundred million pesos the cash on hand at the end of fiscal year 2017.

CEZA has more than tripled its 2017 gross revenues and income to a new agency record of P706.512 million. CEZA’s contribution to the national coffers for 2018 amounted to P147.83 million as dividends, P110 million as corporate tax remitted to the Bureau of Internal Revenue (BIR) and P31.482 million in Bureau of Customs collections.

This is on top of the 5-percent gross income tax levied by the BIR on CEZA-registered enterprises.

2. On online gaming operations.
When I assumed office as administrator and CEO in July 2017, CEZA was on the red. It was losing as much as P926 million as receipts for operations. CEZA’s online gaming locators and all its local gaming support service providers operating in Metro Manila (more or less 50 companies) opted to operate under the Philippine Amusement and Gaming Corp. instead of relocating to the Cagayan Freeport Zone, following the issuance in Feb. 2, 2017 of Executive Order 1(EO) 3.

As earlier mentioned, pursuant to EO 13, we terminated the operations of more than 200 Interactive Gaming licensees (online gaming licensees or IGL), which were operating outside of the Cagayan Freeport Zone.

To date, only two IGL/online gaming operations are doing business in CEZA — Eastern Hawaii and Succeed Asia — while a new e-casino operation started in 2019 (Wus Technologies), all under First Cagayan Leisure and Resort Corporation (FCLRC).

Eighteen other licensees (e-casino and sports betting), all under FCLRC, are awaiting completion of commercial and office space requirements in the zone and, therefore, have no operations to date. Why then would these companies give away weekly P5 million as my share from gaming operations? There is no reason for them and FCLRC to source out funds for the alleged P5-million stipend, a malicious accusation, which I categorically deny.

Prior to my assumption of office at CEZA, there were no clear-cut rules and regulations on gaming and casino operations. We have now these in place prohibiting any CEZA licensee to operate outside of the Zone.

Our regulatory framework in offshore online gaming is recognized by the Anti-Money Laundering Council /Bangko Sentral ng Pilipinas as among the most compliant in terms of ensuring anti-money laundering mechanisms in our online-gaming operations.

Through strict implementation of CEZA rules and regulations, we were able to collect all the accounts payable from our online-gaming locators, which failed or were delayed in the remittance of their monthly gaming revenues in previous years between 2015 to 2017.

In October 2019, the FCLRC, CEZA’s primary licensee, first paid the amount of P69,176,682.90 and in December 2019, FCLRC paid another P119,757,641.62, while North Cagayan Gaming and Amusement Corp., another licensee, paid P10 million in November 2019 and another P11,474,044.68 in December 2019 in gaming levy fees, including interests due to CEZA.

Second of 3 parts
3. On CEZA’s Fintech and offshore virtual currency exchange license (OVCE) program

The CEZA fees for joining the program are two-fold. Each OVCE principal license consists of $100,000 for the application fee and $150,000 for the license fee for a total of $250,000. The schedule of fees for the FTSOVCE Business Rules are published in the CEZA website and can be accessed by the public.

All payments for the application and license fees are officially receipted.

As of end of 2019, with the help of I-wave and Y-fi companies and CEZA’s consultants and special assistants who guided us in this innovative business venture, CEZA revenues from its OVCE licenses totaled $8,650,000, or P460 million.

To date, Fintech and offshore virtual currency exchange companies are not yet operating. Alpha Palauig, one of CEZA’s new investors, is now developing a 21-hectare property with an investment of P5 billion for resort, hotel and commercial building development, including the CEZA Fintech hub.

CEZA has 25 principal licensees — all have undergone strict probity and integrity checks — that have yet to start their operations upon completion of the required facilities at the Cagayan Freeport in Santa Ana. These companies are mostly on incubation period of their platforms and marketing activities with no actual operations in the Philippines. In short, they have no revenue streams. Again, there is no reason for them to source out funds from the alleged P5-million weekly stipend, another malicious accusation that I categorically deny.

4. On the alleged 10-percent dole out from prospective investors prior to signing of a memorandum of understanding

Absolutely not true and “outrageously” malicious!

There is no entity or any business enterprise that will agree to pay any fee much less 10 percent of its authorized capital stock just for a non-binding MOU.

The MOUs serve only as a record of the parties’ intentions and do not constitute a partnership, joint venture or agency under domestic and international law and do not constitute or create any legally binding financial obligation.

Most of these MOUs that were signed abroad more particularly with Chinese companies, were strictly vetted and checked by the Department of Trade and Industry.

Some of these companies have not eventually passed CEZA’s rigid probity and integrity check or were discouraged to invest because of the lack of infrastructure facilities to suit their requirements.

CEZA is very strict in reviewing the corporate records of applicant companies prior to the issuance of permits, licenses or Certificates of Registration for any business activity in the Zone.

5. On the alleged P1 million request from Sun City and unspecified amount from Party Beach Resort for my alleged birthday bash in 2017

I only assumed office on July 24, 2017. That was several months past March 9, my birthday.

Moreover, Sun City is FCLRC’s sub-licensee while Party Beach Resort is NCGAC sub-licensee, and CEZA does not deal directly with sub-licensees. I have written FCLRC and NCGAC to clarify these allegations.

6. On my foreign travels

All my foreign travels are with pertinent Authority to Travel issued by the Office of the President. As one of the investment promotion agencies (IPAs) together with the likes of SBMA, CDC, AFAB, PEZA, CEZA is often invited to join international investment promotion activities and marketing roadshows abroad, which are facilitated by the Board of Investments (BOI) and the Department of Trade and Industry (DTI). Some of my travels abroad happened during the state or working visits of President Duterte in many countries. Others are upon invitation of respected foreign chambers of commerce or business associations, all vetted by the Philippine embassy officials or trade counselors concede before the Authority to Travel is approved by the Office of the President.

7. On Cagayan North International Airport (CNIA)/ Lal-lo airport

The previous CEZA administration failed to commence the operation of the CNIA for commercial or regular chartered flights since 2013 when the construction was completed. CEZA’s corporate funds amounting to almost P1 billion were spent for an infrastructure [project] outside the jurisdiction of CEZA. Whatever the motive or intent of the past CEZA administration was in spending such a large amount is a matter to be further investigated. It was a white elephant and remained as such.

It was only upon my assumption that we worked double time in coordination with the Department of Transportation (DOTr) and the Civil Aviation Authority of the Philippines (CAAP) that we were able to secure the needed Aerodrome Certification of the CNIA and its ICAO registration and IATA code, thus paving the way for its eventual operation on March 23, 2018 of domestic commercial flights to and from Clark International Airport and international chartered flights to and from Macau.

Lal-lo airport, although owned by CEZA and its private joint venture partner, Cagayan Premium Venture Development Corp., operates only chartered flights from Macau and vice versa and domestic commercial flights from Clark. It is a facility located outside the Freeport Zone and hence it is outside the jurisdiction of the Authority. As such, it is manned by personnel from Immigration, Customs, Quarantine and DOTr-OTS. CEZA never interfered in the jurisdiction of said national agencies, although we have assigned a few security personnel to assist the OTS.

CEZA does not have a hand in the entry and exit of foreign nationals through the CNIA (Lal-lo Airport); it is not engaged, moreover, in the ground-handling services, which is the responsibility of the provider of Royal Air, the airline company that has domestic commercial and international chartered flights.

On June 28, 2018, CEZA security personnel at Lal-lo airport intercepted several high-powered firearms. They immediately alerted the police, to whom the firearms were turned over for proper disposition. This incident is properly documented and reported to higher authorities and the PNP.

Last of 3 parts
8. On alleged use of chartered planes, luxurious parties at five star hotels, and holding of various events at CEZA
The Cagayan Economic Zone Authority is situated in the municipality of Santa Ana, Cagayan, the northeastern most tip of Luzon. It is more than 600 kilometers from Manila, a good 16-hour drive by land or a three-hour drive from Tuguegarao City.

On several instances, I have traveled by land from Manila to Sta. Ana and vice versa, or by plane from Manila to Tuguegarao City, then by land to Sta. Ana and vice versa.

However, on a few instances when some investors who visited the ecozone used their private jets or chartered planes, I have accompanied them, all at no cost to CEZA.

CEZA has never hosted or organized luxurious parties at five-star hotels. On a few occasions when invited, however, the agency attended license-awarding programs, which are vital marketing tools of CEZA licensees. All these activities involved no cost to CEZA.

The holding of motocross, film festivals, sports activities and other entertainment shows in CEZA are regularly held during the anniversary or in the summer when tens of thousands of tourists come to CEZA. It must be noted that CEZA is not just an ecozone for industries and other businesses but also caters to tourism enterprises such as resorts and other tourism-related services. It must be noted that CEZA is the most attractive tourist destination in Northern Luzon with its pristine white, brown and black sand beach areas, virgin forests and historical sites.

9. On procurement and infrastructure issues
Camia Construction Corp. is not a consistent losing bidder in CEZA’s procurement activities. In fact, it was awarded the contract for the design-and-build scheme for the construction of the CEZA Multi-Purpose Building in the Regional Government Center, Carig, Tuguegarao City, and the contract for the site development of the Tuguegarao office. With regard to the statement of a certain Queenie Dupaya, alleged subcontractor of Camia, our record shows that she was not authorized to represent Camia in the bidding of some CEZA projects. Moreover, we do not allow subcontractors to undertake CEZA projects.

I have neither talked to any of the contractors nor promised them anything. My only directive to the CEZA Bids and Awards Committee (BAC) was to strictly adhere to the provisions set forth by the Procurement Act and its implementing rules and regulations, and ensure that the bidding process is open, transparent and competitive as mandated by law. I have never interfered with the BAC deliberations and decisions.

CEZA does not have any favored contractor. Rep. Joseph “Jojo” Lara’s Pulsar Co. is an established and well-known construction company in the Cagayan Valley (Region 2), which could be attested to by records from the Department of Public Works and Highways and other agencies. Any project awarded to Pulsar underwent the transparent procurement process of CEZA and other companies.

10. On foreign visitors in CEZA and Pangasinan
Not only Chinese have shown interest to come to CEZA. We are talking with Americans, Europeans, Canadians, Japanese, South Koreans, Singaporeans, Malaysians and others in the Asia-Pacific region.

Regardless of nationalities, CEZA will only allow investments that are sustainable and beneficial to the interest of the country and the Filipino people.

In my capacity as presidential adviser for Northern Luzon (in concurrent capacity), I am actively promoting Pangasinan and other areas in Northern Luzon as areas of investments. I made public pronouncements about the establishment of an economic zone in the first district of Pangasinan in the areas of Alaminos City and the towns of Sual, Mabini and Dasol; the establishment of an economic zone in the fifth district, within the towns of Binalonan and Pozorrubio; on an economic zone in the town of Umingan in the Sixth District and an economic zone in the towns of Manaoag, San Jacinto and San Fabian in the fourth district. I have informed no less than Executive Secretary Salvador Medialdea of this planned ecozones in Pangasinan.

Many local and foreign investors have come and visited the province of Pangasinan upon my invitation and visited these various sites and talked to some local officials of the province.

With the election of my son as vice governor of Pangasinan and my wife as mayor of Mangaldan, these groups of businessmen have more confidence to take a look at my home province as a feasible growth area for investments and business development.

I am sure that this bold move has brought displeasure to powerful political families, which have not done any action to entice investments that could provide hundreds of jobs to our people, help them to escape indolence and poverty and spur economic growth and development in Pangasinan.

11. On political victories in Pangasinan
My son Mark Lambino was elected vice governor of Pangasinan, and my better half, Mary Marilyn de Guzman Lambino, mayor of Mangaldan, handily beat the incumbent in the last election. Their political pedigree also showed. Her father, Eulogio de Guzman, was once governor of La Union province; her two older brothers and niece were undefeated municipal councilors of Mangaldan. Likewise, former vice governor Oscar Lambino, a close relative, was undefeated for three consecutive terms from 1998 to 2007 as vice governor of Pangasinan.

In all poll surveys six months prior to the 2019 elections, Mark and Marilyn were favored to win. Vice Governor Mark, though young and a neophyte, gained the support of the youth because of his qualifications and background and won by a landslide. Mayor Marilyn’s victory on the other hand, is a testament to the protestations against the inability of the incumbent mayor then to bring about effective and efficient governance, a popular clamor to which my wife responded when she decided to take the cudgels for the people of Mangaldan.

Although new faces in local politics, Mark and Marilyn were elected fair and square. Mark won with the idealism of his campaign platform, which fired up the hearts of local voters and drew support from various sectoral groups and local officials, led by Bayambang Mayor Cesar Quiambo and big political families such as Deputy Speaker Conrado Estrella 3rd of the Sixth District, Rep. Baby Arenas of the Third District and her daughter former representative and now Movie and Television Review and Classification Board Chairman Rachel Arenas, Fourth District Rep. Ramon V. Guico 3rd and his father, Mayor Ramon Guico Jr., former representative and mayor Arthur Celeste, First District Rep. Noli Celeste and Mayor Arth Bryan Celeste of Alaminos City, former governor Victor Agbayani, Abono party-list led by Sinag Chairman Rosendo So and even former representative Mark Cojuangco, who defeated me in the congressional race for Pangasinan’s fifth district in the 2001 elections.

12. Things I have done since July 2017
CEZA is now ISO Certified (ISO 9001:2015), an award given last March 2018, and we maintain such certification for quality management system for the past two years.

I have caused the formulation of the CEZA Master Plan and feasibility studies for every project to be financed by the national government and corporate funds of CEZA in order to ensure that no public funds will be unnecessarily wasted.

It is only now that serious foreign and local investors have come to CEZA and started to build world-class infrastructure facilities to cater to visitors and workers in various fields like financial technology or FINTECH and other innovative technologies, and five-star hotels and resorts. A clear manifestation and testament of their trust and confidence in CEZA now! No legitimate businessman or company would deal and wage billions of funds with a corrupt agency or official.

When I assumed the post of CEZA Administrator and CEO on July 24, 2017 and began the necessary reforms, I knew that I would be stepping on the toes of the most powerful people or groups that have lorded it over the Zone, controlling illegal gambling operations and smuggling of imported secondhand vehicles and other goods through Port Irene. These I have stopped!

CEZA that time had issued hundreds of licenses to online gaming companies that were operating in Metro Manila, Central Luzon and Southern Tagalog provinces. CEZA also issued licenses to companies that were operating jueteng and illegal online sabong or cockfighting in Northern Luzon and other regions. These I have stopped!

CEZA has seized and confiscated the remaining luxury vehicles, some of which were destroyed with no less than President Rodrigo Duterte and senior cabinet officials in attendance on two occasions.

I have also caused the dismantling of monopoly in gaming operations with the issuance of new licenses to companies that have passed the rigid probity and integrity check of CEZA. These companies have begun constructing multi-million dollar infrastructure projects inside CEZA since the last quarter of 2019, creating thousands of new jobs and demand for goods that drive economic growth in Cagayan.

I have also stopped the monopoly of port operations and port services and opened it to other players, hence the number of port calls have increased more than tenfold and brought millions of pesos of new income to CEZA. These never happened in the previous administration.

I have also caused the investigation and submitted our findings to the Office of the President, the Department of Justice and the Ombudsman for further investigation of the illegal transactions and millions of fees collected pertaining to the issuance of CEZA immigration cards under the previous administration that only benefited some persons.

I have also been very strict in reviewing the application of people for free patents of lands being awarded by the DENR within the ecozone. We noticed that thousands of hectares of public lands have been titled to powerful political personalities to the detriment of the government and CEZA.

The national government had provided more than P5 billion to CEZA under the previous administration that was used in the construction of the breakwater in Port Irene, a contract that was awarded to a company that is known to be very close to powerful political families in Cagayan. This P5-billion breakwater has been destroyed and not serving well the CEZA’s Port Irene operations. This multi-billion anomaly is now the subject of a pending case filed before the Ombudsman by incumbent Cagayan Gov. Manuel Mamba. I have required and demanded that the contractor immediately undertake the necessary repairs of the breakwater.

13. On the alleged National Intelligence Coordinating Agency or NICA report
As early as 2018, I have been informed of a white paper containing damaging allegations against me being peddled by disgruntled powerful groups and personalities who used to control CEZA. They have used this white paper in their extensive media attacks against me, especially in the province of Pangasinan during the 2019 elections. Most of the issues or matters raised by Mr. Tulfo in his column were the same as those contained in the said white paper.

On top of this white paper, I am a recipient of continuing threats and warnings, which I don’t take lightly!

Records will show that CEZA was then run by the previous administration like a sari-sari store with no board authorization for its corporate acts. The transactions of CEZA then were made without corresponding board resolutions from the period October 2012 to May 2017.

For the past two-and-a-half years during my incumbency, all CEZA transactions have the corresponding board resolutions duly approved by the CEZA board during regular meetings held monthly or special meetings if need be.

Unlike the previous CEZA administrator and CEO who also sat as chairman of the board of directors, I am not even a member of the board. Since the present chairman of the CEZA board is the current secretary of the Department of Trade and Industry, there is not a single transaction in CEZA now, however small, that would escape the close scrutiny of the existing board composed of new appointees of President Duterte and holdover members.

14. My previous work experience
Modesty aside, during the incumbency of President Gloria Macapagal Arroyo, I had been offered several key government posts, but I respectfully declined those offers since I enjoyed my life as a private law practitioner. I have never chased after any client. On the contrary, I declined anybody or any company engaged in gaming or gambling operations or those implicated in illegal drugs and heinous crimes like robbery with homicide and rape — all these are considered lucrative cases in the legal profession.

Back then, I was already running my own law firm at the Philippine Stock Exchange Tower in Ortigas Center, Pasig City with prominent local and international corporate clients. I have been a legal counsel or consultant to some senators like Loren Legarda (1998-2000) and some congressmen from 1992 to 2017. I was reviewer of Political Law and Remedial Law in various law schools in Manila and Pangasinan for more than 15 years.

When some would turn their backs on their friends and allies during hard times, I never traded loyalty for political or personal convenience. In 2007, I remained and worked then as legal counsel of former speaker Jose de Venecia Jr., when he was removed as speaker of the House of Representatives and defended him in the House ethics committee and Ombudsman cases. In 2010 when I opted to be one of the lawyers and spokesmen of former president Arroyo in the trumped-up charges filed against her during the time of President Benigno Simeon Aquino 3rd, I lost valuable clients who were fearful of reprisals from the powers-that-be. But I am most compensated and elated with the dismissal of these cases against her.

Until now, my wife and I, together with our youngest lawyer daughter, continue to live in a modest townhouse in Metro Manila, which I have been renting for more than 15 years already. My son Mark and family, and my elder daughter lawyer and family have their own modest apartments all acquired by them before I joined the government.

My wife’s house in Mangaldan is the de Guzman ancestral home, which they renovated. The family is renowned in Mangaldan as honest and hardworking businessmen for more than 50 years already, engaged in hotel and resort operations, real estate and land development, rice milling and trading, poultry and piggery, LPG refilling station and car dealership in several provinces, among many other business interests.

In a Hugpong ng Pagbabago general assembly in Davao City sometime in 2018, President Duterte publicly announced and asked me if I was interested to run for governor of Pangasinan or perhaps run for senator, but I humbly declined the offer for I know where I stand. My sole focus for now is how to serve the Filipino people and to fulfill the mission President Duterte has entrusted in me. Being a senior citizen already, I have no political plans and ambitions but I will continue fighting for reforms.

At this point, may I take this opportunity to invite Mr. Tulfo to come and visit the towns of Pozorrubio and Mangaldan in Pangasinan to see our humble home, and the Cagayan Special Economic Zone and Freeport in Santa Ana, Cagayan to see for himself the ongoing multi-billion developments in the area, a phenomenon that never happened in the past 25 years of CEZA’s existence.

Further, I offer my apology to Rep. Joseph Lara and his son, Joseph Lara 2nd, newly appointed by President Duterte as CEZA director, and to my staff who have been unnecessarily dragged into this fabricated falsehood. I know that they and their families are hurting and suffering.

Finally, let me quote this verse from Psalm 27:2 of the Holy Bible: “When evildoers assail me to eat up my flesh, my adversaries and foes, it is they who stumble and fall.”

Thank you very much and more power!

SECRETARY RAUL L. LAMBINO
Administrator and CEO
Cagayan Economic Zone Authority and
Presidential Adviser for Northern Luzon

1st Part https://www.manilatimes.net/2020/02/25/opinion/letters-to-the-editor/ceza-head-replies-to-tulfos-allegations/695833/

2nd Part https://www.manilatimes.net/2020/02/26/opinion/letters-to-the-editor/ceza-head-replies-to-tulfos-allegations-2/696128/?fbclid=IwAR0RNAvmThFTjvgDeJ8aHtbGIVh6ZTRz8dpgxJBp02PDzGwu79pAj6VWiY0\

3rd Part https://www.manilatimes.net/2020/02/27/opinion/letters-to-the-editor/ceza-head-replies-to-tulfos-allegations-3/696756/?fbclid=IwAR3zlVvL_QmTwsx3UFVezmXsWGT63kgqVBaYzkbl_kznsERA1FpIUrX_Vrc

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