Before lotto suspension, COA flagged PCSO for irregularities involving billions

Before President Rodrigo Duterte ordered the Philippine Charity Sweepstakes Office to stop its gaming operations over allegations of corruption, the Commission on Audit flagged the agency for several points as regards the funds under its care.

Weeks before the President’s stunning order, the Commission on Audit (COA) released its 2018 audit report which found at least seven irregularities involving billions of pesos.

These adverse findings of COA on the PCSO include:

• failure to remit P8.426 billion worth of dividends to the national government from 1994 to 2016 in violation of Republic Act 7656 requiring government-owned or -controlled corporations (GOCC) to declare and remit at least 50 percent of their annual net earnings as cash, stock or property dividends to the national government;
• posting of P4.6 billion Presumptive Monthly Retail Receipts (PMRR) or STL proceeds shortfall as of December 2018;
• failure to settle P1.036 billion worth of transactions already disallowed by COA from 2016 to 2018;
• accumulating P1.031 billion of unsettled amounts disallowed by COA from 2013 to 2015;
• failure to transfer P684 million to charity fund (The amount is broken down to P184 million worth of forfeited prizes in PCSO-sanctioned lottery Keno Games and P500 million unutilized operating fund in 2017);
• the amount of unclaimed Keno prizes increasing over the last three years, reaching P45.3 million in 2016, P57.4 million in 2017, and as high as P81.5 million in 2018 for a total of P184 million; and 
• PCSO-sanctioned Keno Game incurring a total deficit of P2.719 billion under its prize fund.

Under its charter, the PCSO is mandated to raise and provide for funds for health programs, medical assistance and services, and charities of national character by conducting charity sweepstakes races, lotteries, and other similar activities “as shall be determined and subject to such rules and regulations as shall be promulgated by the Board of Directors.”

The same law mandates that the allocation of PCSO’s gross receipts—which covers sale of sweepstakes tickets, whether for sweepstakes races, lotteries, or similar activities—will be deducted the printing cost of such tickets, which in no case shall exceed two percent of such gross receipts to arrive at the net receipts.

The net receipts, on the other hand, will be allocated as follows:

• 55 percent a prize fund for the payment of prizes, including those for the owners, jockeys of running horses, and sellers of winning tickets;
• 30 percent for as contributions to the charity fund for payments or grants for health programs, including the expansion of existing ones, medical assistance and services and/or charities of national character, such as the Philippine National Red Cross, under such policies and subject to such rules and regulations as the Board may from time establish and promulgate; and
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• 15 percent for contributions to the operating expenses and capital expenditures of the Office. —NB, GMA News