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MANILA (Reuters) – The Philippine justice minister has ordered a review of a lease agreement for a $1.5 billion casino project by Landing International Development after President Rodrigo Duterte abruptly halted it, saying it was unfavorable to the government.
FILE PHOTO: Philippine President Rodrigo Duterte delivers his State of the Nation address at the House of Representatives in Quezon city, Metro Manila, Philippines July 23, 2018. REUTERS/Czar Dancel
Just as Hong Kong’s Landing broke ground on Tuesday on the integrated casino-resort at Manila’s Entertainment City, Duterte sacked the board of the Nayong Pilipino Foundation which administers the land and who had agreed the terms of Landing’s lease, which tied the government to a lengthy contract that collected rent at far below market value.
Justice Secretary Menardo Guevarra said the deal between state-owned Nayong Pilipino and Landing would be investigated, but stressed that it did not mean the project was dead.
“The removal of all the members of the Nayong Pilipino board, by itself alone, does not affect the implementation of the project,” he told reporters on Thursday.
However, he said it could be affected by the re-evaluation of the deal and the appointment of a new Nayong Pilipino board.
Landing said on Tuesday the casino would go ahead and its lease contract remained valid, unless nullified by a court. Landing said on Friday that it had no further comment.
The review is the latest setback for a gaming sector whose fast growth has until recently been warmly welcomed by the Philippines. It now finds itself increasingly at the mercy of a powerful president who dislikes gambling, even though it attracts tourists, creates jobs and brings in revenue.
Earlier this year Duterte halted the licensing of new integrated resorts to prevent overcrowding. On Wednesday he reiterated that he hated gambling and would not allow new casinos to set up beyond those already approved.
The national gaming regulator said on Friday it would stick by industry policies on licensing and leases but would respect any order issued by the president.
A distant relative of the president who was a member of the Nayong Pilipino board Duterte sacked identified herself on Friday as the whistle-blower who reported the irregularities with the lease, which she said would see rent collected at more than two-thirds below the market value.
“There was no bidding, it did not undergo proper process. They (board members) did not publicize or put it to challenge of other investors for comparison,” Maria Fema Duterte, who married into the Duterte family, told news channel ANC.
Former Nayong Pilipino officials could not be for comment. Former chairman Patricia Ocampo said on Tuesday said the contract was “above-board” and “highly advantageous to the government and to the Filipino people”.
Editing by Martin Petty and Eric Meijer