ALARM & DISGUST: Oo nga naman, why should bigtime cockfights be held right at the provincial capitol grounds in Pasig City in utter disregard of the sensibilities of the more decent members of the community?

If wealthy sabungeros want to gamble in public — throwing multimillion-peso bets with abandon — they should at least do it in a private cockpit operating within the law and in good taste.

My mention here last Jan. 25 of the derby-type cockfights at the Ynares Sports Center at the capitolio has elicited more expressions of alarm and disgust from many readers.

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BAD EXAMPLE: A concerned reader emailed us: “You would be amazed by the bigname politicos and personalities participating in this shameless display of gambling in a publicly-owned establishment.”

He listed the sabungeros seen betting heavily. They are prominent in politics, sports and business who should be role models. I held back the names (one is reportedly a member of the First Family) because I did not see them myself, but the list is available to those interested.

The writer identified a former governor and the spouse of a senator as the known organizers of the derbies. The multimillion-peso betting is open and the game schedule is advertised, it is a wonder the Bureau of Internal Revenue has not stepped in.

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GAB ALERTED: Another concerned citizen gave me a copy of a letter he said he had sent to Chairman Eric R. Buhain of the Games and Amusement Board after my Postscript on it came out. It said in part:

“We in our small circle of professionals who are natives of Pasig City actually visited the Ynares Sports Arena on the night of Jan. 27 and we saw and confirmed that the place is a venue of bigtime sabong. And we also learned that this has been going on regularly since December last year, with weekly schedules already booked up to May 2009, under the group National Cockers Association.

 “Truly our city leaders have lost their sense of delicadeza. After the shabu scandal, we now have sabongand gambling right inside the capitol grounds!

“We are therefore seeking clarification from your office: have you allowed and granted authority to any person or entity to operate cockfights at the Ynares Sports Arena, which is a public facility owned by the Rizal provincial government?”

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DÉJÀ VU: After earlier scandals saw parents failing to collect contributions for their children’s schooling, one would think the government would have cracked down on companies selling pre-need plans.

My impression is that pre-need companies were saved from mass prosecution by the mention of a relative of a Palace dweller, the rescue assistance of former congressman Mark Jimenez to the distressed parents, and the relentless lobbying and public relations.

With the eruption now of what looks like another case of syndicated estafa involving pre-need companies, it has turned out that the government has not learned its lesson.

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TRUST FUND: The modus operandi is as old as the hills. As analyzed by Catanduanes Rep. Joseph Santiago, only 45 to 51 percent of planholders’ contributions are put into the trust fund to cover future claims.

Trust funds of pre-need companies taken from contributions are set aside to guarantee or pay for all benefits due planholders.

There is an urgent need, he said, for the business model of the pre-need providers to be corrected so as to build up the industry and protect planholders.

He said the Senate and House bills seeking to require providers to put in the trust fund at least 60 percent of contributions may not be enough.

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TOO TINY: Listen to Santiago and weep: “Pre-need firms are investing only 45 to 51 percent of planholders’ contributions. For every P100,000 paid by planholders, only P45,000 to P51,000 is actually put to work in a trust fund.

“The P49,000 to P55,000 balance (of the P100,000 sample) is used to pay the commissions of the selling agent and his manager, and to cover the provider’s general operations, including the compensation and bonuses of its top executives.

“Just to make the P100,000 contribution whole again, the P45,000 in the trust fund would have to grow at an annual compounded rate of 15 percent for at least six years.”

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SLOW GROWTH: Santiago explained that P45,000 growing at a compounded yearly rate of 15 percent would become P104,087, roughly matching the planholder’s contribution, only by the end of the sixth year.

He noted: “Everybody knows how difficult it is to invest P45,000 safely and make it grow 15 percent per annum, let alone 18 percent, which we understand is the average (trust fund) target growth rate adopted by industry players.

“The problem is not so much that pre-need providers are not putting the money to work securely and hard enough, but that too little is being stashed in the trust fund from the start.”

But if at the outset at least P90,000 (out of a P100,000 contribution) is put in the trust fund, and the money grows at an annual compounded rate of 15 percent, then the P90,000 would double to P181,022 after five years, or grow four times to P364,100 after 10 years, he said.

“Pre-need providers are not much different from mutual fund managers,” he noted. “In the United States, fund managers get only 3 to 5 percent of contributions as their cut or fee. Around 95 to 97 percent of the client’s or investor’s money is instantly put to work.”

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