The fallout from the massive flood control scandal has dealt another blow to former Ako Bicol Party list Representative Zaldy Co, as a long-standing commercial dispute involving his company continues to move through the courts alongside his frozen  multibillion-peso assets.

The widening investigation has drawn increased attention to his private-sector interests, including the unresolved legal case involving publicly listed DigiPlus Interactive Corp.

Locked in commercial dispute 

Documents furnished to the press indicated that DigiPlus and Eco Leisure and Hospitality Holding Co. — the Midas Hotel co-owner controlled by Co — has been locked in a commercial dispute since 2020, when Eco Leisure filed an arbitration case alleging that DigiPlus owed it billions of pesos in financial obligations. 

The arbitration tribunal dismissed the claims and ruled in favor of DigiPlus, prompting Eco Leisure to file a motion to elevate the matter to the Pasig Regional Trial Court in 2022. The case remains pending.

The dispute stems from DigiPlus’ entry into the Midas Hotel in 2012 with a 51 percent stake, during which the property recorded steady revenue growth. 

Advanced hundreds of million of pesos

DigiPlus also extended hundreds of millions of pesos in advances to cover operating requirements. By 2019, the company sought to divest amid internal disagreements and secured a prospective buyer willing to acquire all shares in the hotel entities for P5 billion.    

Eco Leisure exercised its right of first refusal and agreed to purchase DigiPlus’ stake for P2.5 billion. However, disagreements emerged when Eco Leisure later offered P1 billion instead of the agreed amount, citing reimbursement claims for expenses. 

DigiPlus countered that such expenses were not reflected in Midas Hotel’s financial statements. The impasse led to the arbitration case that DigiPlus won, and which is now being contested by Eco Leisure before the Pasig court.

Dispute enters its fifth year

The online gaming operator, meanwhile, continues to await the court’s resolution as the dispute enters its fifth year.

Co’s bank accounts, real estate, e-wallets, insurance policies, and air assets are currently under an Anti-Money Laundering Council freeze order tied to a corruption probe. He is also expected to face plunder, graft, and administrative complaints before the Ombudsman. 

Corruption concerns continue to weigh on the country’s economic outlook, with the ongoing “floodgate” scandal affecting public investment and investor confidence.

“Indeed, the recent controversies surrounding flood control projects have raised concerns about the adequacy of oversight in infrastructure development,” the ASEAN+3 Macroeconomic Research Office (AMRO) said, noting that government construction spending fell 26.2 percent in the third quarter, cutting about 1.3 percentage points off economic growth. 

The scandal has also contributed to weaker foreign direct investment and peso pressures, which recently hit record lows against the US dollar.

While corruption has slowed growth, National Treasurer Sharon P. Almanza said ongoing investigations into the issue could boost investor confidence. 

“I think the investigations have been progressing, so we’re really hoping that they will address some of the concerns of our investors,” she said, adding that the hearings should show that “the system is working.”