Another reason to abolish Pogos

Not credible. Not capable. Not qualified.

That was how Senate ways and means committee chair Sen. Sherwin Gatchalian described Global ComRCI, the third-party auditor that the Philippine Amusement and Gaming Corp contracted in 2017 to ensure that the controversial Philippine offshore gaming operators (Pogo) were declaring the right revenues and paying the right fees and taxes.

The harsh description was certainly warranted, as the Senate has been uncovering more evidence underlining how clearly unqualified the consortium was to undertake its mandate, thus raising grave concerns over corruption and bolstering the long-standing argument that the Pogo industry, which is just half of what it used to be before the pandemic struck in 2020, has to go. Now.

But first, Pagcor must and should explain to the people’s satisfaction how and why the questionable consortium was able to bag the contract in the first place.

Was the country taken for a fool when the administration of former president Rodrigo Duterte entered into a 10-year P6-billion contract with the Global ComRCI group in December 2017 because of the abject failure of the gaming regulator to properly vet its qualifications and competence?

Certainly looks that way, based on the ongoing joint hearings of the Senate committees on ways and means and public order.

First, the Global ComRCI consortium only had P27 million in equity, far off the required minimum of P1 billion for a Pogo third-party auditor. Then it presented a bank certificate amounting to P1.38 billion from a bank that was not even authorized to conduct business in the country. Plus, it failed to secure business permits from local governments where it was supposed to be operating.

An exasperated Gatchalian charged that Global ComRCI, which he had long described as a “bogus” Pogo auditor, does not even have an office address nor a business permit and even registration with the Bureau of Internal Revenue.

“How come nobody saw this? Paano nakalagpas sa inyo ito? It’s either nabudol kayo or nagpabudol kayo,” Gatchalian said as he lambasted Pagcor officials during the recent hearing.

Given the patent lack of qualifications, then it stands to reason that Global ComRCI had been unable to deliver on its “crucial role” to report on the gross gaming revenues of the Pogo industry despite the estimated P824 million in payments that it has already received from the government.

The Commission on Audit already said in its 2018 report that Pagcor had to adjust its collections due from Pogos amounting to P711 million, supposedly due to the inaccurate reporting by the third-party auditor.As expected, Pagcor has defended its decision to award the auditing contract to Global ComRCI, saying that the service provider “went through proper bidding process and met all the legal requirements under the procurement law.”

Pagcor did say that the contract of Global ComRCI was put under review in September last year with the assumption of the new leadership at Pagcor, now headed by businessman Al Tengco.

The embattled Pagcor told the Senate that the review was about to be completed and that the results would be released soon as well as it should. But if the documents already out in the open are any indication, then Filipinos can already expect that the results would not favor Pagcor, and ultimately, the Filipino people.

As such, it should be easy for President Marcos Jr. to act on the resounding pleas to phase out the industry that looks to be more trouble than it is worth, inflicting huge social costs and spawning crimes in the country. A Pulse Asia survey found that 58 percent of Filipinos believe Pogos are “harmful” while influential business organizations including the Makati Business Club and the Management Association of the Philippines have raised issue with the regulatory shortcomings of Pagcor.

Marcos had expressed recently his reluctance to immediately ban the Pogo industry and pressed the distinction between the legal and illegal players in the industry, saying that the legal ones “pay their bills, pay their taxes.”

According to the Association of Service Providers and POGOS, a local industry association of POGOs and their service providers, the Pogo Industry has contributed more than P61 billion to the government in terms of taxes and fees.

But with the irrefutable findings on the third party auditor, seems like even the right taxes are not coming in, to the point that it becomes even harder to justify their continuing operation in the Philippines where they found safe haven outside China where they are outlawed. That is the supreme irony—why is our government fighting for this online gambling that is illegal where its bettors are living?

Thus there is no more reason for the President to delay a decision to phase out all Pogo operations in the country while also doing right by the estimated 23,000 Filipinos who will be temporarily displaced by their exit. This and the revenue loss from “legal” Pogos may be painful in the beginning but if allowed to fester, may lead to more pain down the road.