- Legal States
Silvia Pavlof January 24, 2023 3 min read
PAGCOR Under Pressure for Working with Unlicensed Tax Auditor
The Philippine Amusement and Gaming Corporation (PAGCOR) has faced backlash and scrutiny over allocating a multi-million dollar contract to a firm that was not authorized to do the job
In 2017, PAGCOR gave Global ComRCI a consultancy agreement worth PHP 26 billion ($477 million) for monitoring the revenues of licensed Philippine Offshore Gaming Operators (POGOs) and ensuring that they were paying the appropriate amount of tax. However, it has recently been exposed that Global ComRCI is not registered in the Philippines and did not present accurate documentation in its proposal.
Calls for Investigation into PAGCOR’s Allocation Procedure
The problem of PAGCOR awarding the contract to Global ComRCI was brought to light by Senator Sherwin Gatchalian, chairman of the Ways and Means Committee, during a hearing exploring the advantages and disadvantages of the POGO industry.
Previous hearings have revealed the loss of PHP 9.1 billion ($166 million) in POGO taxes due to substantial differences in industry gross gaming revenue (GGR) figures between PAGCOR, the Bureau of Internal Revenues, and the POGOs themselves.
Furthermore, it was revealed that Global ComRCI collaborated with a bank that is also unlicensed in the Philippines, Soleil Chartered Bank (SBC), to prove that it met PAGCOR’s capital requirements.
This revelation has raised significant concerns and has prompted calls for an investigation into PAGCOR’s allocation process, as well as for stricter regulations to be put in place to ensure that proper due diligence is conducted when allocating contracts of this nature. The incident has also raised questions about the broader POGO industry and its ability to self-regulate and comply with tax laws.
Gatchalian Criticizes PAGCOR’s Effectiveness
Senator Sherwin Gatchalian raised concerns about PAGCOR’s effectiveness in enforcing laws and regulations on POGOs. He specifically highlighted the cases of two companies, Brickhartz Technology Inc and MOA Cloudzone Corp, that have been implicated in kidnappings but continue to operate. Despite Brickhartz being fined, PAGCOR has yet to receive a report on the actions taken against MOA Cloudzone Corp.
Gatchalian expressed doubt about PAGCOR’s ability to handle crimes with urgency and effectiveness, arguing that leniency and a conflict of interest may be at play. He has called for POGOs to be banned, stating that they pose more risks than benefits. However, Philippines President Ferdinand R. Marcos Jr has stated that it is unlicensed operators that are breaching local laws.
This is not the first time Gatchalian is breathing down PAGCOR’s neck. In November, the senator called for the restructuring of PAGCOR. Gatchalian argued that the current model of operation poses a conflict of interests, as PAGCOR both manages and regulates gambling activities in the country.
Currently, PAGCOR owns and runs nine casinos and operates 32 satellite casinos in the Philippines, while at the same time acting as the gambling regulator in the country.