MANILA, Philippines — The government may have been duped — or allowed itself to be duped — by entering into a P6-billion contract with a private firm that was tapped to audit the earnings of state-sanctioned offshore gaming operations, senators said on Monday.
At a joint hearing of the Senate committees on ways and means and public order, the lawmakers concluded that Global ComRCI, the third-party auditor chosen by the Philippine Amusement and Gaming Corp. (Pagcor) to examine the revenues of Philippine offshore gaming operators (POGOs) was not suited to the task.
“Bottom line is based on the documents and all of that, the third-party auditor is not credible, not capable… not qualified,” said Sen. Sherwin Gatchalian, chair of the Senate ways and means committee.
“They do not even have simple things like (office) address and business permit so how do you expect us, the Filipino people, to believe that what they are supplying to us in the form of information is accurate?” he said.
“Like I said, it’s either you were tricked or allowed yourselves to be tricked,” he added, addressing Pagcor officials.
Spurious documents
By choosing Global, Pagcor may have violated the “strict qualifications” of Republic Act No. 11590 for the external auditor of POGOs, such as being “independent, reputable, internationally known and duly-accredited… by industry experts,” the senator said.
The company, according to Gatchalian, submitted spurious documents to prove its financial and technical capability, did not secure business permits from the local governments where they purportedly operated, and did not have a proper office.
Citing corporate documents, Gatchalian said Global ComRCI, as a consortium, failed to meet the required P1-billion minimum capitalization for a POGO third-party auditor, as Global Myoho Renge had a listed capital of only P29.9 million; Comfac Corp., P341.7 million; and Malta-based firm, High-Web Trade, only had 240 pounds or about P13,920.
In a supposed attempt to mislead Pagcor on its financial qualifications, Global also submitted a bank certificate amounting to $25 million or about P1.38 billion from Soleil Chartered Bank, Gatchalian said.
But the international bank is not registered with the Bangko Sentral ng Pilipinas (BSP), and thus, is not authorized to conduct business in the country, according to lawyer Florabelle Santos-Madrid, BSP director for financial system integrity.
Alarmed by Gatchalian’s revelations, Sen. Ronald dela Rosa, chair of the public order committee, urged the BSP to raid the bank’s purported address.
“You locate them and send your operatives to that location, seek the assistance of the police. You should also do your part, as these firms may have already amassed billions [of pesos] from their illegal operations,” he said.
Grounds for termination
Lawyer Roderick Consolacion, Pagcor’s vice president for legal, conceded that Gatchalian’s findings should be sufficient grounds for the termination of Global’s contract.
Citing certifications from the local governments of Manila and Makati, Gatchalian said the firm did not secure a business permit in either city, even if it was said to have moved its offices to two separate addresses in the Malate district in Manila and the Makati Central Business District.
Sen. JV Ejercito said he doubted the legitimacy of Global’s operations following Pagcor officials’ claims during the hearing that most of its personnel were under a work-from-home setup.
“Working from home and earning P6 billion for their use… it’s really suspicious… This really affects the legitimacy of this entity,” he said.
Gatchalian said Global also failed to establish that it possessed technical expertise in gaming revenue auditing based on experience gained from completed projects in at least three other countries with a gaming industry that is “at par with or higher than the Philippines.”
The company had cited two completed projects in the Bahamas and Sweden, and two ongoing projects in Trinidad and Tobago and the United Kingdom.
“The requirement of the (terms of reference) is three, but they only completed two. Don’t tell me you also counted those that are ongoing,” Gatchalian said.
Pagcor officials struggled to respond to the senator’s inquiries, with some of them seen frantically fiddling with documents.
Moments later, Consolacion replied: “Apparently, they reported that the ongoing is also qualified.”
Earlier during the hearing, Gatchalian criticized Pagcor for “treating with kid gloves” two companies whose employees were implicated in criminal cases involving Chinese POGO workers.
He questioned why Pagcor only imposed a fine of $10,000 (about P500,000) on Brickhartz Technology Inc. and did not sanction MOA Cloudzone Corp. at all.
Gatchalian said Pagcor’s purported failure to penalize gaming operators called attention to the apparent conflict of interest in the corporation’s dual roles as gaming operator and government regulator.
“You cannot erase from our minds that conflict of interest is actually happening with this industry, which is why this is not improving in so far as regulation is concerned,” Gatchalian said.