POGO auditor’s bank documents bogus, says Gatchalian
Sen. Sherwin Gatchalian (Senate Public Relations and Information Bureau)
MANILA, Philippines — The third-party auditor of the country’s gaming regulator, which is supposed to help it determine whether Philippine offshore gaming operations (Pogos) have been paying the right taxes and fees to the government, allegedly falsified documents to show that it met the required capitalization for such a task, Sen. Sherwin Gatchalian said on Saturday.
Global ComRCI, which bills itself as the “sole authorized third-party auditing partner” of the Philippine Amusement and Gaming Corp. (Pagcor), presented a certification on its capital status from a bank that is not authorized by the Bangko Sentral ng Pilipinas (BSP) to conduct business in the country, he said.
Gatchalian, chair of the Senate ways and means committee, said that according to BSP Governor Felipe Medalla, Global ComRCI’s supposed bank, Soleil Chartered Bank, was not registered with the BSP or under its supervision.
“Based on BSP’s letter, it appears that Global ComRCI falsified the bank certification submitted to Pagcor because Soleil is not authorized to issue any bank guarantee,” he said in a statement.
Third-party auditor
“It is clear from the terms of reference issued by Pagcor that this is a ground for the termination of the contract and this issue should not be taken lightly,” he said.Republic Act No. 11590, or the Pogo tax law, directs Pagcor to engage the services of a third-party auditor that would determine the gross gaming revenues (GGR) of offshore gaming licensees.
The auditing firm, which has a P6-billion consultancy contract with Pagcor, has already received P824 million in payments from the gaming regulator since 2017, when Pogos started operating in the country.
Its report on the gaming companies’ GGR would serve as the basis for the Bureau of Internal Revenue to determine the taxes and regulatory fees that are due from each Pogo company.
But the expected revenues from Pogos could no longer be accurately determined, Gatchalian said, as Global ComRCI submitted falsified documents to prove that it has met the capitalization requirements set by law.
During a hearing on Jan. 24, Gatchalian castigated Pagcor officials for accepting Global’s falsified corporate documents, which included a bank certification that it had $25 million (about P1.25 billion) deposited in Soleil Chartered Bank, surpassing the required P1-billion minimum capitalization set by law for the third-party Pogo auditor.Aside from failing to meet the financial requirements, Global also failed to prove its technical expertise in auditing offshore gaming operations, Gatchalian said.
“Let’s not forget the crucial role of the third-party auditor in determining the taxes and regulatory fees of Pogos—every peso that Pogos do not pay to the government is a loss for the entire country. So, it appears that Pagcor also swindled the Filipino people,” the senator said during that hearing.He has called for a Senate blue ribbon investigation of Pagcor’s choice of Global as its third-party auditor.
No license
In Medalla’s letter to Gatchalian, a copy of which was obtained by the Inquirer, the BSP governor reported that Soleil, Global’s purported bank, did not even have any pending application for a banking license based on BSP records from as far back as 2014.
When BSP personnel visited the bank’s supposed address at the Philippine Stock Exchange building in Makati City, which was indicated in the Soleil document, they found a different company, Soleil Capitale Corp., holding office there, Medalla said.Raj Astavakra, the chief executive officer of Soleil Capitale, told the BSP staff that he was “not aware” of the bank’s certification and the signatures in that document could have been obtained from “a similar document and then placed on the aforesaid certification to make it appear that it was legitimately issued by them,” Medalla said.
Astavakra said that while Soleil Chartered Bank, an affiliate of Soleil Capitale, did exist, it was based abroad and was not operating in the Philippines, according to the BSP governor.
“Their (Soleil Capitale’s) office has no record of such document or any correspondence with regard to the aforesaid certification,” Medalla said in his letter.
According to Medalla, only those authorized by the BSP to operate as a bank may issue a letter of credit, citing Republic Act No. 10641, which allows foreign banks into the country with BSP authorization.
A duly authorized foreign bank may issue a letter of credit if this is in favor of a company that entered into a contract outside of the country and will not constitute banking activities in the Philippines, he added.
The third-party auditor’s name came up as early as when Gatchalian’s committee opened its hearings on Nov. 23 last year.
Social cost
The committee launched its probe into the social cost of the Pogo industry amid the spate of kidnappings and other criminal activities allegedly committed by Chinese Pogo workers.
The Senate committee wanted to determine whether the revenues generated by the government from Pogos could justify the continued hosting by the Philippines of these offshore gaming companies, which are banned in China where they originated.
Despite Gatchalian’s insistence, none of Global’s officers ever showed up physically in any of the hearings, preferring to appear only online.
The committee’s staff did not provide the Inquirer with the contact details of Global’s officers, invoking data privacy. The firm’s purported website was either not set up properly or was down on Saturday and its Facebook page did not list phone numbers.
