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Philippine regulator PAGCOR has testified that its outsourced auditing platform for online gaming does not identify player country of origin, calling into question its commitment not to allow illegal gambling, as senators renew corruption accusations against the auditing consortium.
More than six years after PAGCOR launched the audit platform, the regulator told a Senate committee that it only collects offshore-facing online gaming operator (POGO) data on foreign currency transactions of players, not their location.
A PAGCOR representative told a joint hearing of the Ways and Means and Public Order and Dangerous Drugs committees on Wednesday (November 23) that the auditing consortium, Global ComRCI, “cannot establish the exact country of origin since … it is not included in the mirrored data by the POGO licensees”.
PAGCOR said the auditor has identified currencies of 24 countries or regions, including the euro, that are being used by players, but that 47 percent of volume was generated by the Chinese yuan.
When asked by Senator Sherwin Gatchalian if PAGCOR had made any effort to identify the location of players, the PAGCOR representative said players can choose different currencies regardless of location, and “for the time being, the data that we have is the currency”.
PAGCOR’s offshore gaming regulatory manual does not specify that the third-party audit platform must collect player origin data, but it does state that authorised players must not be located in “territories where online gaming is prohibited”.
PAGCOR has long looked the other way on massive violations of its initial online gaming charter, which was adapted to produce the regulatory manual.
But Wednesday’s evidence is the first time the regulator has admitted that the third-party auditing process is strictly a monitor of player volume and revenue and plays no role in detecting illegal play by foreign-based players.
The regulator’s representative later told Gatchalian that PAGCOR has no data on “possible risks that any policy changes in any particular territory may impose, because we do not really look at our revenues from a territorial standpoint".
“Meaning, from the data, we get Chinese currency, but we do not attribute that to a particular place only.”
Other currencies on the PAGCOR list whose governments strictly ban online gambling include the Hong Kong dollar, the Indonesian rupiah, the Korean won, the Singaporean dollar, the Vietnamese dong and the Indian rupee.
Gatchalian and other committee members also rounded on Global ComRCI, accusing the consortium of opaque operations and corporate connections, having a residential address, and overall of being “bogus”. He said PAGCOR exercised insufficient oversight of its operations.
Gatchalian said the consortium, consisting of Philippine companies Global Myoho Renge Copy Inc and Comfac Corp and Malta-based platform provider Highweb Trade Ltd, may not have undergone due diligence and did not declare 300m pesos ($5.3m) it received from the PAGCOR contract in the first two years of operations in 2018 and 2019.
The senator also extracted an admission from PAGCOR officials that the regulator had not monitored Global ComRCI’s financial circumstances following the award of the contract despite the consortium having registered capital of only 2 percent of the required minimum.
“With a third-party auditor now in question, where do we go now? … How can you continue [with POGO operations] if all of these things are coming out?” he asked.
The senators’ attack follows a salvo against Global ComRCI in September by Senator Raffy Tulfo, who lamented the size of the PAGCOR contract with the group and alleged that an owner of one of the consortium members maintained an inappropriate connection with PAGCOR.
PAGCOR's reluctance or refusal to pursue POGO licensees that target China-based players has contributed to testy relations between Manila and Beijing, whose leaders continue to place pressure on the government of President Ferdinand Marcos Jr. to shut down the industry altogether.
