Pagcor Insists Audit Contract Aboveboard

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The Philippine Amusement and Gaming Corp. (PAGCOR) on Tuesday defended its contract with a third-party auditor for offshore licensees, saying Global ComRCI went through a proper bidding process and met all the legal requirements under the Procurement law.

In a statement, the state firm and casino regulator said it awarded the contract to Global RCI in December 2017 and put the contract under review “with the assumption of the new leadership of PAGCOR” last September 2022 under chairman and chief executive Alejandro Tengco.

“We assure the Senators that the review will soon be finished and released at the proper time,” the PAGCOR statement added. “We have been in contact with Global ComRCI and are currently assessing the contract’s terms and conditions and the company’s performance.:

However, senators took turns blasting the state firm on several issues in yesterday’s hearing of the Senate Committee on Ways and Means, with panel chairman Sen. Sherwin Gatchalian reiterating PAGCOR was hoodwinked into signing a P6-billion contract with the third-party auditor.

The lawmakers also took the government firm to task for its handling of Philippine Offshore Gaming Operators and its actions on the alleged kidnapping of a Filipina by workers of two companies that are reportedly service providers of POGOs.

In its statement, the gaming regulator noted that the offshore gaming industry “has only been in existence in the Philippines under PAGCOR over the last five years.”

“Aside from the taxes to the national and local governments, it currently employs an estimated 25,000 Filipinos and contributes billions of pesos to the local economy thru real estate activities, consumption and indirect employment,” it added.

“It is PAGCOR’s aim to nurture this industry as it believes it has much more to contribute to the Philippine economy and nation building,” the statement said.

But Gatchalian lambasted PAGCOR for its failure to comply with its own Terms of Reference (TOR) when it entered the big contract with Global ComRCI, one of three company names that surfaced in the hearing.

The TOR provided the requirements necessary for an entity to qualify as a third-party auditor of gaming revenues declared by POGO operators, including that it must have an operating capital of at least P1 billion.

But based on the audited financial statements of the members of the consortium — Global Myoho Renge Copy, Inc., Comfac Corporation, and Highweb Trade — for the third-party auditor, their combined equity does not meet the P1-billion requirement.

The 10-year contract between PAGCOR and Global ComRCI started in 2017.

To comply, GlobalComRCI submitted a bank guarantee issued by Soleil Chartered Bank in its favor in the amount of $25 million (P1.36 billion).

However, it was revealed by the Bangko Sentral ng Pilipinas (BSP) that Soleil Chartered is not a registered bank in the country and therefore, cannot issue a bank guarantee in the Philippines.

“How come nobody saw this? How did it pass? It’s either nabudol kayo or nagpabudol kayo (It’s either you were swindled or let yourselves be swindled),” Gatchalian said.

The hearing also uncovered that the office addresses declared by Global ComRCI to PAGCOR were traced to a residential area in Paranaque City, found to be fictitious, and considered inappropriate venues of operation for the entity that it claims to be.

Global ComRCI also failed to secure the necessary building permits. In the contract, its address is in Makati but in a letter submitted by Global ComRCI to PAGCOR and to the Committee, its address is in Manila.

Worse, the city governments of Makati and Manila certified that no business permit was issued to the third-party auditor.

The committee also found out that Highweb Trade Ltd., part of the third-party auditor consortium under Gloval ComRCI, does not have the technical expertise to provide the technology for a regulator like PAGCOR.

Highweb did not have prior experience as a third-party auditor of a government gaming regulator, which again violates PAGCOR’s TOR, Gatchalian noted.

To top it all, it was revealed that Global ComRCI, which received payments from the government totaling P824 million to date, is not even registered with the Bureau of Internal Revenue (BIR) as stated in a certification issued by the agency.

Securities and Exchange Commission records stated that only Global ComRCI, Inc. is registered with their office.

“Let’s not forget the crucial role of the third-party auditor in determining the taxes and regulatory fees of POGOs,” the senator said.

Roderick Consolacion, PAGCOR vice president for legal group, explained to the Senate panel that the government firm cannot just junk the application of any company, but assured the lawmakers they will act accordingly.

“Perhaps we can go into the record and ask their comment on this, and maybe we can recommend that this contract be terminated. This is really a spurious document,” Consolacion stressed.

During the hearing, Senator JV Ejercito called on the panel to be considerate to some 40,000 POGO workers who will be affected by any drastic action of Congress.

The real estate sector, Ejercito said, will also be severely affected by the sudden exit of POGOs in the country, and that there should be a clear plan on how the country could handle the situation.

“I’m just worried about the termination of this business. Also, the employment,” Ejercito said.

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