QUESTIONS OVER PAGCOR-HIRED POGO AUDITOR

Senators on Wednesday expressed doubts on the credentials and capability of an internet company that the government tapped to monitor the finances of Philippine offline gaming operators (Pogos) and for which it is paying up to P600 million in fees, with Sen. Sherwin Gatchalian even branding the firm as “bogus.”

Gatchalian expressed dismay over the failure of state regulator Philippine Amusement and Gaming Corp. (Pagcor) to vet the qualifications and competence of Global COMRCI, a consortium that it tapped as third-party auditor of Pogo firms’ finances, including assessing the amount of taxes that they are supposed to pay to the government.

“We’re talking to a bunch of bogus entities. How do we now get the confidence that the gross gaming revenue [that Pogo firms are declaring] is accurate?” Gatchalian asked.

Credentials

He made the remarks at the continuation of the investigation by the Senate ways and means committee on the economic and social costs of the country’s hosting of Pogos.

The hearing centered on the credentials of Global, which is a venture among of two Filipino companies, Global Myoho Renge Copy Inc. and Comfac Corp., and a foreign firm, Malta-based Highweb Trade Ltd.

During the nearly five-hour hearing, Gatchalian repeatedly castigated Pagcor officials for their failure to provide details on how they selected Global.

“I want to establish if Pagcor conducted due diligence to ascertain that this Highweb is credible and capable, not only based on the documents they submitted for the bidding,” he said.

He also faulted Pagcor for ignoring the insufficient capitalization of Global Myoho, which declared an equity of P27 million when the minimum requirement was P1.5 billion.

“With a third-party auditor now in question, where do we go now? And [Pagcor] wants to continue Pogo? How can you continue if all of these things are coming out?” Gatchalian said.

Questionable credibility

Citing Securities and Exchange Commission documents, Gatchalian disclosed that the consortium did not declare the P300 million it was supposed to have received from Pagcor’s contract payments in 2018 and 2019.

“So now we are confronted with these facts: Highweb as a consultant was never validated while Myoho was never validated and also not paying the right taxes. These speak well of (the consortium’s) credibility,” he said.

A check made by Gatchalian’s office found that Global Myoho was located in a residential address in Parañaque City.

“This doesn’t look like a credible IT third-party company to me. I don’t expect third-party auditing will happen in that house, let alone, they will get P600 million a year, P6 billion in 10 years,” he said.

Pagcor officials also failed to provide proof that they contacted representatives of firms in Bahamas, Sweden, Trinidad and Tobago, and the United Kingdom, where Highweb claims to have been engaged as third-party auditor of online gaming operations.

Gatchalian also cited a 2018 Commission on Audit (COA) report, which flagged Pagcor’s adjustment of collections due from Pogos amounting to P711 million, supposedly due to the inaccurate reporting of Global.

“Again the credibility of the third-party auditor is in question here,” he said.

Connivance

Sen. Ronald dela Rosa, chair of the Senate committee on public order and dangerous drugs, which conducted a parallel investigation on the spate of Pogo-related kidnappings in the country, expressed concern over the possibility that the third-party auditor was conniving with Pogos to declare a lower gaming income.

“What is now our safeguard that we are not duped by the third-party auditor in case it connives with Pogos to the detriment of Pagcor and the Filipino government? I’m from law enforcement, so that’s always my mentality: how we will be duped or how we can get one over them,” he said.

In response, lawyer Joseph Lobo, Pagcor senior manager for offshore operations, said they would confront Global on Gatchalian’s revelations.

Claiming that the consortium was selected through a proper bidding process, Tan, however, could not say how it made such a selection.

Jackie Lou Rivera, Pagcor acting senior manager, maintained that the third-party auditor was qualified based on the bidding documents it submitted.

She said Pagcor was now discussing with its legal department the possibility of amending the third-party auditing contract to include the recommendation of the COA on the lack of the government’s security liability for pecuniary losses.