By: the Asia Sentinel Staff
When Philippine President Ferdinand Marcos Jr. in July banned multi-million-dollar Philippine Offshore Gaming Operators (POGOs) and ordered all of their operations out by the year-end, he was, in effect, yielding to a Chinese request which his predecessor, Rodrigo Duterte, had ignored five years ago. During his 2019 summit with Duterte in Beijing, Chinese President Xi Jinping raised the problems that POGOs posed to China's economy and society, and wished Manila to consider discontinuing the program for good neighborly relations. In the meantime, POGOs have turned into the biggest scandal in recent Philippine history and become a major issue in the cutthroat war for political primacy between Marcos and Duterte and Duterte’s daughter Sara, the current vice president and leading candidate to replace Marcos when his six-year term ends in 2028. The Marcos forces, bolstered by a revelation that hundreds of fake birth certificates have been issued to Chinese nationals in Duterte’s stronghold of Davao del Sur, have charged major corruption allegations tying the POGOs and Duterte. China doesn’t allow gambling. But millions of Chinese citizens with newfound wealth have become POGO clients, gambling online by credit card outside the long arm of Chinese law, and often running into lovelorn scams that cost them thousands and frustrate mainland officials. The Philippines was among the top five countries in Southeast Asia with increased money laundering activities, much of it related to POGOs, from 2018 to 2023, according to Moody’s, with money-laundering events up by 45 percent just from 2022 to 2023. The Financial Action Task Force is keeping the country on its “gray list” of jurisdictions under increased monitoring for money laundering risks for a third straight year. Loan sharking to Chinese citizens by Chinese nationals has skyrocketed, along with kidnappings by triads to reclaim exorbitant loans to hapless gamblers. The Philippine tourism department’s “visa-upon-arrival” program gave added impetus to Chinese nationals entering and obtaining permanent residence illegally. As Asia Sentinel reported on April 25, 2019, Labor Undersecretary Ana C. Dione reported that as many as 130,000 workers in so-called POGO firms were unregistered with the Bureau of Internal Revenue and weren’t paying taxes to the Philippine government. A review of 88 POGO companies found that only 16,550 of their workers were registered. Officially recognized “facilitators” operating at the immigration office speak of permits for permanent residence available at a price – Php7 million (US$124,400) for Chinese nationals and PHP1 million for others. They would fearlessly place a bribe between the application papers of their clients and pass it across the window to officers dealing with the matter. POGO operators in the Philippines employ Chinese nationals to service their clients in their native tongue and local police officers as protectors. Altogether, they fostered an environment inimical to the Chinese economy and law and order in the Philippines. Nevertheless, for Duterte, POGOs were too good to give up. Besides contributing more than US$2 billion to the Philippine GDP in 2019 and providing jobs to many Filipinos, it filled the pockets of his Chinese allies. Marcos, on the other hand, saw the indirect cost of these gains and the ill effects of the entire venture as providing a convenient opportunity to tighten the noose around the neck of Duterte, who remains a formidable foe. Thus, he ordered to shut them down, declaring during his third State of the Nation Address on July 22 that POGO outlets “[d]isguising as legitimate entities […] have ventured into illicit areas furthest from gaming, such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, brutal torture, even murder." Exactly what China had warned as it declared POGOs as the “most dangerous tumor in modern society.”
A woman named Alice Guo, also known as Guō Huápíng ([郭華萍), has become the poster child for Marcos’s charges. Guo, a businesswoman and politician who served as the mayor of the town of Bamban in the province of Tarlac, is currently on the run from the law with Interpol somewhere in Indonesia after February and March raids on property that she was linked to – Hongsheng Gaming Technology Incorporated and Zun Yuan Technology Incorporated on charges of alleged human trafficking and serious illegal detention. As Asia Sentinel reported on May 22, two of the beneficial owners were found to be Chinese nationals Zhang Ruijin, and Lin Baoying who carries a Dominican passport, both of whom were accused of involvement in one of the biggest money laundering scams in Singapore’s history. In the property, police found a vast online casino that catered to online gamblers in China, and rescued nearly 700 workers, including 202 Chinese nationals and 73 other foreigners who were forced to pose as online lovers in related Internet scams. There are rumored to be scores of similar operations in rural areas, according to a well-informed gaming industry source, who described them as “POGO ponds” with a major economic effect on the adjacent neighborhoods, along with a pernicious effect on receptive, ill-paid public officials and law enforcement.
The Philippine Senate and House of Representatives both have been holding marathon nationally televised hearings into the Guo family and their POGO connections. They have ensnared Duterte’s former presidential spokesperson Harry Roque, among others, over his alleged links with illegal offshore gaming operators and the proliferation of illegal POGOs in the country. According to a citizen who has observed every administration in the past six decades, these developments speak volumes about Duterte’s so-called pivot to China soon after assuming office and calling US President Barack Obama a “son of a whore.” China, says the observer, didn’t, in fact, welcome Duterte with open arms; it was skeptical of him as he was aligning with unholy elements in China. No wonder, the observer said, that Beijing didn’t extend the financial support for economic development that Filipinos expected from Duterte’s China pivot. While gambling is banned in China, it has been deeply ingrained in the Philippine society for centuries in various forms as an accepted pastime. What has made it a menace, a breeding ground for crime, is the appallingly weak law enforcement that has long burdened the country on all fronts. Almost half a century ago, President Marcos’s father, the martial law dictator, tried to make gambling clean fun and a good source of national revenue. He created PAGCOR as the operator of gambling establishments and watchdog of other privately owned casinos, thus discouraging illegal gambling. After his fall, the Corazon Aquino administration reorganized it to raise funds for the government. POGOs were introduced during the Arroyo administration with strict controls to prevent them from adversely impacting the nation’s body politic. All Filipino citizens at home and the 2.3 million registered living abroad were barred from playing the game. But all that began changing as regimes changed. According to reports, Duterte, who came into office in 2016, introduced measures that let POGO operations flourish and the number of gaming hubs increase from 60 in 2016 to 300 by 2019, with an estimated 200 others operating without permits. The Philippine Daily Inquirer noted in an August 23 editorial that under the Duterte administration, the POGO operations also became linked to such criminal activities as human trafficking, kidnapping, money laundering, and cyber scams. The rule of law being circumvented by those occupying seats of power and ordinary people in everyday life has long been a perennial problem that makes a long string of sordid tales in the country. In 2018, the second year of the Duterte presidency, Michael Yang, a Chinese national whom Duterte came to know during his mayorship of Davao was made a presidential adviser, contravening prevailing practice. The following year a group of people Yang had previously introduced to Duterte incorporated a company called Pharmally Pharmaceutical Corporation with a paid-up capital of 625,000 pesos and Yang allegedly as its financier and guarantor. Then, as the Philippine Daily Inquirer noted in its June 11 editorial, Pharmally secured, between March 2020 and July 2021, government contracts totaling P11 billion to supply personal protective equipment such as face masks, face shields, COVID-19 test kits, and other healthcare items to the Department of Health, which became a scandal. Meanwhile, Guo, who had obtained a birth certificate from the Philippine Statistic Authority (PSA), successfully contested the 2022 election for mayor of Bamban. What was the basis on which the PSA issued her the birth certificate is unclear. Also unclear is if the Commission on Elections tried at all to ascertain Guo’s eligibility to stand for election, particularly considering the national debate that dragged on ad nauseam just six years ago about Sen Grace Poe’s claim to nationality. Also, how did Guo, against whom an immigration lookout order existed since June 21, manage to leave the country unnoticed well before the Ombudsman acting on a petition from the Department of the Interior and Local Government dismissed her as the mayor of Bamban? Guo is rumored to be headed for the notorious Golden Triangle on the borders of Thailand, Laos, and Myanmar where major Chinese outlaw organizations thrive. Marcos said an investigation is underway to expose the culprits who helped Guo escape, and “heads will roll.” But how far will he go? What the country needs is a nationwide social reform. No clean government can develop in a society where the rule of law is non-existent at every level. This is among the stories/excerpts we choose to make widely available.If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us for US$10/month or US$100/year.
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