PAGCOR’s illegal online gaming operations and its sins of the past

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AL S. VITANGCOL III

THE Senate blue ribbon committee on January 23, 2017, started an inquiry into the bribery scandal that has rocked the Bureau of Immigration. The scandal has likewise exposed the extent and magnitude of the illegal online gaming operations in the country.

Noteworthy was Senator Joel Villanueva’s opening remarks at the hearing. According to Villanueva, Al C.
Argosino was already in possession of the P50 million bribe money when the latter attended the December 7, 2016, hearing of the committee on labor. Yet, Argosino never mentioned that fact.

Villanueva said: “I therefore express my agitation and indignation at Atty. Argosino’s actions and failure to disclose this information at the time that he had already received the P50 million from Jack Lam and Wally Sombero.I would like to manifest my absolute disgust at what he did and we are contemplating and exploring our options, such as considering filing contempt charges against him. This representation believes that he is liable for perjury for having provided false statements through withholding information from the Senate.”

As always, the truth will come out in the end. Indeed, “for nothing is hidden that will not be made manifest, nor is anything secret that will not be known and come to light. (Luke 8:17, ESV)”.


PAGCOR’s sweetheart deal with Lam

Another thing worth reviewing during that blue-ribbon committee hearing are the statements made by Mr. Arnel Ignacio, the assistant vice president for community relations and social services of the Philippine Amusement and Gaming Corp. (PAGCOR). He said that Jack Lam’s online gambling business has no license, and is therefore, illegal. He added that Lam’s licenses only cover casino, junket and phone betting operations.
Ignacio also told the Senate that Lam owes the government P13.9 billion from his “legal” casino operations but they cannot collect from Lam because of the prevailing binding contract that he has with the government.

In a subsequent media interview, Ignacio revealed that Lam had signed a contract with the agency in 1999, which only required him (Lam) to pay one percent as license fees instead of the usual 10 percent. According to Ignacio, the agreement was “effective co-terminus with PAGCOR’s existence.” Ignacio added, “(Lam had) a sweetheart deal, way back (in) 1999.” The reason why it was made this way, and who were involved at that time should be dug up. This “sweetheart deal” made a fool of all of us Filipinos.

Meanwhile, contrary to President Rodrigo Duterte’s order to close all online gaming facilities, PAGCOR recently launched the Philippine Online Gaming Operations (POGO). Ignacio estimated that the corporation would rake in ₱8 billion in revenues from over 30 government-approved online gambling operations.

IP address not an effective tracking measure

PAGCOR has issued 35 licenses to POGO operators and eight are now in operation. Ignacio asserted that online gaming is restricted to foreigners to avoid criticism on moral issues for locals and that all users will be tracked using their internet protocol (IP) address and personal details on account registration.

Is this a tough security measure, which will prevent Filipinos from betting and engaging in online gaming? My insight tells me that it is not. Don’t these people realize that IP addresses can be faked and changed? This is called IP spoofing.

In computer networking, IP address spoofing or IP spoofing is the creation of IP packets with a false source IP address, for the purpose of hiding the identity of the sender or impersonating another computing system. For example, you are connected in a network with assigned IP address of 192.168.168.123. You know that there is another available machine address space, say 192.168.168.246. You just have to “convince” the router serving you that you are indeed the x.x.x.246 machine, and not the x.x.x.123 computer. Thus, the “tracker” will see you as 192.168.168.246 instead of the actual 192.168.168.123. This is the simplest explanation of what IP spoofing is.

Well, so much for the technical stuff for now. Let us go back to the illegality of POGO. In my previous column, “Probing the relationship between online gambling and corruption of public officials”, I discussed the mandate of PAGCOR and opined that online gambling is illegal.

POGO outside PAGCOR’s mandate

To refresh the readers, PAGCOR is a government-owned and -controlled corporation the franchise of which was granted under Presidential Decree 1869, known as the PAGCOR Charter. This decree consolidated Presidential Decrees 1067-A, 1067-B, 1067-C, 1399, and 1632. On June 20, 2007, then President Gloria Macapagal-Arroyo signed into law Republic Act 9487, which amended the PAGCOR Charter.

The third paragraph of Section 10 of the amended charter delineates the power and authority of PAGCOR. Section 10 is very clear that the operation and licensing of casinos and similar places shall be “within the territorial jurisdiction of the Republic of the Philippines.”

RA 7922 did not include Internet gambling when it amended Section 10 of PD 1869. Likewise, with the very nature of the Internet, players and gamblers, and even the game servers, might not be located within the territorial jurisdiction of the Philippines.

Clearly, PAGCOR’s recent launching of POGO is definitely beyond its legal mandate.

SEC responds

The Securities and Exchange Commission (SEC) responded to this column’s January 7, 2017 issue, “The Philippines is still one of the worst places to start a business; main culprit is the SEC.”

Mr. Armando A. Pan Jr., the officer in charge, Office of the Commission Secretary, sent a letter addressing some of the issues that I have raised. “We are confident in saying that we have not been remiss in our duty in the continuous introduction of measures to make the Commission more competitive and deliver service that is expected of a corporate register and regulatory agency. In recent years, and without going into details, we are proud to share what we have achieved,” Pan Jr. maintained.

He then listed down their supposed accomplishments—establishment of the green lane unit (GLU), introduction of green lane forms, downloadable forms, bank certificate of deposit dispensed with, integrated business registration system (IBRS), SEC satellite offices in Metro Manila and Cebu, certificate issuance system-unified reference database (CIS-URD), and SEC express system. This is very good, on paper. However, what is controlling is what is really happening on the ground.

Mr. Pan Jr. was not able to address the real problems and concerns that I raised in this column. The fact remains that the name reservation fee was required to be paid, was paid, and collected by the SEC for a non-existent service. Furugganan still wields her little power and the same problem persists as of this writing.
Here is another actual case – documented at that.

A company name reservation was made online and passed the initial validation made by the SEC’s electronic system. The reservation notice was submitted to a Metro Manila SEC satellite office in Robinsons’ Galleria.

When presented, the SEC issued a payment assessment form, which requires the payment of the name reservation fee. Payment was made at the nearest Land Bank of the Philippines (LBP) branch. The LBP deposit slip was then submitted back to the SEC satellite office. SEC gave an unsigned slip and asked the party to come back on January 18, 2017. On January 18, 2017, the same party went back to SEC satellite office. She was asked to come back on January 25, 2017. On January 25, 2017, she was asked to reserve a new name online. Her Calvary has not ended.

Is this the improved service that Mr. Pan Jr. is boasting of?

Govt should welcome complaints

The Filipino people, as end users of any government service, should be treated as customers of these government agencies. Getting complaints is actually a good thing. It gives the agency an opportunity to know what is wrong with their processes and to subsequently improve their service.

Statistics shows that for every customer who complains, 26 others remain silent. When customers complain, they are actually teaching these agencies how to improve their services. These agencies, in turn, should focus on “successfully resolving” the complaint instead of plainly defending themselves.

To successfully resolve complaints, the agency should specifically respond to the issues brought up. It should be honest enough and provide a specific apology to the mistakes committed by their employees, if any. The agency must state exactly what it intends to do to make things right. Lastly, proposals on how to improve the service experience in the future should be elicited.

In all these four aspects, the SEC-CRMD, through Mr. Pan Jr., failed.

Now, do you still wonder why the Philippines remains to be one of the worst places to start a business?

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