Business & Economy

Philippines is China’s virtual casino, new haven for its mafias

By Sara Gómez Armas

Manila, Mar 17 (efe-epa).- Money laundering, labor exploitation, kidnapping, extortion and prostitution are some of the crimes that have emerged following the opening of virtual casinos focused on Chinese people but built in the Philippines.

These online gambling entities, known as POGOs (Philippine Offshore Gaming Operators), have been legal in the Philippines since 2016 following President Rodrigo Duterte’s election, and have grown rapidly since, but much of their activities remain hidden from authorities’ radars.

Other than stoking anti-Chinese sentiments and racism, the situation has generated intense social debate in the Philippines, where the Senate this week resumed an inquiry committee into POGOs’ lax legality and the need to step up controls or even suspend their licenses.

“The moral fabric of the Philippine society is being damaged through corruption, prostitution, and illegal traffic brought about by the influx of POGO workers in the country,” said Senator Richard Gordon, who promotes the investigation in the upper house.

Seven murders, 73 kidnappings and 10 brothel raids with the rescue of 200 sex workers – 173 of them Chinese – are the result of criminal activities linked to the POGOs that police have intercepted since 2017, which have led to the arrest of 60 Chinese suspects.

China’s embassy in Manila said these are “isolated incidents” and criticized the links between its citizens and the crime surge in the Philippines. However, it also demanded that the Philippine government increase controls on POGOs, as much of China’s capital flight ends up at these virtual casinos.

Since 2016, the Philippine Amusement and Gaming Corporation has granted 59 licenses to POGOs, internet gaming companies that use networks and software for players abroad.

Most licenses are in the hands of firms in China, where gambling is prohibited, but about 200 others are operating illegally. The lack of regulation in the sector makes these opaque companies a money laundering instrument.

Though it is difficult to determine how much dirty money these casinos move, the Philippine Anti-Money Laundering Council said it suspects it to be about $280 million out of $1.07 billion in transactions between 2017 and 2019.

Additionally, $633 million in foreign currency has entered the country through airport customs held by Chinese tourists since September 2019.

“I will assure you under my oath of office as President of the republic […] that POGOs are clean,” Duterte said Tuesday, having redirected his foreign policy toward China, its largest political and economic partner.

The president is the POGOs’ main defender, an activity that – according to him – employs about 20,000 Filipinos and has reaped the country $336 million, reinvested in infrastructure projects.

Critics say the government has only collected about $100 million in taxes on POGOs – 10 percent of what they should have generated.

Although they also hire Philippine nationals, these companies mostly employ Chinese people who can satisfy gamblers’ language demands and perform jobs related to marketing, customer service or technical support.

Data from the employment department says about 130,000 Chinese people work in this industry, although the sector’s experts assure the number could be twice as much, since the majority enter the Philippines as tourists and are employed illegally.

Authorities uncovered a bribery system in February whereby immigration officials at airports charged up to 10,000 pesos ($200) from mafias related to POGOs for every Chinese worker who slipped in as a tourist. EFE-EPA


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