Porac mayor blames PAGCOR for POGO’s small tax payments

PAMPANGA, Philippines –  Lucky South 99, the Philippine offshore gaming operation (POGO) raided in Porac, Pampanga, paid only a small amount in real property taxes to the local government despite its massive property, a situation local stakeholders blamed on “oversight failure.”

“It was clear there had been an oversight failure on the part of PAGCOR (Philippine Amusement and Gaming Corporation ) although its representatives had been consistently inspecting the operations of Lucky South 99 being the issuing authority of its license to operate,” Porac Mayor Jaime Capil said in a statement sent to Rappler on Sunday, June 16.

Ruperto Cruz, the previous owner of the Thai Royal Court compound where the POGO is situated, also blamed PAGCOR. Cruz, a local businessman, earlier sold part of his property to Whirlwind Corporation, which eventually leased the premises to the POGO.

“They (PAGCOR) failed to monitor illegal activities there because it was them who go in and out of Thai Court,” Cruz said in a mix of Kapampangan and English during an exclusive interview with Rappler on Monday, June 17.

Pampanga’s provincial government conducted an investigation to find out how a big POGO managed to set up business in Porac. Later this POGO was never flagged despite being accused of trafficking and torturing workers

“I actually called (this hearing) because I panicked. Porac is suddenly in the news, we have no idea. We have a lot of confidence in Mayor Jing [Capil]. He should have informed us. You didn’t say that there was a POGO there, that there was a BPO there. Suddenly we were surprised that there was something illegal there,” Vice Governor Lilia Pineda said during the hearing conducted at the provincial capitol on Friday, June 14.

Pampanga’s ruling Pineda family owns the Royce Hotel and Casino inside the Clark Freeport. All casino operations in the Philippines are regulated by PAGCOR.

Small taxes

The sprawling Lucky South 99 operation contributes a measly P14,000 annually to the coffers of Porac: P10,000 is for business permits, and only P4,000 for real property taxes despite having 46 buildings spread over 10 hectares in the compound.

The provincial council blamed insufficient tax mapping and land misclassification as the reasons for the POGO’s low tax remittance. Pineda said higher taxes should have been imposed on the as the operation expanded.

During the hearing it was discovered that there was no record of how many employees worked for Lucky South 99. The POGO also could not produce occupancy permits issued to its buildings, and there was no environmental permit.

In their defense, the local officials said the letter of no objection (LONO) they issued to Lucky South in 2019 was only for the establishment of a business process outsourcing (BPO) service. LONOs are actually required by PAGCOR specifically for those applying for offshore gaming license, and not just a BPO.

Capil said the LONO was just a “locational requirement,” and further scrutiny was PAGCOR’s responsibility.

“The POGO operations in the country had been legalized in a bid to bring in revenues for the government and PAGCOR top officials even said that these POGOs contribute significantly to the country’s coffers. Thus, it resides in the authority of PAGCOR to monitor the operations of these POGOs or IGLs (internet gaming licensees) all over the country,” Capil said.

Pineda told Capil during the hearing: “Why didn’t you complain to the higher authority? Why did they just come to your town and not let you in? It is in the law that all private property must be inspected if there is any suspicion of illegal activity,” said Pineda. “You are Filipino, you are Kapampangan, you are from Pampanga, you are not allowed to enter, what kind of people are they? Do they already own Porac? Did you give Porac to them?”

PAGCOR’s side

A PAGCOR official told Rappler that there are special BPOs that cater to the gaming industry. The official also said that the Lucky South 99 they licensed was located in an area that was “far” from the building that was raided by the Presidential Anti-Organized Crime Commission (PAOCC).

It seems, the official said, that Lucky South 99 also slipped through PAGCOR regulations. The official said that when a team from PAGCOR visited the area “out of curiosity,” they were “chased away by armed men.” This led PAGCOR to file reports to PAOCC, said the official.

The original landlord

Porac businessman Cruz said he only sold a portion of his property to Whirlwind Corporation.

Later, Whirlwind, a real estate firm incorporated in 2019, leased the compound to Lucky South 99. Whirlwind and Lucky South 99 are interconnected through common people, this was apparent in documents seen by Rappler.

Cruz said the size of his whole estate was 150 hectares. The POGO compound occupied only an estimated 10 hectares.

Another provincial hearing is set to review all permits and clearances issued by the Porac to the facility. The provincial council will continue its probe on the compliance with local regulations. – Rappler.com