The Problem With POGOs

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The Problem With POGOs

An ongoing investigation into Alice Guo, the mayor of a small city in Luzon, has prompted increased scrutiny of online gambling operations – and their possible links to Chinese espionage.

The Problem With POGOs

In this photo provided by the Philippine National Police Anti-Cybercrime Group, a police officer walks inside an office in Las Pinas, Philippines, on June 27, 2023, after it was raided by the police.

Credit: Philippine National Police Anti-Cybercrime Group via AP, File

National security has always been an issue that has divided the Philippine public, especially as the country has always faced threats from domestic insurgencies, terrorism, and territorial disputes. However, the issue has further gained attention since the recent raid of several Philippine Offshore Gaming Operators, or POGOs, by authorities in the municipality of Bamban. The raid yielded evidence of organized crime, including the involvement of several Chinese nationals.

On March 13, Bamban, a sleepy second-class municipality located in the southernmost part of Tarlac Province bordering Mabalacat City in Pampanga, was rocked by the arrival of dozens of police vehicles and mobile units and authorized units led by the Presidential Anti-Organized Crime Commission (PAOCC) and the Philippine National Police (PNP) Criminal Investigation and Detection Group (CIDG). These groups then raided the 10-hectare Zun Yuan Technology Incorporated POGO complex, which is located directly behind the municipal hall of Bamban.

The surprise raid resulted in the arrest of nine individuals involved in scam-related activities and illegal human detention as well as the extrication of more than 800 victims of human trafficking and alleged physical and torture abuse. The raid also yielded paraphernalia used for scamming activities, such as mobile phones and SIM cards, as well as several high-powered firearms.

Most explosively, investigators claimed to uncover multiple links between the POGO and Bamban mayor Alice Guo, whose office was located directly behind the Bamban municipal hall. Guo was also found to be the owner of the property that was used by Zun Yuan Technology POGO complex.

The discovery of the POGO compounds in Bamban and their multiple links to Guo, who became mayor in 2022, prompted an ongoing Senate inquiry. The inquiry is looking into multiple issues, such as inconsistencies surrounding Guo’s origins, her intricate business ties with the POGO operations in Bamban, and most explosively, the allegation that she is operating as a Chinese sleeper agent.

In response, the Ombudsman placed Guo and two other Bamban officials under a six-month preventive suspension pending the completion of the inquiry, although calls to investigate all POGO operations and possible Chinese espionage activities have only grown, especially against the backdrop of China’s aggressive actions in the South China Sea.

Since incumbent President Ferdinand “Bongbong” Marcos Jr. took office in mid-2022, his foreign policy has involved a pivot back to the United States, the Philippines’ security ally, for economic and military support amidst the ongoing maritime dispute. This contrasts starkly with his predecessor Rodrigo Duterte, who had largely denounced what he saw as U.S. interference in Philippine affairs, and decided to create closer ties with China.

The Duterte administration also saw the rapid proliferation of POGOs, most of them run by Chinese nationals and intended to serve clients in mainland China, where gambling is banned outside of Macao. Although these gambling firms have been operating in the Philippines since 2003, they became much more prevalent after 2016 and have only grown larger since. Despite the issues associated with the Philippines’ POGO boom, Duterte defended the industry, saying it generated considerable income for the Philippine Amusement and Gaming Corporation (PAGCOR).

What Exactly Are POGO Hubs?

A POGO refers to a business entity that participates in offshore gaming services by offering online games, taking bets, and paying the winning players – but only to customers based outside of the Philippines. To operate legally, a POGO must be licensed with PAGCOR.

Furthermore, Filipinos, whether abroad or at home, and foreigners residing in the country are not allowed to take part in POGOs’ gambling activities. According to Alejandro Tengco, the chairman of PAGCOR, licensed POGOs contributed over PhP 5 billion ($85 million) to the agency last year.

Tengco added that PAGCOR has been monitoring teams tasked to keep track of registered POGO businesses to ensure they are complying with the legal terms of their licenses. He also said that those violating these terms could face stiff penalties and the revocation of their license.

Despite these assurances about the measures in place to regulate POGO hubs, some lawmakers, as well as a majority of the public, have raised concerns about the operations.

Given that many POGOs are run by Chinese nationals, lawmakers have raised concerns that they could be used as a front for infiltration and foreign espionage. There are also worries that these operations could involve human trafficking and cyberscams, as with the operation uncovered in Bamban. For these reasons, some lawmakers are urging Marcos to shut down POGOs for good; Senator Risa Hontiveros, during a hearing tackling Guo’s alleged ties to the POGO in Bamban, urged the National Security Council to tag the gambling hubs as security threats.

Critics point to the fact that some POGO operations in the Philippines are located curiously close to military installations, especially naval ports and air force bases. For instance, the POGO hub of Bamban is just 13 kilometers away from  Clark International Airport in nearby Angeles City, where the Philippine Air Force has a facility.

Similarly, an island resort in Kawit, in the province of Cavite, formerly owned by the Remulla political family has been converted into a POGO site and is just a few kilometers from Sangley Point, which is both operated by the Philippine Navy and Air Force. There are also significant Chinese casinos and POGO hubs near the Armed Forces of the Philippines (AFP)’s Camp Aguinaldo and the PNP’s Camp Crame headquarters in Quezon City. This has prompted security experts to describe the gambling operations as possible “Trojan Horses.”

Additionally, another POGO hub raid conducted by authorities last June 6 in Porac, Pampanga yielded three sets of suspected Chinese People’s Liberation Army (PLA) military uniforms and military pins. The discovery further raised suspicions among lawmakers and defense experts that POGO hubs are being used to infiltrate and destabilize the country. Other observers, such as Singapore-based research fellow Collin Koh, argued that the uniforms might have come from discharged PLA personnel finding jobs abroad. AFP spokesperson Col. Francel Margareth Padilla also downplayed the findings, describing the uniforms as props being used for illicit transactions. She added that the AFP had contingency measures in place to deal with Trojan Horse-type surprise attacks.

Another risk with POGO hubs is the illicit activities, such as cyber scam operations, illegal detention, human trafficking, torture, and kidnapping. Aside from the trafficking victims rescued during the Bamban raid, 186 more Filipino and foreign workers who were victims of torture were rescued in the raid of the POGO in Porac, while drugs and weapons such as baseball bats and sticks were recovered.

Just last year, nearly 3,000 workers were also rescued from a POGO operation in Las Pinas City, in Metro Manila. In May 2020, 265 Chinese nationals were arrested in the same city for illegally operating a POGO firm inside a hotel.

Bamban’s Mayor: The Backstory

This brings us back to Alice Guo and her mysterious background. Guo only became a registered voter in her 30s, and the topic of her early life and ancestry has sparked intense debate among members of the Senate as its investigation has unfolded.

For instance, despite Guo’s claims that she was a love child of her father with her alleged mother, Senator Hontiveros has revealed that the Philippine Statistics Authority had no marriage or birth records for either of Guo’s parents. Hontiveros later claimed that based on fingerprints obtained by the National Bureau of Investigation, Guo’s true name was Guo Huaping, and that she had migrated to the Philippines from China as a teenager. The same was later revealed to be true of her brother Wesley (real name Guo Xiangdian).

“This confirms what I have suspected all along. ‘Mayor Alice’ – or should I say, Guo Hua Ping – is a fake Filipino,” Hontiveros said late last month. “She is a Chinese national masquerading as a Filipino citizen to facilitate crimes being committed by POGO.”

Guo’s insistence on her simple lifestyle was also met with skepticism, and Hontiveros has presented evidence to the Senate that she owned 16 vehicles, including a McLaren 620R racing car. Guo responded by claiming she no longer owned the cars, but did admit to owning a helicopter in the past for business purposes. She said the McLaren 620R was only borrowed for a car contest in the nearby town of Concepcion.

Throughout the investigation, Guo’s evasive responses, including the phrase “Hindi ko na po maalala” – “I cannot remember it anymore” – had not only irked the Senate but also been ridiculed by the Filipino public, who have quickly generated memes and other online content parodying the now-infamous quote. Guo has defended her actions, stating that her answers were an automatic response to blocking out what she claimed were sad childhood memories.

Townsfolk, Critics In-Between

With Guo now facing possible charges of human trafficking and money laundering, a number of critics as well as some residents of Bamban felt that the whole Senate inquiry was a witch-hunt that could lead to discrimination against Filipinos of Chinese descent, who make up a significant minority in the country.

Civic leader and activist Teresita Ang See, who has fought for the integration of ethnic Chinese into Philippine society since the Martial Law era, lambasted the Senate inquiry, saying that it could have been focused on more important matters than the personal details of Guo’s private life. She also raised the possibility of an anti-Chinese narrative being spurred, especially with calls for the investigation of the recent influx of Chinese students into Cagayan province.

Bamban residents are divided over their embattled mayor’s legal issues. Some long-time residents question their own local executive’s identity as well as her motives in running for mayor. However, a lot of people are dismayed that Guo is being maligned in public and have thrown their support behind her. Others have noted that there is nothing wrong with her personal life but do agree that POGOs must be banned.

One university student from Bamban, who preferred to remain anonymous, said that many people were “shocked” to hear of the allegations against Guo. “The thing is, locals here were aware of what happened and they’re not in denial but right now, they’re just silent about it because they felt that Guo did not do anything bad towards them,” the student said.

However, one thing most residents in Bamban could agree on is that she succeeded in attracting investment and spurring development in the sleepy town. In this sense, some said she was a marked improvement on her predecessor, Jose Antonio “Jon” Feliciano, who served three terms as the local executive from 2013 to 2022.

“The former mayor, Feliciano, he ran for mayor in Bamban but he resided and worked in Manila,” the university student added. “Nothing happened in Bamban, its development paralyzed and there was no improvement, since he was always absent.”

Another Bamban resident said that after Guo became mayor in 2022, “there were new buildings and factories. For the first time, Jollibee and McDonald’s franchises were built. What was a former quiet small town became developed.”

Given that she ran as an independent candidate, Guo was largely “unknown” when she ran for office. “She ran as an independent candidate but she gave lots of money to the voters here. Even lawyers from Bamban and nearby Capas municipality didn’t know her,” the resident said. Another added, “But since nothing was happening under the former mayor, they decided to vote for someone new.”

Moving Forward

The ongoing investigation of Alice Guo and the successive raids on POGO operations show that the authorities are making a concerted effort to strengthen national security and stamp out criminal syndicates operating in the Philippines. Even if Guo is innocent of the accusations against her, the affair has exposed the degree to which the Philippines is vulnerable to outside threats and international criminal syndicates as well as multi-layered factors that enable these threats such as poverty and local corruption.

Ironically, while China had its own official ban on offshore gaming, and has urged the Philippine government to finally ban POGO hubs, the government’s inaction has led Chinese gambling operators to continue to flock to Philippine cities.

One problem is that POGOs contribute a considerable amount of revenue to the government; PAGCOR is the third largest source of revenue to the national government after the Bureau of Internal Revenue and Bureau of Customs. But with that in mind, some have argued for the government to establish an alternative source of employment for the thousands of Filipino workers employed in POGOs.

Authorities, especially the Commission on Elections should also start doing thorough background checks on candidates running for government positions and monitoring public servants who might have a dubious background or have been involved in cases similar to the ones in the Alice Guo saga.

The discovery of the POGO hubs in the municipality of Bamban should serve as a wake-up call to the agencies involved to move to protect the Philippines’ sovereignty from international and domestic security threats as well as transnational criminal syndicates. How it would respond to similar challenges in the future would depend on how the government will prepare for it long term.