China Cracks Down on Philippine POGO Workers

The Philippines declined last year to clamp down on online gaming operations that reach consumers in mainland China. Now Beijing has taken matters into its own hands, canceling the passports of thousands of Chinese workers who work for Philippine Offshore Gaming Operations (POGOs).

China Cracks Down on Philippine POGO Workers

The Philippines Bureau of Immigration may be faced with a mass exodus of Chinese nationals who work for Philippine Offshore Gaming Operations (POGOs). Last month, the government of Beijing announced it was canceling the passports of scores of those workers, which could kickstart a full-scale deportation.

“To crack down on cross-border telecom fraud, China’s Ministry of Public Security has obtained a list of Chinese nationals suspected of committing long-term telecom fraud crimes abroad, who are classified as the persons prohibited from exiting China,” the Chinese Embassy in Manila said in a February 23 statement. “Such operations are aimed at the suspects of Chinese nationals who have committed telecommunications fraud crimes in different countries.”

According to CNN, China is presenting its latest broadside against iGaming as an attempt help the Philippines crack down on the POGO industry which is reportedly rife with tax evasion and could pose a national security risk. The Bureau of Internal Revenue has indicated that PH27 billion (US$528 million) in taxes remain uncollected from the POGO sector.

The Philippine Amusement and Gaming Corp. (PAGCOR), the state-run gaming regulator, stopped accepting new applications for POGO licenses in August 2019.

The POGO business has been plagued by other unsavory allegations, including failing to obtain necessary legal work permits for their Chinese employees, allegedly paying bribes to immigration officers, allowing harsh working and living conditions for the foreign workers and not allowing them to return to their homeland.

“The Chinese government always requires Chinese citizens overseas to abide by local laws and regulations and not to work illegally in foreign countries,” the Chinese embassy said.

China added that offshore gambling leads money laundering, which undermines China’s financial supervision and financial security.

“The Chinese embassy in the Philippines has repeatedly issued consular reminders and has been keeping close communications with the Philippine government in this regard. The relevant departments of both countries also conducted a series of law enforcement cooperation,” the embassy said.

Chinese officials in Manila said they will work closely with the Philippines “to combat such crimes as telecommunications fraud, illegal online-gambling, money-laundering, illegal employment, kidnapping, extortion, torture, murder etc. so as to effectively protect the legitimate rights and interests of nationals of the two countries, and to promote the China-Philippines friendship and cooperation.”

Any form of gambling by Chinese citizens, including online-gambling, gambling overseas, opening and operating casinos overseas to attract citizens of China as primary customers, is illegal, the embassy pointed out.

Bureau of Immigration Division Chief Fortunato Manahan says that Beijing cancelled the passports of 800 Chinese nationals last year, making them fugitives who were then arrested by Philippine authorities.

According to the South China Morning Post, Philippine President Rodrigo Duterte “bet heavily on POGOs to bring billions of pesos in revenues to the Philippines.”

Instead, it resulted in a flood of undocumented Chinese workers—by some accounts, hundreds of thousands of them—to be employed by hundreds of illegal POGOs. It also caused an increase in crime, said Senator Sherwin Gatchalian. “POGOs bring with them syndicates and criminals,” he said. “Criminality cannot be separated from these POGOs, they’re directly correlated to the rise in crimes where they operate.”

In Senate testimony, it was revealed that since 2016, it has become commonplace for Chinese nationals to bypass immigration checks at Manila’s airport by paying bribes amounting to billions of pesos. According to a whistleblower, under the so-called “pastillas system,” Chinese nationals paid PH10,000 (US$200) to as much as 100,000 pesos to be let in “at once … no questions asked.” Those allowed entry included convicted criminals and Chinese nationals on a blacklist.

Beijing has condemned POGOs and called on the Philippine government to shut them down; it did the same with offshore operations in Sihanoukville, Cambodia, which complied with the Chinese directive. Last August, China said “any form of gambling by Chinese citizens, including online-gambling, gambling overseas, opening casinos overseas to attract citizens of China as primary customers, is illegal.”

Duterte said last year that he wouldn’t ban POGOs because “many will lose their jobs.”

Nicky Franco, research head of brokerage firm Abacus Securities Corp, told the Post a crackdown on POGOs will be “painful” for the Philippine economy, potentially causing residential value to plummet and property vacancies to soar. But he said the gambling centers were a bigger problem for the country.

“We have always maintained that POGOs are a net negative for the Philippines as a whole. Their seemingly impending departure should therefore be a net positive,” Franco said.