Duterte’s tyranny at the service of corruption

“Drug money is the source of POGO money.”

Rep. Dan Fernandez of Sta. Rosa on Sept. 4 gave a blunt summary of the tangle of offshore gaming hubs that Philippine lawmakers are trying to untangle.

Four years of legislative investigations into offshore gaming hubs have produced surreal stories:

• Huge complexes are springing up in the countryside as hordes of foreigners flood the capital’s gated villages and apartment blocks.
• Thousands of foreign slaves toil in twilight zone regimes, where armed enforcers dictate their work shifts, meals, karaoke nights, and even their sexual needs.
• Vaults and torture chambers sprout like mushrooms in tunnels that end on the grounds of a municipal government building.
• Closure orders are declining under the influence of corporate power; police are brushing aside reports of killings.
• Dismissed Bamban Mayor Alice Guo and her alleged siblings vanish into the night despite a Senate warrant for contempt of court, turning up in Malaysia, Singapore and Indonesia.

While lawmakers in the capital are hacking layers of POGO-related corruption, thousands of police officers in Davao City are searching for another fugitive, Apollo Quiboloy, the self-proclaimed son of God accused of sexually abusing women and minors, human trafficking and money laundering. Police officers, who have been sitting idle for decades, say Quiboloy’s 30-hectare compound is home to an underground labyrinth; a private taxiway leads to Davao International Airport.

Welcome to the portals of Rodrigo Duterte’s black holes.

Peripatetic crime

Davao, Central Luzon, Cebu, Metro Manila — the cities and regions where POGOs flourished were also epicenters of a “drug war” that claimed the lives of thousands of Filipinos for decades.

As mayor of Davao City and president of the country, Duterte led an army of murderers.

He was the supreme commander of the executioners and their irresponsible intelligence chief. When he listed the names of local chief executives, businessmen and foreigners, they were faced with three options: death, flight or give up everything.

The similarities between the handling of the drug war, the church in Davao, and the transformation of POGOs into criminal empires are striking.

Uniformed killers and their vigilantes moved from province to province, rewarded for their killings and pressured to meet quotas.

POGOs rotated managers and traded employees, beating them if they didn’t meet quotas for digital scams.

The faithful who filled Quiboloy’s coffers opposed “donation” quotas in the Philippines and other countries to avoid torture and public humiliation.

Billions of dollars flowed in and out of these profit centers through cash transactions, poorly regulated money transfer channels, and non-compliant banks.

Duterte presided over this climax of violence, pressuring critics to protect their friends.

Recycled crime

Illegal gambling and drug money partly fueled the killings of the drug war. Excepted from the dirty war were Duterte’s friends and rich kids who made deals with the regime.

Among those dancing: the guards of huge shipments of drugs that arrived in the capital and passed through Mindanao and the central Visayan islands to Luzon.

Just months after Duterte stepped down, nearly a ton of shabu was found in Tondo, in premises frequented by an officer of the Philippine National Police (PNP) Drug Enforcement Group. Other anti-drug operations in 2022 and 2023, mainly in Pampanga, yielded a total haul worth P7.5 billion.

Retired, dismissed and active police officers have told the House of Representatives investigating committee that Duterte’s actions have actually worsened the country’s drug problem.

He also rolled out the red carpet for POGOs as the drug war got underway, praising the economic prosperity.

Less than eight years later, the Philippines is part of a transnational crime network that stretches from Asia to the western continents.

Alarm bells rang early. Financial officials warned in 2017 that POGOs were becoming a money laundering haven, with anonymous users and service providers (SPs) falling through the cracks of state regulation.

From 2017 to 2019, the Anti-Money Laundering Council (AMLC) monitored suspicious transactions worth 14 billion pesos in the sector, including the SPs.

Yet Duterte continued to insist in 2020 that the industry was “clean,” with dozens of kidnappings and killings and an AML risk assessment linking POGOs to drugs.

While the COVID-19 pandemic and the government’s draconian containment strategy dampened street drug sales, restrictions on mobility masked the expansion of cybercrime through POGO networks and preparations for the coming drug trade boom.

The paymaster

Both before and after the pandemic, the so-called henchmen of the Davao Death Squad labeled Duterte’s economic adviser, Chinese national Michael Yang, a key player in a drug cartel.

When Yang made headlines with the Senate’s revelations about the Pharmally scandal, Duterte defended him as a helpful “paymaster” for Chinese investors in the Philippines.

The Cambridge Dictionary has a very clear definition of paymaster: “a person in an organization who pays for something to happen and therefore has or expects to have some control over it.”

Yang helped Pharmally, a new company with little capital and founders with fictitious addresses, secure 8 billion pesos in pandemic contracts.

That is almost a carbon copy of the 10-year, 6-billion-peso POGO revenue audit contract that was awarded to a company with a fake capital claims certificate.

Yang’s name has surfaced again as lawmakers continue to monitor drug and cybercrime networks in Central Luzon.

Yang’s brother, Hong Jiang Yang, had transactions worth 3.3 billion pesos with Guo.

Other companies owned by a Pharmally founder have links to Empire 999, which owned a warehouse in Mexico’s Pampanga with more than 500 kilos of shabu. The company’s majority shareholder, who fled the country, is a Chinese national who used a fraudulently obtained late-registration birth certificate to acquire land — just as the ousted mayor of Bamban did.

Duterte has previously complained about local thugs from Mexico’s Sinaloa cartel to justify his crackdown. The exposed POGO estates would fit right in with the cartel’s Central American headquarters.

Without Duterte, there would be no crime hotbeds in Bamban and Porac, and no sex and torture dens in Pasay, Makati and Cavite.

Six years of tyranny had one overarching goal: to create a climate of fear to stifle dissent and discourage investigation into the contradictions in his drug policies and actions.

Among the many Filipinos inside and outside the government who are now railing against POGOs are those who once gave Duterte a free pass. Let us not forget that. – Rappler.com