Regulators in New South Wales will launch an official inquiry into Crown Resorts’ planned sale of approximately 20 percent of its equity to Macau casino operator Melco Resorts & Entertainment.
The investment, first revealed in May, has been suddenly cast into the spotlight following an explosive series of reports in three of Australia’s major media outlets accusing Crown of entanglement with Asian organized crime groups through its relationships with the foreign promoters who control the traffic in high-rolling gamblers from mainland China.
Casinos in Macau and across East and South Asia and Australia depend on the promoters, junkets, as they’re known, to recruit wealthy players within China, where casino marketing is prohibited by law, and arrange their travel and provide them with loans and other financial means to evade the country’s strict currency export restrictions.
The exposes accuse Crown’s junket relationships of facilitating money laundering and other illegal activities at its casinos in Melbourne and Perth.
The junkets are not casino employees but third-party contractors. They do, however, generally have an established presence within the region’s casinos, especially in Macau, where they operate the private salons where high rollers play in exchange for a split of the win or a percentage of the turnover they generate.
The system was perfected by Hong Kong tycoon Stanley Ho, who held a monopoly on the Macau casino market from 1962 to 2002, a period coinciding with the city’s last decades as a Portuguese colony. Macau returned to Chinese sovereignty in 1999.
Over those years, Ho was the target of numerous investigations by international law enforcement, notably in Australia and the United States, for his alleged ties to organized crime elements in Hong Kong and elsewhere. He has never been charged with any crimes, however, and now, at the age of 97, he is no longer active in the many businesses he has controlled. But his influence was pervasive in Macau’s casino industry even after the handover, strong enough that even when the market was opened to competition at the turn of the century, two of his children, Pansy Ho and Lawrence Ho, were awarded casino concessions, the former in partnership with MGM Resorts International, the latter as part of a joint venture between James Packer’s Crown and Melco, which Lawrence Ho chairs.
Packer sold out of the Melco joint venture in 2016, but neither Crown nor Melco are finding it easy to escape the shadow that Stanley Ho still casts in Australia, more so now than ever in the wake of the media battering Crown has taken.
It’s been something of a perfect storm, with Crown planning to build a A$2 billion-plus luxury casino in Sydney catering to high rollers, and Melco suddenly entering that picture via the deal announced in May to pay Packer’s CPH Crown Holdings A$1.76 billion for a 19.99 percent stake in Crown.
The NSW inquiry aims to ensure that the management and operation of Crown Sydney, due for completion in 2021, remain free from criminal influence or exploitation and that gaming is conducted honestly, “controlling the potential to cause harm to the public interest and to individuals and families”.
The state’s Independent Liquor & Gaming Authority is conducting the investigation and will take evidence in public and possibly also conduct private hearings to receive confidential information from law enforcement or other sensitive information, according to news reports.
Ho has pledged full cooperation and is adamant in stating that his businesses are completely free of any involvement by his father.
“Both Crown and I have always stressed that my business dealings are independent of my father’s interests,” he told the Australian Financial Review in June. “We have already been in partnership with Crown for 12 years and have passed probity screens from regulators without an issue.”
Melco reiterated that in an e-mailed statement to Reuters last week, emphasizing that Stanley Ho did not hold any position on Melco’s board of directors or any of its related entities and is not involved in the company’s business operations.
“(Stanley Ho) does not exercise any influence on any financial and operating policies or other matters of these companies,” it said.
But that could be in dispute as the investigation gets under way. British newspaper The Guardian, for one, has reported that the first half of the transaction𑁋with the Crown shares said to have been transferred to Melco on June 6𑁋was completed while Lawrence Ho was a director of Lanceford Company Ltd., an entity linked to Stanley Ho and one of 59 companies and individuals banned from doing business with Crown under a previously secret condition of Crown’s licensing for the Sydney casino.
