Government seized property in 2012
Sanum Investments Ltd., which formerly managed the Savan Vegas Hotel and Casino in Savannakhet Province, Laos, has won an appeal of the property’s sale in a case heard by a Singapore Appeal Court, reports the Straits Times.
The resort originated as a joint venture between the Laotian government and a consortium consisting of Netherlands-registered Lao Holdings and Macau-based Sanum Investments. Under the partnership, Lao Holdings owned 80 percent of the complex, with the rest under government control.
But in 2012, the government seized the property, claiming it owed $23 million in back taxes. An arbitrator supposedly settled the dispute in June 2014 by requiring the two companies to sell their interest provided that Laos dropped its tax-dodging and criminal bribery charges.
In May of this year, Hong Kong-listed casino services company Macau Legend Development agreed to pay US$42 million for the property, which comes with a 50-year monopoly on casino operations in three Laotian provinces. Sanum Investments says that price is “a fraction of the estimated value,” which it set at up to $250 million.
The most recent decision overrules a previous one by the Singapore High Court and allows Macau to be included under a bilateral investment treaty signed by Laos and China in 1993, the Times reported. The appeal from Sanum regarded claims of capital investment benefit losses caused by what is says were unfair taxes levied by the Laos government.
Because the MSAR officially returned to China in 1999, the court ruled that the “moving treaty frontier” rule applied to Macau. The original arbitration tribunal took the case to Singaporean authorities, who ruled that the territory had jurisdiction over the dispute and that the treaty should apply. Laos appealed to Singapore’s High Court, but the court ruled in favor of Sanum.
“Simply put, because a treaty is binding in respect of the entire territory of a state, the MTF rule presumptively provides for the automatic extension of a treaty to a new territory as and when it becomes part of that state,” wrote Chief Justice Sundaresh Menon.
“Sanum continues to strongly object to the government’s unsupported claim of an outstanding ‘tax liability’ arising during the time period in which we were actively involved in the management of the Savan Vegas project. An objective review of our Flat Tax Agreement and the audited financials proves that all valid taxes were paid in full by Sanum during its operation of the Savan Vegas property,” Sanum President Jody Jordahl told the Macau Business Daily.
The property on the border of Thailand and Vietnam includes a full-service casino, a hotel and numerous entertainment and leisure offerings.
