GGRAsia – Crown Resorts barred from Stanley Ho associates

Crown Resorts barred from Stanley Ho associates

Nov 14, 2014 Newsdesk Latest News, Macau, Top of the deck, World

An undertaking sought by the authorities in New South Wales before granting a casino licence to Crown Resorts Ltd in Sydney includes a provision to prevent “any new business activities or transactions of a material nature between Stanley Huang Sun Ho or a Stanley Ho associate and Crown, any of Crown’s officers, directors or employees or any Crown subsidiary”.

The reference in the document is to former Macau gaming monopolist Stanley Ho Hung Sun, founder of SJM Holdings Ltd, one of Macau’s current six casino concessionaires.

Mr Ho, now in retirement from the Macau gaming industry and due to celebrate his 93rd birthday on November 25, has been subjected in the past to scrutiny by regulators in the U.S. and Australia for alleged links in the Macau casino junket sector to Chinese organised crime groups, known as triads.

The provision faced by Crown Resorts for its Sydney licence to keep away from Mr Ho and his associates – previously kept confidential – is in a document supplied by the office of the New South Wales Premier Mike Baird to the clerk of the Australian state’s two legislative bodies and dated November 13. A copy of the document has been seen by GGRAsia.

Reuters reported in November 2013 that Suncity, a Macau junket promoter brand with links to Stanley Ho-founded SJM Holdings, was working with Crown Melbourne (pictured). Suncity Group is now one of the largest junket investors in Macau, and is sponsoring this weekend’s Macau Grand Prix.

In January it was announced that International Entertainment Corp – a Hong Kong-listed firm that lists Henry Cheng Kar Shun as chairman – would pay up to HKD7.35 billion (US$948 million) for a 70 percent stake in an entity called Suncity International Holdings Ltd. The latter is wholly beneficially owned by Alvin Chau Cheok Wa, described as chairman of Suncity Group.

Mr Cheng’s father, Hong Kong billionaire Cheng Yu Tung, is a longstanding business associate of Stanley Ho. In 1982 Mr Cheng senior bought a 10 percent stake in SJM’s parent firm STDM SA. As recently as February 2013 he was described in an SJM Holdings’ filing as maintaining a “beneficial interest” in STDM. Mr Cheng senior is not listed as a shareholder of SJM nor STDM in SJM Holdings’ 2014 interim report.

International Entertainment’s deal with Mr Chau has not yet been completed according to publicly available information.

Henry Cheng is also named as a non-executive director of SJM Holdings in its 2014 interim report filed with the Hong Kong Stock Exchange on September 1. He is also listed in that document as a beneficial owner of 0.05 percent of SJM Holdings’ issued share capital.

GGRAsia attempted to contact Crown Resorts to ask whether in the light of the New South Wales provision barring “any new business activities” with Stanley Ho or his associates, it would be reviewing any current or future links with Suncity, were the International Entertainment deal to go though. No comment was available at the time our story was first published.

Other provisions

The New South Wales agreement as now revealed, also requires that every quarter, Crown Resorts “conduct searches of Crown and Crown’s wholly owned businesses to ascertain if any payments were made to Stanley Huang Sun Ho or a Stanley Ho associate during the previous quarter…”

The previously redacted agreement between Crown Resorts, chaired by James Packer, and the New South Wales authorities also contains a provision that Crown must report on its joint venture with Mr Ho’s son Lawrence Ho Yau Lung – Melco Crown Entertainment Ltd, a Macau casino concessionaire. Crown Resorts holds a 33.6 percent equity interest in Melco Crown.

The agreement states: “Crown [Resorts] undertakes that it will on a six monthly basis, report in writing to the Authority the identities of all organisations or promoters of a junket with whom Melco Crown or any of its subsidiaries have an agreement to conduct junkets at any casino operated by Melco Crown or any of its subsidiaries.”

The agreement also says Crown Resorts must on a quarterly basis “…request Melco Crown conduct a search of its ADR [American Depository Receipt] and share registers to ascertain whether Stanley Huang Sun Ho or a Stanley Ho associate has either become a security holder of Melco Crown or there has been any increase in existing security holdings in Melco Crown during the previous quarter…”

Melco Crown told GGRAsia it had no comment on the provisions relevant to the joint venture.

In July it was announced that Crown Resorts had been given a so-called ‘Restricted Gaming Licence’ by New South Wales, allowing the firm to operate a VIP casino at its planned six-star Crown Sydney hotel within a AUD1.5 billion (US$1.3 billion) real estate development in the Barangaroo district of the city. It will be allowed to start operating some time after November 15, 2019.

The project however may face some delays. A payment disagreement between Mr Packer’s Sydney casino partner Lend Lease Group LLC and the New South Wales government has delayed construction of the scheme, the Australian Financial Review reports. Construction is said to be on hold while the parties discuss the final payment required once the development is complete.

According to the Australian Financial Review, a court ruling in favour of Lend Lease three months ago has the government concerned about costs for public infrastructure at the Barangaroo site, with the state trying to shore up end payment requirements for Lend Lease. However, there is currently no end date for settlement talks.