Taking on the Macau Casinos

It could be the most unusual trade war in global history. But the multi-billion dollar Macau gambling industry is under assault from a website, www.CasinoLeaks-Macau.com, which is dedicated to exposing the multiple criminal links of the Macau casino operators, not least the US-owned and publicly listed groups, Las Vegas Sands controlled by Sheldon Abelson and Wynn controlled by Steve Wynn’s Wynn Resorts.

The site is linked to the International Union of Operating Engineers, a US trade union that represents casino workers in the US but clearly is more than just a crude anti-Macau or anti-Adelson post put up by aggrieved US employees.

Much time and inside research in Macau must have gone into it. Its claims have led the union official, Jeff Fiedler, to write to the Nevada Gaming Control Commission and Nevada Gaming Control Board asking them to investigate the links of the US controlled casinos in Macau to alleged organized crime.

The website has already published considerable detail about the casinos and in particular allegations about the identities of some of the so-called junket operators, the firms and individual firms and individuals who bring high-rolling gamblers to the casinos and are in effect independent sub-contractors who run VIP rooms in the casinos for their clients.

In particular the website has called for investigation into the Neptune Group, which it says has relations with five of the six Macau casino licensees through junket companies it controls. Neptune it says is controlled by one Cheung Chi Tai which till late 2011 owned a gambling ship, the Neptune, often seen in Hong Kong waters, and is a close associate of Macau businessman Lin Cheuk Chiu who, it says, has been named in the mainland media as a money launderer.

The claims are backed by a wealth of corporate and other documents showing Chung’s various links, including with the new Singapore gambling industry. It is promising to tell more in due course, details which could prove highly embarrassing to several individuals in Macau, Hong Kong and the US, to the Macau government which purports to regulate the casinos and to China whose corrupt far cats are the main source of the business but readily launder their ill-gotten gains in Macau under the noses of mainland officials who turn a blind eye to what goes on.

The junket system, unknown in Las Vegas where all gambling is controlled by specific licensed operators, dates back more than two decades to the time when Macau was under Portugese rule and gambling was a monopoly controlled by Stanley Ho and his Sociedade de Tourism e Jugos de Macau (STDM). Then struggles between rival triads -- organized crime groups -- over control of junkets and the other seedier aspects of tourism in Macau-led gang warfare in which several people were killed.

There was then an attempt at clean-up and one of the leadings bosses, Wan Kuok-koi, known as “broken tooth” was jailed in 1998 – just before the handover of Macau to Chinese sovereignty. Wan is due to be released soon after serving 14 years. His lawyer is reported saying he will in future stay clear of the gambling business. But according to CasinoLeaks his relatives and some former colleagues are already well entrenched in the junket business, which has grown astronomically during his years in jail.

After the handover STDM’s monopoly was ended and new licenses handed out mostly to known, big-name operators like Adelson and Wynn. Since then too the number of very rich Chinese willing and able to lose a lot at the tables has expanded even faster. For rich mainlanders who have no easy access to other means either of laundering ill-gotten gains or moving capital to safe havens in Hong Kong, the west or southeast Asia losses on gambling plus the take of the junket operators were a small price to pay.

Some at least of the junket operators who act as the bankers of high-rollers are an integral part of the system, proving credit in Macau in return for assets elsewhere.

Although the junket operators undermine the profits of the casino companies, they are integral to the system, enabling the casinos themselves to appear clean while bringing in business on a scale that they themselves could not do.

The Macau authorities profess to be surprised and hurt by the website’s allegations and have accused it of having a hidden agenda. They note that their major casinos are run by known US professional groups and that they and their associated hotels and entertainment venues have attracted some US$20 billion in foreign investment of the past decade and claim that regulation is strict.

The Nevada regulators have no standing in Macau and the authorities in the enclave clearly feel no need to answer either the union or the website. However, there are several reasons why Macau and its gambling organizers may feel uncomfortable. US politicians, not just in Nevada, may have begun to take an interest in Adelson because his wife has been the major contributor to Newt Gingrich’s campaign for the Republican presidential nomination.

Further revelations by the website may show more clearly the links between organized crime and the major junket syndicates. And a China getting worried about corruption and the wealth gap may figure that the Macau situation, which it cannot claim is beyond its control, could become a focus of mainland internet outrage against official corruption and wholesale breach of foreign exchange and tax laws permitted to influential persons.

Conceivably too it could lead to a return of overt gang warfare. Last month a bizarre story surfaced about a gang being able to operate a bogus casino within the Las Vegas Sands-owned Venetian Macau and drugging and defrauding gamblers. (See Asia Sentinel, 8 March 2012) Given the amount of security apparatus and personnel employed by big casinos, this story alone raises questions about who controls what in an enclave whose economy is now almost totally based on the casinos.

The casinos in turn make most of their money from the few high rollers and money launderer,s not from the mainland and Hong Kong masses who flock to gamble anything from HK$10 to HK$1,000 or mostly just gaze at the gaudy extravagance of Macau casino architecture, some of which apes Las Vegas and some exceeds even that gambling mecca in showmanship.