Melco faces legal struggle with ILGA.
Melco, a major player in Hong Kong's gaming industry, is currently locked in a legal battle with the Australian gambling regulator, ILGA. The regulator is demanding access to certain financial documents relating to Crown Resorts, a prominent Australian casino operator, and the alleged involvement of Melco CEO Lawrence Ho with Chinese crime syndicates. Here's a breakdown of the situation.
ILGA Files Appeal
For several months, Melco has been under investigation for suspicious share transactions with Crown Resorts, Australia's casino market leader. ILGA has been seeking the release of certain documents to gather evidence. However, Melco celebrated a legal victory earlier this week when the New South Wales highest court ruled that they were not obligated to hand over the documents.
Melco had previously requested the documents, citing "legal grounds of privilege." Now, the supervisory authority has announced plans to file an appeal, fearing that the ongoing investigations could be tainted. According to a spokesperson, "it would be inappropriate" to provide more information at this stage.
Suspicious Share Deal
The financial documents in question include nine confidential documents regarding Melco's 20% share purchase in Crown Resorts. This deal has been canceled due to the ongoing investigation. The outcome of this transaction could jeopardize Crown's third casino license.
As Melco's managing director, Lawrence Ho, and his father, former Melco CEO Stanley Ho, have long been associated with Chinese organized crime, the connection between Melco and Crown Resorts has come under intense scrutiny from Australian authorities. The two companies operate the Studio City Casino together in Macau, currently closed due to the coronavirus pandemic.
The possible business relationships between the groups raise numerous unanswered questions for the authorities. It's undeniable that NSW license regulations from 2014 state that Crown may not collaborate with individuals or companies connected to the Ho family.
Crown Under Pressure
Despite these restrictions, Crown's owner, James Packer, attempted to finalize share transactions with Lawrence Ho in March 2019. He offered Lawrence Ho the opportunity to acquire a 20% stake in Crown for around 1.04 billion euros. ILGA claims that an initial transaction worth 535 million euros took place in June, with the remainder due by the end of September.
Justin Field, a New South Wales Member of Parliament, bluntly stated, "It's hard to accept that a company associated with individuals linked to money laundering and criminality can be fit to run a casino that predominantly targets high rollers." The statement is clearly a legal warning to Crown. As part of an extensive investigation, Crown's suitability as a licensed operator is being examined. If ILGA finds them unfit, the company will need to prove itself worthy of the "suitable" classification again.
The Crown Scandal
In August, a joint investigation by The Sydney Morning Herald, The Age, and 60 Minutes sparked a scandal concerning Crown's junket operator business. Junket operators organize VIP packages for high-end players, with middlemen earning a commission based on their protégés' gambling expenses. These operators usually provide complimentary flights and luxury hotel stays. They also provide access to VIP lounges where significant sums of money exchange hands.
The controversial business model is once again causing concern for authorities. Since the end of November 2019, inspectors from the Cyprus Gaming and Casino Supervision Authority have been scrutinizing Melco's activities. Melco owns 75% of the Casino City of Dreams Mediterranean, the first casino resort in Cyprus, with the remaining stake owned by local company Cyprus Phassouri Ltd (CPZ). The project, currently worth over 450 million euros, is set to open at the end of 2021. The authorities' final decision on whether to authorize the opening is dependent upon the results of this investigation. The future remains uncertain.
Melco Under Surveillance
Melco is now under the watchful eye of two authorities: the Australian regulator, ILGA, and the Cyprus Gaming Authority. Crown's junket operator business is under scrutiny by the latter. Melco is co-owner of the City of Dreams Mediterranean Casino, scheduled to open in late 2021. The Cyprus Gaming Authority's investigation began in November 2019, focusing on the company's junket operator business.
In the meantime, Melco continues to navigate legal waters and scrutiny from multiple sources. The outcome of these investigations could have significant ramifications for the gaming industry. The future of Melco and Crown Resorts hangs in the balance.
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Source: www.onlinecasinosdeutschland.com
