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As gold fever hits Macau, Ho's still in the money

MGM Mirage sees the green as evangelicals see red

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VIP means all access

Legendary Macau gangster Broken Tooth Koi, now in prison, at one time leased a VIP room from the Hotel Lisboa, Ho's flagship gambling enterprise. The VIP rooms created an entire subclass of the Hong Kong economy organized around travel junkets to the Macau casinos by Hong Kong gamblers, where they could be serviced by prostitutes and plied with drugs or whatever else they needed.

The structure of Ho’s casinos, in which VIP rooms were illicitly leased to local triads, provided an easy forum for prostitution, money laundering and loan sharking, and the house itself functioned as an unlicensed bank, extending credit to gangsters when needed.

Money changers across the border in Zhuhai provided ready access to a Chinese version of the Middle Eastern halawa system, in which Chinese Renminbi could be exchanged for casino chips or, if needed, a casino check payable to cash, without cash ever being transported across the border. Estimates of just how much money was laundered through these unregulated schemes have ranged as high as $70bn per year, prompting concern on the Chinese side about the drain of hard currency.

Evangelize this

Unlike most businesses, the moral doubts surrounding the gambling industry lead its regulators to extend their investigations around the globe – MGM Mirage, for example, could lose its license in Nevada or New Jersey if regulators in those jurisdictions determine that the company had linked up with an “unsuitable” partner, whereever that might be.

The Rev. Gary Kellner, founder of the Family Focus Coalition, is counting on that to derail the joint venture between MGM Mirage and Ho-controlled SMTB, which is now officially run by his daughter, Pansy Ho. Kellner has been firing off letters and phone calls to gaming authorities in Nevada and New Jersey, hoping to put enough pressure on MGM Mirage to force it out of Macau. Although Pansy has a sketchy enough history of her own, she has admitted to borrowing much of her stake in the project from her father.

As Kellner put it to Matt Ward of the Las Vegas Business Press "We are giving Stanley Ho, who is in bed with a rogue terrorist nation of North Korea, which our own president says is a part of the 'Axis of Evil,' a license to print money, All I want to do is make sure the facts are known. That people who have the ability to investigate this have the facts and are asking the right questions."

According to the Las Vegas Business Press, Pansy’s attorney John O’Reilly went ballistic when a reporter from the paper questioned him about the authenticity of the documents after a hearing by the Nevada Gaming Control Board on Pansy’s suitability.

"You lost that chance when you published that garbage without calling anybody," he allegedly yelled at a reporter when asked for comment.

DOJ feeding frenzy chews up smaller fry

The DOJ has focused its prosecutorial zeal the last few months on listed online companies and their enablers, which in terms of overall wealth are still dwarfed by Ho’s Macau offerings.

Ho, who, along with business partner Ng Lap Seng, was at the center of the Clinton-Gore Chinese fundraising scandal a few years back, has always managed skillfully to utilize his abundant political contacts to insulate himself from trouble. His legendary political connections in both Hong Kong and the mainland have made him untouchable – apparently even to the DOJ.

The closest anyone has gotten to Ho has been his own sister Winnie, who put up the original money for the concession back in 1961, and sued him in 2001 for squeezing her almost completely out of the family company. In a lawsuit that rocked Hong Kong, Winnie claimed that Stanley had blackmailed her for years to conceal the fact that her son was actually the product of an illicit affair with their cousin, noted Hong Kong philanthropist Sir Eric Hotung.

Winnie managed the family casino business for years, and the lawsuit provided a rare view on the inner workings of Ho’s secretive family companies, supporting much of what had been only rumor or innuendo.

As if that weren't enough, Winnie chose to intervene through a San Francisco attorney as a surprise witness against her brother at the March 22 Nevada Gaming Commision's special hearing concerning the MGM-Ho deal, according to the Las Vegas Business Press. The spokesman apparently read a highly critical statement and introduced new documentary evidence into the public record, although at time of writing we still don't know either the exact contents of the statement or the additional evidence introduced.

Egged on by the evangelicals, the New Jersey Republican party has also started to put political pressure on the New Jersey Casino Control Commission to can the $1.1bn project.

If the Reverend Kellner has his way, MGM Mirage will be forced to eat crow on a deal in which it has already invested hundreds of millions of dollars. Whether the DOJ will hold Stanley Ho to the same standards as the online companies it has so eagerly eviscerated in the past year remains to be seen. ®

Burke Hansen, attorney at large, heads a San Francisco law office

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