He may have only just paid for a $200 million super yacht but James Packer could set to be another $1.75 billion out of pocket after an investigation was launched into Packer’s sale of Crown Resorts stock to Melco Resorts and Entertainment.
The New South Wales Independent Liquor and Gaming Authority announced last week it was launching an investigation to the $1.75 billion sale of Crown Resorts shares by Packer to Melco Resorts and Entertainment. Packer agreed to sell 135.35 million Crown Resorts Ltd shares, representing almost half of Packer’s stake, to Melco Resorts in May 2019. The sale left Packer, through his CPH Crown Holdings company, with approximately 26 percent of Crown Resorts.
Issues have since arisen relating to Melco Resorts’ CEO Lawrence Ho who is the son of Stanley Ho who once enjoyed a monopoly on gambling activities in the gambling haven of Macau. Stanley Ho has long been linked with organized crime throughout China, although he and his representatives strongly deny these claims.
Despite denying the allegations, the New Jersey Division of Gaming Enforcement (DGE) concluded Stanley Ho was an associate of Sun Yee On triads when they were looking into the suitability of MGM Resorts to operate the Borgata casino in Atlantic City in 2010. That investigation revealed, “According to the DGE, the VIP rooms Stanley Ho had introduced to his casinos in the 1980s “provided organized crime the entry into the Macau gaming market that it had previously lacked.”
Crown Resorts is currently developing a Barangaroo casino in Sydney where the terms of its license prohibit the brand to not step into “any new business activities or transactions of a material nature between Stanley Hung Sun Ho or a Stanley Ho associate and Crown, any of Crown’s officers, directors or employees of any Crown subsidiary.” This is where matters are starting to become unstuck.
The agreement Crown Resorts entered into listed 55 companies and five individuals linked to Stanley Ho. While Lawrence Ho was not directly named, nor were companies linked to the Melco group, Lawrence Ho was a director of Lanceford Company Ltd until June 28th this year, a company currently blacklisted by the Crown Resorts agreement. As Packer’s $1.75 billion sale to Melco was agreed in May 2019, the deal could fall foul of the aforementioned agreement.
Half of the Crown Resorts shares are already in Melco’s possession having been transferred on June 6th. The remaining half are due to be transferred by the end of September. Whether this now happens remains to be seen.
Three of Lawrence Ho’s sisters, Pansy, Daisy, and Maisy, are also directors of Lanceford, as are two companies listed as being from the British Virgin Islands, Action Winner Holdings and Ranillo Investments.
Also on the banned list are two major companies that are listed on the Hong Kong stock exchange. SJM Holdings is Stanley Ho’s Macau casino empire, and Shun Tak Holdings, which is a conglomerate with interets in hotels, ferries and property development. Shun Tak and Melco are business partners with the former transporting gamblers from Hong Kong to the Macau casinos owned by Melco.
Both Crown Resorts and Melco Resorts have said they will fully cooperate with any investigation, with Lawrence Ho going on record to say “Both Crown and I have always stressed that my business dealings are independent of my father’s interests. We have already been in partnership with Crown for 12 years and have passed probity screens from regulators without an issue.”
It has been a rough few weeks for Crown Resorts who seem to be in the headlines for all the wrong reasons and are struggling to shake off the negativity surrounding the company.
Crown Resort is already facing an investigation into its handling of Chinese VIPs where the casino company is accused of using junket operators to allow well-heeled Chinese gamblers to travel to Australia without restrictions and play for ultra high stakes at Crown Resort’ properties.
More recently, a social media post from Australian NBA star Ben Simmons went viral when he claimed he was turned away from the company’s Melbourne property as a result of racial profiling.