One of Star Entertainment Group’s major shareholders and partners has strong links to the banned Hong Kong businessman Stanley Ho. This is the same tycoon who Crown Resorts is banned from having any involvement with in its new Barangaroo venue.
F ounded 56-years ago, Chow Tai Fook Enterprises is a privately-owned Hong Kong conglomerate. The company has business interests in jewellery, property development, energy, casinos, transportation, telecommunications, energy, department stores, and more. It is also holds a five-percent stake in Star and has signalled it may increase that stake substantially.
Star Group and Chow Tai Fook are joint-venture partners in two massive casino and hotel developments. These are a $3 billion Queen’s Wharf Casino development in Brisbane and $500 million Ritz Carlton complex in Sydney. Queen’s Wharf Casino is due to open to the public during 2022.
Star Joint-Venture Partner Chow Tai Fook Has Ties to Stanley Ho
The issue stems from Chow Tai Fook being controlled by Henry Cheng, a 72-year-old Chinese billionaire. Cheng’s family hold a 9.6 percent stake in SJM Holdings, the major company in Stanley Ho’s portfolio. SJM Holdings listed Cheng on the board of directors until June 2019. He was replaced on the board by Patrick Tsang On Yip, the chief executive of Chow Tai Fook.
New South Wales Independent Liquor and Gaming Authority (ILGA) banned Crown Resorts, Star Group’s biggest rival in Australia, from undertaking any business activities or transaction with Stanley Ho or anybody linked to Ho.
Crown signed an agreement with ILGA that promised it would avoid doing business with 55 companies and five individuals linked to Ho. It has been adhering to this agreement as its Barangaroo casino license is under threat if it does not.
Crown Shares Sale Probed
ILGA launched an investigation into the proposed $1.76 billion sale of Crown shares by James Packer to Melco Resorts. Melco’s CEO is Lawrence Ho, son of Stanley Ho. Lawrence Ho was revealed to have been a director of a blacklisted company until June 2019, prompting the investigation.
Some 135.5 million shares, worth $880 million, have already been transferred. The remaining 50 percent are due to close on September 30th. Both Packer and Lawrence Ho agreed to put the deal on ice while the ILGA completes its investigation.
Packer’s Consolidated Press Holdings company released a statement regarding the ILGA investigation.
“While CPH does not consider there has been any breach of agreement, licence condition or legislation, it has taken this step in agreement with Melco so the regulatory processes and ILGA inquiry can proceed in an appropriate manner.”
Melco and Packer can terminate the deal if regulators do not deem Lawrence Ho a suitable person for running a casino. May 31st, 2020 is the deadline for this to happen,
MP Raises More Questions
Justin Field, the Independent MP whose questions in parliament assisted in ILGA’s releasing the conditions on Crown to the public. Field said questions need to be asked as to why Crown but not Star is banned from dealing with Ho.
“There is scope within the Bergin Inquiry’s terms to consider these Star business relationships and the ‘extant and emerging risks for gaming’ generally and to recommend changes needed to address these risks. I hope they will be considered,” said Field.
Field also said the business model of both Crown and Star appeared to rely on well-heeled VIPs from China.
A spokesperson for Star Group responded to questions the ties to Ho would attract the attention of NSW regulators. They responded, “Chow Tai Fook have completed extensive probity reviews and received regulatory approval in Queensland.”
Field may have a legitimate point when he talked about Star and Crown’s business models judging by recent financial figures. Star’s latest report to the stock exchange revealed profits fell by 8.4 percent compared to last year. Directors blamed a lack of revenue from international VIPs for the reduction in profits. This figure fell dramatically by 30.7 percent to $42.4 billion of turnover.