The following is a report from Reuters that shows that Sands is linked with the Chinese triads. Under the Casino Control Act 2006, the Casino Regulatory Authority should investigate this linkage between the Sands Macau operations and the Chinese triads. If the linkage is true, the Act requires that the Sands casino license be revoked.
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Special report: High-rollers, triads and a Las Vegas giant
By Matt Isaacs and Reuters staff
SAN FRANCISCO/MACAU (Reuters) - Late last autumn, a Hong Kong jury convicted four men of a conspiracy to commit bodily harm and a fifth of soliciting a murder.
At first, the men had been ordered to break the arms and legs of a dealer at Sands Macau suspected of helping a patron cheat millions of dollars from the business. Later, a call went out to murder the dealer, court records show. But then one of the gangsters balked and reported the plans to authorities.
The plot's mastermind, according to testimony in previously undisclosed court transcripts obtained by Reuters, was Cheung Chi-tai. At trial a witness identified Cheung as a leader of the Wo Hop To -- one of the organized crime groups in the region known as triads. Another witness, a senior inspector with the Hong Kong police called to testify because he is an expert on the triads, identified Cheung by name as someone who would commit crimes for money. Cheung's organized crime affiliation was corroborated in interviews for this article with law enforcement and security officials intimately familiar with the gaming industry in Macau.
The murder-for-hire case sheds light on the links between China's secretive triad societies and Macau's booming gambling industry. It also raises potentially troubling questions about one of the world's largest gaming companies, Las Vegas Sands, which plans to open a $5.5 billion Singapore casino resort in late April.
Cheung was not just named as a triad member but also, according to a regular casino patron testifying in the trial, "the person in charge" of one of the VIP rooms at the Sands Macau, the first of three casinos run here by Las Vegas Sands. In addition, Cheung has been a major investor in the Neptune Group, a publicly traded company involved in casino junkets -- the middlemen who bring wealthy clients to Macau's gambling halls. Documents show that his investment allowed him a share in the profits from a VIP gambling room at the casino.
An examination of Hong Kong court records, U.S. depositions from the former president of Sands, and interviews with law enforcement and security officials in both the U.S. and Macau, reveals a connection between Las Vegas Sands and Cheung -- ties that could potentially put Sands in violation of Nevada gaming laws.
The Reuters investigation is a collaboration with the Investigative Reporting Program at University of California, Berkeley.
U.S. casinos operating in Macau are all headquartered in Nevada and must comply with that state's laws which prohibit "unsuitable" associations that "discredit" its gaming industry. Those laws are meant to keep organized crime figures out of the casinos.
Leading up to its public offering in Hong Kong last November, Sands China, a subsidiary of Las Vegas Sands, acknowledged the risks of working with gaming promoters -- another term for junkets: "If we are unable to ensure high standards of probity and integrity of our Gaming Promoters with whom we are associated, our reputation may suffer or we may be subject to sanctions, including the loss of (Sands' Macau gaming license,)" the company wrote in a public filing.
Randall Sayre, a member of the Nevada Gaming Control Board that monitors casino compliance, declined to comment specifically on Sands Macau, writing in an email that the state "takes no public position on suitability ... without a full investigative work-up."
A gaming official, who insisted upon anonymity, said: "This relationship (with Cheung) would be of concern to Nevada authorities. You're talking about direct ties to bad guys." Another said the agency is monitoring the situation.
Las Vegas Sands issued a statement saying, "to our knowledge, Mr. Cheung Chi Tai is not listed as a director or shareholder" with any of the gaming promoters the company uses in Macau, but declined to comment further.
Sands was the first U.S. operator to cash in on the Chinese passion for gambling when it entered Macau in 2004 after the government opened the casino market to outsiders.
Since reverting to China in 1999, Macau, an hour away from Hong Kong by ferry, has flourished as one of the world's wealthiest cities. The territory's economy has soared in recent years -- much of the wealth generated by the enclave's casinos.
Indeed, the former Portuguese colony has become a playground for China's nouveau riche. And the gleaming neon red lights of the Sands Macau casino are the first sights a visitor takes in as the ferry approaches Macau.
THE JUNKETS
The link between Macau's gambling industry and organized crime may be an open secret, but it has come under increasing scrutiny lately. Within the last two weeks, MGM Mirage said it would give up its holdings in New Jersey in response to pressure from the New Jersey Division of Gaming Enforcement. The state agency had said that Pansy Ho, MGM Mirage's partner in Macau and the daughter of casino tycoon Stanley Ho, was an "unsuitable" associate, an assertion stemming from the agency's belief that her father has links to organized crime.
The involvement of the triads in Macau's casinos is centered on the murky and highly profitable junket business. The VIP sector brought in $9.9 billion last year, two-thirds of the enclave's total gambling revenues.
Macau has about 187 licensed junket operators, said Manuel Joaquim das Neves, director of Macau's Gaming Inspection and Coordination Bureau.
The junkets are crucial because they ensure the flow of capital by extending credit to gamblers, often millions of dollars on a visit. They assume responsibility for collecting on their loans -- at times indelicately, authorities say.
They also often assume management of the private VIP rooms. And while many law-abiding junkets are active in Macau, experts say the industry is highly susceptible to criminal influence given the extra-legal functions and opaque environments in which they work.
In an interview, Dan Grove, a former agent for the FBI who oversaw security for Sands Macau in the first few years after its opening -- and before the casino became involved in junkets -- characterized pressure from triads to work with the casino as "immense."
When known crime figures applied directly for contracts, blocking them was easy, Grove says. But if legitimate professionals submit applications and then sub-contract the work to the triads, detecting such ties was more difficult if not impossible.
JUMBO BOOM
Cheung Chi-tai's ties to Sands Macau came through such a multi-tiered arrangement. His solely owned company, Jumbo Boom Holdings, provided capital for another firm, now called Neptune Group, to acquire a stake in Hou Wan, a junket operator. Hou Wan was entitled to profits from Sands Macau's Chengdu VIP room.
Cheung owned more than 8 percent of Neptune Group in 2008, according to public filings with the Hong Kong stock exchange. That made him a substantial shareholder when the call for the dealer's murder went out.
When asked about Cheung, Nicholas Niglio, Neptune's chief operating officer, said: "I'm not familiar with him at all."
After a reporter showed him Neptune's 2008 annual report listing the firm's substantial shareholders, including Cheung, Niglio declined to respond specifically. Cheung does not appear in Neptune's 2009 annual report.
Niglio said Neptune wasn't a junket itself but invests in VIP junkets that operate at the Sands Macau, the Venetian Macau and Galaxy Entertainment's StarWorld casinos. He said Neptune now had a 20 percent stake in Hou Wan, a junket operator that runs around 20 VIP tables at the Sands Macau.
In Neptune's public filings three years ago, Cheung was described as a "merchant in Hong Kong" whose company "generally does not engage in underwriting business and has no underwriting experience as at the date of this announcement."
While Niglio described Neptune merely as an "investor" in junkets, trial testimony placed Cheung inside the casino's private room.
According to testimony by Siu Yun-ping, aka the "God of Gambling", who won about HK$100 million ($12.9 million) between August 2007 and January 2008 at various casinos, Cheung was "the person in charge" of the Chengdu Hall, one of the VIP rooms that Siu frequented.
Las Vegas Sands, however, has said it maintains management of all its VIP rooms, though it acknowledges working with gaming promoters to attract customers.
---
Special report: High-rollers, triads and a Las Vegas giant
By Matt Isaacs and Reuters staff
SAN FRANCISCO/MACAU (Reuters) - Late last autumn, a Hong Kong jury convicted four men of a conspiracy to commit bodily harm and a fifth of soliciting a murder.
At first, the men had been ordered to break the arms and legs of a dealer at Sands Macau suspected of helping a patron cheat millions of dollars from the business. Later, a call went out to murder the dealer, court records show. But then one of the gangsters balked and reported the plans to authorities.
The plot's mastermind, according to testimony in previously undisclosed court transcripts obtained by Reuters, was Cheung Chi-tai. At trial a witness identified Cheung as a leader of the Wo Hop To -- one of the organized crime groups in the region known as triads. Another witness, a senior inspector with the Hong Kong police called to testify because he is an expert on the triads, identified Cheung by name as someone who would commit crimes for money. Cheung's organized crime affiliation was corroborated in interviews for this article with law enforcement and security officials intimately familiar with the gaming industry in Macau.
The murder-for-hire case sheds light on the links between China's secretive triad societies and Macau's booming gambling industry. It also raises potentially troubling questions about one of the world's largest gaming companies, Las Vegas Sands, which plans to open a $5.5 billion Singapore casino resort in late April.
Cheung was not just named as a triad member but also, according to a regular casino patron testifying in the trial, "the person in charge" of one of the VIP rooms at the Sands Macau, the first of three casinos run here by Las Vegas Sands. In addition, Cheung has been a major investor in the Neptune Group, a publicly traded company involved in casino junkets -- the middlemen who bring wealthy clients to Macau's gambling halls. Documents show that his investment allowed him a share in the profits from a VIP gambling room at the casino.
An examination of Hong Kong court records, U.S. depositions from the former president of Sands, and interviews with law enforcement and security officials in both the U.S. and Macau, reveals a connection between Las Vegas Sands and Cheung -- ties that could potentially put Sands in violation of Nevada gaming laws.
The Reuters investigation is a collaboration with the Investigative Reporting Program at University of California, Berkeley.
U.S. casinos operating in Macau are all headquartered in Nevada and must comply with that state's laws which prohibit "unsuitable" associations that "discredit" its gaming industry. Those laws are meant to keep organized crime figures out of the casinos.
Leading up to its public offering in Hong Kong last November, Sands China, a subsidiary of Las Vegas Sands, acknowledged the risks of working with gaming promoters -- another term for junkets: "If we are unable to ensure high standards of probity and integrity of our Gaming Promoters with whom we are associated, our reputation may suffer or we may be subject to sanctions, including the loss of (Sands' Macau gaming license,)" the company wrote in a public filing.
Randall Sayre, a member of the Nevada Gaming Control Board that monitors casino compliance, declined to comment specifically on Sands Macau, writing in an email that the state "takes no public position on suitability ... without a full investigative work-up."
A gaming official, who insisted upon anonymity, said: "This relationship (with Cheung) would be of concern to Nevada authorities. You're talking about direct ties to bad guys." Another said the agency is monitoring the situation.
Las Vegas Sands issued a statement saying, "to our knowledge, Mr. Cheung Chi Tai is not listed as a director or shareholder" with any of the gaming promoters the company uses in Macau, but declined to comment further.
Sands was the first U.S. operator to cash in on the Chinese passion for gambling when it entered Macau in 2004 after the government opened the casino market to outsiders.
Since reverting to China in 1999, Macau, an hour away from Hong Kong by ferry, has flourished as one of the world's wealthiest cities. The territory's economy has soared in recent years -- much of the wealth generated by the enclave's casinos.
Indeed, the former Portuguese colony has become a playground for China's nouveau riche. And the gleaming neon red lights of the Sands Macau casino are the first sights a visitor takes in as the ferry approaches Macau.
THE JUNKETS
The link between Macau's gambling industry and organized crime may be an open secret, but it has come under increasing scrutiny lately. Within the last two weeks, MGM Mirage said it would give up its holdings in New Jersey in response to pressure from the New Jersey Division of Gaming Enforcement. The state agency had said that Pansy Ho, MGM Mirage's partner in Macau and the daughter of casino tycoon Stanley Ho, was an "unsuitable" associate, an assertion stemming from the agency's belief that her father has links to organized crime.
The involvement of the triads in Macau's casinos is centered on the murky and highly profitable junket business. The VIP sector brought in $9.9 billion last year, two-thirds of the enclave's total gambling revenues.
Macau has about 187 licensed junket operators, said Manuel Joaquim das Neves, director of Macau's Gaming Inspection and Coordination Bureau.
The junkets are crucial because they ensure the flow of capital by extending credit to gamblers, often millions of dollars on a visit. They assume responsibility for collecting on their loans -- at times indelicately, authorities say.
They also often assume management of the private VIP rooms. And while many law-abiding junkets are active in Macau, experts say the industry is highly susceptible to criminal influence given the extra-legal functions and opaque environments in which they work.
In an interview, Dan Grove, a former agent for the FBI who oversaw security for Sands Macau in the first few years after its opening -- and before the casino became involved in junkets -- characterized pressure from triads to work with the casino as "immense."
When known crime figures applied directly for contracts, blocking them was easy, Grove says. But if legitimate professionals submit applications and then sub-contract the work to the triads, detecting such ties was more difficult if not impossible.
JUMBO BOOM
Cheung Chi-tai's ties to Sands Macau came through such a multi-tiered arrangement. His solely owned company, Jumbo Boom Holdings, provided capital for another firm, now called Neptune Group, to acquire a stake in Hou Wan, a junket operator. Hou Wan was entitled to profits from Sands Macau's Chengdu VIP room.
Cheung owned more than 8 percent of Neptune Group in 2008, according to public filings with the Hong Kong stock exchange. That made him a substantial shareholder when the call for the dealer's murder went out.
When asked about Cheung, Nicholas Niglio, Neptune's chief operating officer, said: "I'm not familiar with him at all."
After a reporter showed him Neptune's 2008 annual report listing the firm's substantial shareholders, including Cheung, Niglio declined to respond specifically. Cheung does not appear in Neptune's 2009 annual report.
Niglio said Neptune wasn't a junket itself but invests in VIP junkets that operate at the Sands Macau, the Venetian Macau and Galaxy Entertainment's StarWorld casinos. He said Neptune now had a 20 percent stake in Hou Wan, a junket operator that runs around 20 VIP tables at the Sands Macau.
In Neptune's public filings three years ago, Cheung was described as a "merchant in Hong Kong" whose company "generally does not engage in underwriting business and has no underwriting experience as at the date of this announcement."
While Niglio described Neptune merely as an "investor" in junkets, trial testimony placed Cheung inside the casino's private room.
According to testimony by Siu Yun-ping, aka the "God of Gambling", who won about HK$100 million ($12.9 million) between August 2007 and January 2008 at various casinos, Cheung was "the person in charge" of the Chengdu Hall, one of the VIP rooms that Siu frequented.
Las Vegas Sands, however, has said it maintains management of all its VIP rooms, though it acknowledges working with gaming promoters to attract customers.
