Melco Crown directors probed over $180m Taiwan-Macau money transfer

melco-crown-taiwan-sjm-holdingsA subsidiary of Asian casino operator Melco Crown Entertainment is being investigated by Taiwanese authorities in connection with the alleged illegal transfer of over $180m between Taiwan and Macau over the past three years. Late last week, a number of Asian media sources reported that Taiwanese prosecutors were investigating a Hong Kong-based company for allegedly allowing over 100 Taiwanese gamblers to deposit money in Taiwan, then withdraw it in Macau. Such activity would circumvent strict foreign exchange rules and represent a breach of the Banking Law, which limits such large transactions to registered financial firms. The company behind the transfers was subsequently identified by GamblingCompliance as Melco Crown subsidiary MCE International Ltd., which has offices in Taipei and five other Taiwan locations. Prosecutors have reportedly frozen $103m contained in MCE International’s local accounts and have questioned multiple MCE International employees in Taiwan.

Melco Crown is a partnership between Hong Kong’s Melco International Development Ltd. and Australia’s Crown Ltd. A high-profile member from each company is listed as a director of MCE International: Crown CEO/managing director Rowen Craigie, and Clarence Chung, executive director of Melco International as well as chairman/CEO of NASDAQ-listed Entertainment Gaming Asia, which operates gaming halls in border areas of Cambodia and in the Philippines. (With a NASDAQ presence, the future involvement of US financial regulators in this investigation seems assured.) Both Craigie and Chung are non-executive directors of Melco Crown. Melco Crown spokesperson Maggie Ma said the company “will fully cooperate with the Taiwan authority on any present and future investigations that they may conduct.”

Bad timing, perhaps, but Credit Suisse just gave Melco Crown a very nice writeup. The Suisse-sters are predicting the VIP gamblers that disappeared in 2012 will return to Macau’s shores like swallows to Capistrano, which, combined with the “robust” mass-market segment, should boost Macau’s overall gaming revenue by 15.7% to $43.8b in 2013. The analysts go on to say Melco Crown is positioned to derive the most upside from this surge, you know, assuming none of their directors goes to jail.

While slightly less bullish than Credit Suisse, the predictions by other analysts that operations on Macau’s Cotai Strip will likely outstrip those of the peninsula and Taipa for the first time has SJM Holdings executive director Angela Leong On Kei wishing Macau’s official gazette would go ahead and publish the official okay on SJM’s Cotai plans. SJM received its Cotai land concession in October around the same time MGM China received its parcel, but MGM got its gazette stamp of approval last week, while SJM is still waiting beside the mailbox. That has left SJM “feeling left behind more or less,” Leong told local broadcaster TDM at the Macau Jockey Club on the weekend. “But it doesn’t mean a disadvantage in the long-term development. As the last one to get the approval, we can look into the others’ progress and complement what Macau lacks.” Leong was also sufficiently emboldened by Macau regulators’ suggestion that there may be some flexibility in the enclave’s gaming table cap to state that SJM didn’t intend to be last in line whenever new tables were handed out.