US court deals Laos a setback in pursuit of Savan Vegas’ former operators

savan-vegas-casino-laos-court-setbackThe government of Laos will get no help from US courts in pursuing claims against the former operators of the Savan Vegas casino.

Last Thursday, a federal court judge in the Commonwealth of the Northern Marianas Islands granted a motion to dismiss a petition brought by the Laotian government seeking the issuance of subpoenas against Bridge Capital LLC, the alleged power behind the former operators of the Savan Vegas Hotel & Entertainment Complex.

If you’re just joining us, in 2007, the Laotian government entered into a joint venture with a consortium consisting of Netherlands-registered Lao Holdings and Macau-based Sanum Investments to run the Savan Vegas casino. But the government seized the property in 2012, claiming to be owed $23m in back taxes and penalties from the operators.

After the JV went south, the parties began arbitration proceedings, which were settled in June 2014. The terms required Lao Holdings and Sanum to sell their interest in exchange for Laos dropping its tax-dodging and criminal bribery charges. Both parties quickly accused the other of violating the settlement, and here we are.

In December, Laos asked the US courts to force Bridge Capital and its owner John Baldwin to turn over bank records the government claimed were related to its legal actions against the casino operator. Laos claims Bridge Capital is the real power behind Lao Holdings and Sanum, a claim Bridge Capital rejects.

Last week, US District Court Magistrate Judge Heather Kennedy sided with Bridge Capital, saying Laos’ request didn’t meet the threshold for entitlement to discovery under the UN Convention Against Corruption, particularly, the requirement that the material sought be intended for use in an “international tribunal.”

The Saipan Tribune quoted Kennedy saying that Laos was a sovereign nation that is entitled to prosecute its laws and interpret its agreements as it sees fit, “but this court is not required to help.”

Kennedy also took into account the fact that Laos appeared to be violating the non-prosecution terms of the arbitration settlement, despite the fact that no neutral arbiter had so far ruled on either side’s claim that the other party violated the deal.

While the legal brouhaha continues to play itself out, the Laos government formally announced in October that it was looking to sell a 50-year concession on the property in Savannakhet province on the border with Thailand. Last month, the sales agent tasked with flogging the property reported that six entities had met the qualifications for proceeding to the next phase of the bid process.

The solicitous six are: French casino operator Groupe Lucien Barrière; Macau junket investor Iao Kun Group Holding Company Ltd; Macau casino operator Macau Legend Development Ltd; US-based investment firm PGP Investors LLC; Hong Kong-based Asian gaming hall operator Silver Heritage Ltd and RGB (Macau) Ltd, a group which has run slot machine operations at the SJM-licensed L’Arc casino in Macau.

The six have been given until May 10 to submit formal bids, which the government says will be “opened in a public ceremony” in the capital Vientiane.