Documents reveal Chinese crime influence over Macau’s casinos
U.S. government officials admitted privately in October 2008 that Chinese organized crime was influencing certain aspects of Macau's casino industry, according to confidential cables obtained by the whistle-blower group Wikileaks.
Nearly 600 private communications between the U.S. Consulate in Hong Kong and the State Department concerning Macau, going as far back as 2006, were collected and released by the group.
The documents criticized the Macau government and its officials, including the former chief executive of the Special Administrative Region, and detailed a lack of oversight of the Macau casino industry by the enclave's regulators.
Macau -- the only location in China where gaming is legal -- surpassed the Strip as the world's largest gaming market in 2006.
Last year, Macau casinos collected a record $23.5 billion. Through August, gaming revenues are up 47 percent over the first eight months of 2010.
Three major Nevada companies, Las Vegas Sands Corp., Wynn Resorts Ltd., and MGM Resorts International, operate casinos in Macau. Current and former executives of the casino companies were cited or quoted in the documents.
None of the American casino operators was alleged to be tied to organized crime, according to the memos.
Counsel General Joseph Donovan told the State Department on Oct. 23, 2008, that American gaming executives in Macau thought Chinese junket operators, who act as the middlemen in bringing midmarket to high-end casino customers to various Macau casinos, were corrupt.
"They believe the operators are directly or indirectly involved with organized crime in Macau and the Mainland," Donovan wrote in a classified cable. "Macau's gaming executives criticized Macau's government as unsophisticated, opaque in its decision making and hamstrung by a recent corruption scandal."
The Wikileaks website has made headlines worldwide and caused consternation in diplomatic circles with a steady drip feed of hundreds of thousands of classified U.S. documents, particularly detailed and often intimate messages from State Department officials in foreign capitals to Washington, D.C.
While a few have breached national security, the cables have given a rare peek behind the curtain of international relations, often confirming events that are the subject of rumors and speculation but never spoken about in public.
The revelations in some of the leaked communications concerning Macau included the following:
■ The Beijing government imposed restrictions on visits to Macau by mainland Chinese residents in 2008 and 2009 to "stem the rise of organized crime" by the junket operators.
According to Donovan, a senior U.S. gaming executive said "provincial officials in the Mainland increasingly provide sweetheart deals to junket operators ... in exchange for bank deposits or cash sums paid to officials upon arrival in Macau."
In the 2008 memo, Donovan said junket operators were paid approximately $2.1 billion in 2007 by casinos, roughly
35 percent of the gaming revenues generated by their players.
A executive with the casinos operated by Hong Kong billionaire Stanley Ho asserted "all of the junket operators are directly or indirectly involved with the (organized crime) triads."
In a cable dated September 2009, acting Counsel General Christopher Marut told the State Department that casino executives didn't think caps placed on what junket operators earned would solve problems.
"(Former) Sands China President Steve Jacobs told us the caps will be routinely violated," Marut wrote. One reason Jacobs gave was that "junket operators maintain significant economic and political influence in Macau."
Executives from Las Vegas Sands and MGM Resorts expressed frustration with the Macau Gaming Inspection and Coordination Bureau, saying the regulatory agency ignored "widespread illegal practices" and didn't enforce its own reporting requirements on junket operators.
Junket operators continue to do business in Macau in 2011.
Contact reporter Howard Stutz at hstutz@reviewjournal .com or 702-477-3871. Follow @howardstutz on Twitter.
Other revelations
■ MGM Grand Macau President Grant Bowie said the company sought to sell its then-50 percent stake in the MGM Grand Macau as part of its "asset divestiture plans" in 2009. MGM Resorts never moved forward with a sale and decided to part with its holdings in Atlantic City after New Jersey gaming officials said its joint venture partner, Hong Kong businesswoman Pansy Ho, was found to be unsuitable by state regulators.
On Friday, MGM Resorts Senior Vice President Alan Feldman said there was never a formal or informal offer for the company's stake in the Macau casino. In 2009, MGM Resorts was building the $8.5 billion CityCenter and facing internal financial issues.
■ According to former Macau Chief Executive Edmund Ho, Las Vegas Sands Chairman Sheldon Adelson and Stanley Ho, a controversial Hong Kong billionaire and the father of Pansy Ho, had a long-running feud. Stanley Ho wanted the Macau government to take back several Las Vegas Sands construction sites on the Cotai Strip.
■ During a June 2009 labor dispute at the Venetian Macau, (former) Sands China President Steve Jacobs threatened to "go across the street to Peoples Liberation Army (garrison) and ask for help" if Macau's leadership did not send local police to the casino.
■ There was a difference in how executives from Las Vegas Sands, Wynn and MGM Resorts dealt with the Beijing government. According to a 2009 memo, Adelson "highly values direct engagement with Beijing," though his
$100 million Adelson Center for U.S.-China Enterprise in Beijing was forced to close by the government. Wynn Chairman Steve Wynn thought it was "disrespectful to Macau to be "going to Beijing knocking on doors." MGM Resorts said Pansy Ho was called to Beijing several times in 2009 to advise the government on developments in Macau.
