STEVEN STRADBROOKE

PHILIPPINE BANK FINED RECORD SUM OVER ITS ROLE IN BANGLADESHI BANK HEIST

AUGUST 5, 2016

The Philippine bank at the center of those stolen Bangleshi millions has been hit with a record fine for its compliance failures.

On Friday, the Bangko Sentral ng Pilipinas (BSP) slapped a P1b (US $21.3m) “supervisory enforcement action” on Rizal Commercial Banking Corporation(RCBC) for not raising enough questions when $81m in questionable funds flowed through its system to the local gaming industry.

The fine, the largest ever imposed on a Philippine financial institution, is a marked departure from the BSP’s traditional penalty of P30k per day for non-compliance matters. The fine is to be paid in two tranches of P500m, the first half to be paid immediately, while the second will follow 12 months later.

The $81m in question was stolen from Bangladeshi central bank accounts at the Federal Reserve Bank in New York by still unknown cyber-thieves in February. The funds were transferred to RCBC accounts, then transferred again through a local remittance firm to local junket operators and two local casinos: Bloomberry Resorts’ Solaire Manila and Leisure & Resorts World Corp’s Midas Hotel & Casino. To date, only about $18m of these funds has been recovered.

The fine comes as Bangladeshi central bank officials traveled to the Philippines this week to officially claim the $18m in recovered funds and to press the government to compel RCBC to make good on its offer to repay the outstanding funds if it was “found liable.”

On Friday, John Gomes, the Bangladeshi ambassador to the Philippines, announced that the country’s new President Rodrigo Duterte had assured him that the outstanding funds would be returned. Gomes said his team was “very hopeful” that it would eventually recover the full $81m because “I got a commitment from the president himself.”

http://calvinayre.com/2016/08/05/casino/philippine-bank-fined-bangladeshi-heist/

Money Laundering: PHL officials want casinos under AMLA, bank secrecy law relaxed

PHL officials want casinos under AMLA, bank secrecy law relaxed

© Provided by Mediamerge Corporation
Photo from (Twitter: @sandraguinaldo)

On the heels of the $81-million money laundering scandal, the Department of Finance (DOF) has presented to Congress a joint proposal to amend and strengthen the Anti-Money Laundering Act (AMLA) and ease some restrictions under the Bank Deposit Secrecy Law for tax evasion purposes.

In a joint statement on Tuesday, the DOF, the Anti-Money Laundering Council (AMLC), and the Bangko Sentral ng Pilipinas (BSP) noted they proposed that casinos be included within the purview of an amended Republic Act No. 9160 or the AMLA of 2001.

"The banking and financial system of the Philippines remains stable and strong. To respond to emergent risks and challenges, we are proposing a thorough update of the Anti-Money Laundering Act to further strengthen our regulatory institutions in safeguarding a robust financial system," BSP Governor Amando M. Tetangco Jr. said.

This is in line with the recommendation of the Financial Action Task Force (FATF) to include casinos, among others, as covered entities under the law.

The proposed amendments entail the inclusion of tax evasion as a predicate crime to money laundering, and the widening of the regulatory powers of the AMLC.

This includes authorizing the AMLC to issue subpoenas and ex parte freeze orders with respect to certain unlawful activities, and adding unlawful activities that are exempted from the requirement of a court order before a bank inquiry may be done.

Monetary penalty

"The proposed bill also increases the monetary penalty for administrative sanctions," the DOF said.

"Among the amendments is the designation of the BSP as the supervising authority over foreign exchange dealers, money changers, and remittance, and money transfer businesses for the purposes of the AMLA," it added.

The DOF also proposed to amend the Bank Secrecy Law (RA 1405) and the Foreign Currency Deposit Act of the Philippines (RA 6426) and lift certain restrictions on bank secrecy of both peso and foreign currency deposits.

"We are one of only three countries in the entire world where our tax administration cannot access bank transactions for tax evasion purposes. We are one of only two countries in the entire world where tax evasion is not a predicate crime to money laundering," Finance Secretary Cesar V. Purisima said.

The proposed amendments could help the country be internationally competitive, Purisima noted.

Unscrupulous few

"While the tax gap has narrowed since 2009, we still have a long way to go in plugging the 4 percent of GDP (gross domestic product) lost to tax evasion. It's high time we keep up with international standards and pierce the veil the unscrupulous few have conveniently hidden behind," he added.

For her part, Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares cited the need for the amendments.

"Our unduly restrictive bank secrecy laws tie the hands of our revenue generating agencies," she said.

"To illustrate, in 2013 bank deposits grew at 33 percent, while BIR collections grew by only 15 percent while in 2014 bank deposits grew at 13 percent while BIR collections lagged behind, growing only at 10 percent. When numbers don't add up, we know something's up. The proposed AMLA amendments ought to right this wrong," she added.

The BSP in April said it was working with the AMLC to review the laws, given the controversial $81-million money laundering scheme involving still unidentified hackers who stole the funds of the Bangladesh Bank with the Federal Reserve Bank of New York.

The stolen funds were moved to fictitious accounts with the Jupiter branch of Rizal Commercial Banking Corp. before being transferred to casinos, junket operators, and high rollers. – Jon Viktor Cabuenas/VDS, GMA News

http://www.msn.com/en-ph/money/topstories/phl-officials-want-casinos-under-amla-bank-secrecy-law-relaxed/ar-BBsQEuA

Posted September 13, 2013 - 7:15am

Philippines casino removes management led by former Las Vegas Sands executives

By HOWARD STUTZ
LAS VEGAS REVIEW-JOURNAL

 

A gaming management team headed by former executives of Las Vegas Sands Corp. was removed as operators of a $1.2 billion hotel-casino complex in the Philippines late Thursday.

Owners of the Solaire Resort & Casino in Entertainment City along Manila Bay told the country’s stock exchange it terminated the services of Global Gaming Asset Management of Las Vegas due to “material breach” of their agreement.

Global Gaming is headed by former Las Vegas Sands President Bill Weidner and other ex-Las Vegas Sands officials. The initial phase of the development opened in April.

In a statement, Bloomberry Resorts Corp., which is headed by Philippines billionaire Enrique Razon, said it terminated the management services agreement with Global Gaming.

“GGAM has not spent any material time in attending to the management of Solaire and has failed to perform its obligations and deliverables under the MSA,” according to the statement.

A Los Angeles public relations firm representing Weidner firm issued a statement late Thursday denying the allegations.

“Bloomberry Resorts Corporation’s assertions regarding GGAM’s performance of its obligations under the Management Services Agreement have no factual or legal validity,” the statement said.

“Bloomberry has materially breached that agreement and GGAM is pursuing its rights under that contract in arbitration in Singapore.”

Global Gaming was recently named to manage the Baha Mar Casino & Hotel, the centerpiece of the $3.5 billion hotel-casino complex in the Bahamas that is scheduled to open in December 2014.
In additon to Weidner, Brad Stone is Global Gaming’s president and Garry Saunders is executive vice president.

The three were involved in the opening and managing The Venetian and Palazzo in Las Vegas and the Venetian Macau, and the development of the Marina Bay Sands in Singapore while employed by Las Vegas Sands.

Weidner resigned from Las Vegas Sands in March 2009 following a long-simmering dispute with company Chairman Sheldon Adelson. But one month later the company reported to the Securities and Exchange Commission that he had been fired.

http://www.reviewjournal.com/business/casinos-gaming/philippines-casino-removes-management-led-former-las-vegas-sands-executives



 

Abetting addiction to gambling through casino pawnshops

Philippine Daily Inquirer

Friday, January 18th, 2013

With the imminent opening of more casinos in Entertainment City, I would like to raise the issue of “responsible gambling.” Pagcor has been proclaiming its strong commitment to responsible gambling, saying it will ban gambling addicts or problem gamblers from all its premises as a way of assisting their “victimized” families.

But Pagcor has no face recognition software installed anywhere in its premises, so it is impossible for its security staff to monitor gambling addicts. In fact, it seems Pagcor is even into helping gamblers get deeper into debts by allowing the operation of pawn facilities inside casinos. This in my mind is definitely not an indication of Pagcor’s strong commitment to responsible gambling. Neither are the croupiers trained to spot problem gamblers. You would think a player who spends 24-36 hours nonstop in a casino, putting ever smaller bets on the table, might be worth a check as part of the responsible gambling ethos, but no, he’s not!

The croupiers are in fact incentivized to let gamblers continue playing as most Baccarat dealers automatically take the stake on a winning bet on Pairs, Tie and Super Six for their tipbox without even asking the players. To be fair, they mostly do that to Filipinos, not to foreign players who are more likely to object.

Pagcor should be required to install face recognition software in all casinos, and at the same time initiate a comprehensive program that will prevent banned players from entering casinos. Pagcor should also train its dealers to recognize problem gamblers.

As it stands, the present system mocks the families of gambling addicts and projects an image of an institution with no sense of social responsibility but so obsessed only with profits, whatever the cost!

—JAMES STRATTON

http://opinion.inquirer.net/45097/abetting-addiction-to-gambling-through-casino-pawnshops

Criminal Complaint Against Wynn

From Libby Mitchell

http://www.lvrj.com/business/universal-files-criminal-complaint-against-wynn-in-philippines-183376621.html

A bit of interesting trivia but...? Wynn Resorts donated $135 million to Macau University Development Foundation? Guess where Wynn will commission gambling research in future lol?

Of course the rest of the article also makes us wonder how come gambling companies always cry "We can't afford it"?...Well they sure can, for court cases it seems!

Universal files criminal complaint against Wynn in Philippines

Cathleen Allison/The Associated Press File Photo

Steve Wynn, right, talks with business partner Kazuo Okada during a 2004 Gaming Commission hearing in Carson City. Okada's Universal Entertainment Corp. has filed a criminal complaint in the Philippines against Wynn.

 

By Chris Sieroty
LAS VEGAS REVIEW-JOURNAL

Posted: Dec. 13, 2012 | 9:41 a.m.

Universal Entertainment Corp. said Thursday it had filed a criminal complaint in the Philippines against Wynn Resorts Ltd. Chairman and CEO Steve Wynn, accusing the Las Vegas-based casino developer of libel over allegations of improper payments.

In a statement, Universal said it had filed the complaint through Tiger Resorts Leisure and Entertainment Inc., a subsidiary in the Philippines. The company has been granted a provisional gaming license to build a $2.3 billion casino on Manila Bay.

Kazuo Okada is chairman of Tokyo-based Universal, which also owns Aruze USA, a slot machine manufacturer licensed in Nevada since 2004.

Wynn Resorts dismissed Okada's libel suit as "baseless."

"This ridiculous and spurious action is just the latest baseless threat in Mr. Okada's increasingly desperate campaign to divert public attention from his deepening legal troubles in multiple jurisdictions," Wynn Resorts said in a statement Thursday.

Universal's complaint relates to allegations made in an internal report conducted by former FBI director Louis Freeh. The 47-page Freeh Report alleged that Universal had violated U.S. anti-corruption laws through payments it had made to gaming regulators in the Philippines.

The report led to Wynn Resorts in February seizing Okada's nearly 20 percent stake in the gaming company.

Okada and Aruze USA invested $260 million in November 2000 for a 50 percent stake in Valvino Lamore LLC, the predecessor to Wynn Resorts. Earlier this year, Okada was removed as a director of Wynn Macau Ltd., a Macau subsidiary of Wynn Resorts, but he remains a director on the Wynn Resorts board of directors.

The complaint is another twist in the nearly yearlong dispute between the two former business partners. Both Wynn and Okada have sued each other in Nevada, and Okada filed a $143 million defamation lawsuit in Japan.

The lawsuit filed in August in Tokyo claims Wynn Resorts and Wynn damaged Okada's image, cost him potential business and caused Universal Entertainment stock to drop.

"The (FBI) investigation was clearly an afterthought and was commissioned for the purpose of providing justification for the baseless findings of the Compliance Committee," Universal said in a statement.

Universal said Okada was removed as a Wynn Resorts shareholder because he objected to the company's $135 million donation to the University of Macau Development Foundation, which was announced last year.

Shares of Wynn Resorts gained 76 cents, or 0.67 percent, to close Thursday at $114.22.

While Okada and Wynn feud, Universal confirmed Thursday it had signed a preliminary agreement with Robinsons Land Corp. to partner in its Manila casino project.

The Philippines has said it will cancel Okada's license if the bribery charges are proven.

The final contract will be signed Jan. 13, according to Universal. Robinsons Land will be in charge of the development of commercial facilities, hotels and housing for the project.

Okada originally approached Wynn Resorts about a partnership in the Philippines, an offer the gaming company turned down.

Separately on Thursday, Wynn Resorts announced in a statement it is streamlining its board of directors and increasing the percentage of independent directors as it pursues a growth strategy to expand into new jurisdictions.

The company, which had a 12-member board including seven independent directors, has reduced the Board to nine members, including six independent directors, it said in a statement

In the statement, Wynn Resorts also announced it is calling a special meeting of stockholders to vote on a proposal to remove Okada as a director.
 

Philippines fixer paid $30 million by Okada's Universal

Exclusive: Philippines fixer paid $30 million by Okada's Universal - sources

Japanese billionaire Kazuo Okada attends the opening ceremony of his dining complex in Hong Kong (Bobby Yip Reuters, REUTERS / May 15, 2012)

 

Nathan Layne and Joseph Menn Reuters

12:47 a.m. CST, November 30, 2012

TOKYO/SAN FRANCISCO (Reuters) - Japanese billionaire Kazuo Okada's Universal Entertainment funneled at least $30 million to an ex-consultant for the Philippines gaming authority who is now at the center of a bribery investigation, according to sources and company records.

The sum is six times the amount initially confirmed by Reuters and could, if found to be bribery, result in Okada being stripped of his firm's casino license in the Philippines and also jeopardize his gaming license in Las Vegas.

A Hong Kong firm established by Okada's Universal sent the money to Manila-based consultant Rodolfo Soriano in a series of payments in the first half of 2010, according to a review of company records and interviews with more than a dozen current and former employees and people familiar with the investigation.

Soriano, who has close ties to key members of the administration of former Philippine President Gloria Macapagal-Arroyo, received the payments as Universal was lobbying for tax and other government concessions to boost the profitability of a $2 billion casino it was developing on Manila Bay.

Soriano is now under investigation by the Philippine Department of Justice which has created an inquiry panel on the payments with a target to submit findings within the next month.

Universal, a Tokyo-based maker of gaming machines majority owned by an Okada family trust, had no comment through its lawyer, Yuki Arai. Soriano could not be reached for comment.

In addition to the investigation in the Philippines, the Universal payments are being probed by U.S. gaming regulators, with the Nevada Gaming Control Board likely to call the 70-year-old billionaire to give evidence at a closed-door investigative hearing, people familiar with the matter said.

Soriano's powerful connections included Arroyo's husband, Jose Miguel, with whom he had travelled to Las Vegas in 2009.

Soriano was an early partner in Okada's Philippine project, and Universal documents describe him as the "personal secretary" to Efraim Genuino, former head of gambling regulator the Philippine Amusement and Gaming Corporation (PAGCOR).

Jose Miguel Arroyo, a lawyer by training, could not be reached for comment. His spokesman, lawyer Ferdinand Topacio, said he was unaware of any business dealings between Jose Miguel Arroyo and Soriano. "We are denying reports linking Attorney Arroyo to that bribery case," Topacio said.

Genuino's lawyers did not respond to calls seeking comment. PAGCOR has said it has no knowledge of the Soriano payments but is cooperating with the Philippine bribery investigation.

The Universal payments to Soriano in 2010 were described at a company meeting as a "completion bonus" for his help in clearing remaining hurdles for the casino, including an exemption from corporate tax and foreign ownership restrictions, people involved in the project said.

Philippine authorities have already threatened to strip Okada's operating company of its casino license if investigators find evidence of bribery. Nevada regulators could also impose sanctions, including a suspension of Okada's Las Vegas license.

Either outcome would represent a major setback for Okada, who has vowed to bounce back from a costly legal fight with American casino magnate Steve Wynn to turn Universal into Asia's leading operator of high-end casino resorts.

In the United States, the FBI has also taken statements from those involved in the Soriano payments, according to people familiar with that inquiry. The bureau declined to comment on the state of its inquiry.

LUCRATIVE CONCESSIONS

The Nevada Gaming Control Board's investigation has been underway since at least August and is gathering momentum.

"We are continuing our work," board chairman A.G. Burnett said, declining to comment on the agency's next moves or the likely conclusion of its investigation. "We're about in the middle stage of our investigation."

Hearings could help the board's three-member investigative panel decide whether to bring a formal complaint against Okada or his company, the people familiar with the investigation said.

http://www.chicagotribune.com/business/sns-rt-us-casinos-philippines-universalbre8at0a7-20121129,0,4542468.story

Wynn Wants Okada Lawsuit Sent Back to Nevada State Court

Wynn Wants Okada Lawsuit Sent Back to Nevada State Court
By Edvard Pettersson

Wynn Resorts Ltd. (WYNN) wants its lawsuit against Japanese billionaire Kazuo Okada sent back to Nevada state court, arguing its removal to federal court was part of a “scheme to manipulate the legal process and to forum shop.”

Wynn said in a request filed in federal court yesterday in Las Vegas that its claims of breach of fiduciary against Okada involve only state law issues. Okada moved the case to federal court to avoid having it heard by the same state court judge who ruled against him in his attempt to gain access to Wynn’s books and records, according to the filing.

“Defendants experimented in state court and, after receiving an unquestionably adverse decision, moved to do whatever they could to start anew,” Wynn’s lawyers said. “Defendants purposefully used the removal process as an improper attempt to forum shop.”

Wynn, based in Las Vegas, sued Okada in February and redeemed his 20 percent stake in the casino operator saying he was “unsuitable” based on findings that he made improper payments to Philippine gambling officials. Okada last month removed the case to federal court, saying the underlying issue was whether he violated the U.S. Foreign Corrupt Practices Act.

Okada, who Wynn seeks to remove from the board of directors, also filed counterclaims in federal court, alleging that Wynn Resorts Chairman Steve Wynn runs the company as his “personal fiefdom” and asking the court to invalidate the redemption of his shares at an $800 million discount.

Jim Golden, a spokesman for Okada’s Universal Entertainment Corp. (6425), didn’t immediately return a call seeking comment on the filing.

The case is Wynn Resorts v. Okada, 12-00400, U.S. District Court, District of Nevada (Las Vegas.)

Wynn: Dubious corruption claim

Dubious corruption claim
By: Raul J. Palabrica Jr. Philippine Daily Inquirer


Once the best of friends and business partners in the gambling casino business, American billionaire Steve Wynn and Japanese tycoon Kazuo Okada are now the worst of enemies.

Wynn has accused Okada of engaging in illegal activities to obtain a gambling license in the casino resort being built by Philippine Amusement and Gaming Corp. at the Manila Bay area.

According to Wynn, Okada spent more than $110,000 – by way of luxury lodgings, extravagant dinners and shopping treats – to curry the favor of two Pagcor officials despite Wynn’s admonition not to do so.

These freebies supposedly violate the US Foreign Corrupt Practices Act and ethical standards of the Macau casino company where both of them own substantial shares of stocks.

In his complaint, Wynn described the Philippines as a “corrupt nation” and pooh-poohed the efforts of President Aquino to rid the country of graft and corruption.

Reacting to this scathing statement, the Philippine Chamber of Commerce and Industry denounced the “irresponsible and unwarranted dragging of the Philippine government in the private corporate squabble” between the two businessmen.

Prohibition

In military parlance, the Philippines has become collateral damage (or accidental or unintended casualty) in the clash between two warring gamblers.

With millions in dollars in gambling revenues at stake, which Wynn could lose if Okada gets his way, Wynn does not give a damn on who gets hurt in his efforts to put Okada down. Like a woman scorned, hell hath no equal to Wynn’s fury against his erstwhile high roller partner. Wynn’s use of the US Foreign Corrupt Practices Act (FCPA) to go after Okada is the usual modus operandi of American businessmen who lose out to their foreign counterpart in big-ticket projects in foreign countries.

By way of background, the FCPA prohibits certain classes of persons and companies doing business in the US from making cash and non-cash payments to foreign government officials to “secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to any person.”

Enacted in 1977 during the administration of US President Jimmy Carter when several iconic American companies were found to have bribed foreign government officials to bag lucrative contracts in their countries, the law is aimed at restoring the integrity of the American business system.

Statements

It is not uncommon for American companies that are trounced by Chinese, Korean or Japanese firms in contracts auctioned off by foreign governments to claim that money exchanged hands in consideration for the award.

Some American businessmen have not yet outgrown their 19th century belief that US technology and skills are superior to any one else. So if foreign governments choose to do business with non-American companies, in their mind it’s because bribes were given to tilt the odds in the winner’s favor.

The losers cannot accept the fact that the world has changed many times over. No longer are companies from Asia and other developing countries pushovers in terms of technical, financial and managerial expertise.

They can already go toe-to-toe with the best that American companies can offer in a fair competition and emerge victorious with plenty of space to spare.

To show compliance with the FCPA, American businessmen often make holier-than-thou pronouncements about their manner of doing business or, at least on paper, make strong statements against engaging in unethical business practices.

But there is an ocean of a difference between what is said in public and what actually takes place in the highly competitive field of international business.

Memories

No babes in the woods in the Asian way of doing business, American businessmen who want to win contracts in the Philippines know the weak spots (or kiliti) of government officials or Filipino executives whose endorsement make a lot of difference in contract awards.

When in the US, whether at their expense or upon the invitation of American companies, most Filipino officials or businessmen find happiness watching NBA basketball games (if it’s the season), seeing Broadway shows, dining at Michelin-accredited restaurants (think Le Cirque) or sightseeing.

Enjoyment of any or all of these activities translates to bragging rights upon their return, complete with the ubiquitous photos to memorialize the occasion.

All they have to do is drop subtle hints about wanting to go to any of these places and (voila!) the necessary tickets or reservations will be booked and the visit made enjoyable. Or more specifically, something to be remembered when the bid documents are evaluated prior to the award of the coveted contract.

Although no cash actually changed hands, strictly speaking, such hospitable indulgence falls squarely within the coverage of the FCPA because they could induce their recipient to reciprocate their kindness in future business transactions.

Understandably, nothing would appear in the books of the American companies concerned about these generosities that may alert the authorities into looking deeper for possible violation of the FCPA.

The entertainment and its attendant costs will be handled by the companies’ law offices, investment bankers or public relations agencies.

The reimbursement of expenses will be taken care of in the “bill for services rendered” that will be later submitted to the client. Pre-arranged buzz words will subtly describe the particulars of entertainment activities. Very neat.

Just because a US law prohibits bribery does not mean that all American companies comply with it. The art of bribery has no territorial boundaries.

Wynn Goes ‘Nuclear’

Okada Manila Tour Proves Defining as Wynn Goes ‘Nuclear’
By Vinicy Chan and Kana Nishizawa
Bloomberg News

Stephen Wynn stepped off his private jet at Manila airport in June 2010 to be greeted by the Philippines gaming regulator. On the tarmac too, in black wraparound sunglasses and trademark 1950s-style slicked-back hair, was Japanese slot-machine billionaire Kazuo Okada.

Okada, 69, wanted the chief executive officer of Wynn Resorts Ltd. (WYNN) to join his $2 billion casino and hotel project on Manila Bay. Wynn, companion Andrea Hissom and Wynn Resorts Chief Operating Officer Marc Schorr toured a hotel, shopping mall and casino showcasing Manila’s investment potential, and sat through a presentation on the new project in an air-conditioned marquee, photographs of the trip show.

That visit proved pivotal for Okada’s ambition to create an Asian casino empire -- only not as he’d hoped, according to an interview last week detailing how his 12-year alliance with Wynn went sour. Philippines regulator Efraim Genuino was indicted in an ongoing graft case. By the fall, Wynn was focusing on Okada’s Philippines activities, court documents show, removing him as vice chairman last year and forcibly buying his $2.77 billion stake last month at a 30 percent discount.

During three hours at his 36th-floor office in Hong Kong’s Tsim Sha Tsui district, Okada laid out his version of the split with Wynn, whose business he helped revive with funding in 2000. It’s a story at odds with the 47-page report Wynn commissioned from Louis J. Freeh, a former director of the U.S. Federal Bureau of Investigation, which catalogues more than $110,000 in hotel rooms, meals and gifts for gaming officials and their associates that Wynn’s lawyers said may have breached U.S. anti- graft laws.

No Notice
“They gave the board the report without letting me review it,” said Okada, founder of Tokyo-based Universal Entertainment Corp. “Even criminals would be asked to sign off on the findings to ensure there are no mistakes.”

The boardroom scrap at Las Vegas-based Wynn Resorts shows the dilemma U.S. companies face when seeking growth in Asia, where a broader acceptance of gift giving and hospitality conflicts with the tightening anti-bribery regime at home. Wynn Resorts alleges Okada misused its assets, name and know-how to promote himself, even though Wynn had decided to stay out, and that his actions put the company’s gambling licenses at risk.

Freeh briefed Wynn Resorts’ directors on his findings Feb. 18, and on the same day they judged Okada to be an “unsuitable person,” invoking a clause in the articles of incorporation to redeem the 20 percent stake that made him the company’s biggest shareholder. Okada said he’s gathering evidence to show the report was riddled with errors and exaggerated standard industry practice as a pretext to eliminate a man Wynn, 70, had come to regard as a threat.

‘Dormant Nuclear Weapon’
“These are very standard terms that lawyers put in these contracts, but they’re rarely invoked,” said Wendy Wysong, a Hong Kong-based lawyer at Clifford Chance (1000L) LLP who specializes in anti-corruption matters. Clifford Chance isn’t advising either party, she said. The clause is like a “dormant nuclear weapon” that’s put in “to make everyone comply with the law.”

Wynn’s use of the provision raises the prospect that other companies may follow suit to “just boot somebody out that’s fallen out of favor,” she said.

Freeh interviewed Okada for more than seven and a half hours in Tokyo. “He did not offer any exculpatory evidence in that meeting nor has he to date,” said Paul Kranhold, a Wynn spokesman.

Wynn Resorts alleges Okada broke its code of conduct by trying to set up a casino to rival its operation in Macau.

Macau Rival
Okada planned “to lure high-limit, VIP gamblers from China” to Manila “in direct competition with Wynn Macau,” according to documents filed in a Feb. 19 lawsuit in Nevada.

A shareholder agreement amended Jan. 6, 2010, bars Okada from investing in casinos in Macau and Nevada, regulatory filings show. There is nothing to stop Universal (6425) from expanding elsewhere, he said. What’s more, everything was done to further the partnership with Wynn and for their mutual benefit, he said.

“I believe that business by nature is about trust, contracts are a last resort,” Okada said. “That may be a difference between Western and Asian countries.”

Okada won one of four provisional gaming licenses awarded in the Philippines in 2008, according to a Feb. 19 lawsuit filed by Wynn in Nevada. Pushing ahead with the project went against “requests to Okada not to pursue business in the Philippines,” the document said.

Manila Trip
“In or around the fall of 2010,” Wynn learned Okada was falsely claiming that he and Wynn Resorts were developing the Manila project together, the writ said. After Wynn’s compliance committee advised the group to steer clear of the country because of corruption concerns, “Okada was unrelenting,” and in February 2011 “repeated his oft-uttered request that Mr. Wynn travel to the Philippines to explore investing in Universal’s Manila Bay project,” the court papers said.

The photographs, copies of which were given to Bloomberg News, show Wynn had already been there, with Hissom and Schorr, on June 14, 2010. Wynn was “very interested” and asked to meet with Aquino, Okada said.

In a 2008 press release, Universal said it “intends to enlist the full cooperation of Wynn Resorts Ltd.’s Steve Wynn” to develop the project. Okada said the license was to build the hotel-related facilities at an integrated casino resort and that he wanted Wynn to join in any gaming business.

Okada pushed for the meeting with Aquino and was “embarrassed and angry” when told to cancel, the court document said. Okada said Wynn was “foolish” to turn his back on the Philippines project, which he expects to rake in about $3.5 billion in revenue in its first year of operation.

Hong Kong Move
Okada last year began moving operations to Hong Kong, transferring Philippine land assets from his U.S. unit to Aruze Hong Kong Ltd. in April, filings show. Through another Hong Kong company, Okada, his son, daughter and second wife control 70 percent of Universal, filings show. Okada and his wife rent a luxury, 10th-floor apartment overlooking Repulse Bay on the south of Hong Kong island, and he plans to open three restaurants in the territory this year.

It’s all part of refocusing the group on growth in Asia outside Japan, he said, seated at a conference-room table in offices bereft of ornaments or signage, except for an Aruze Gaming logo above reception. During the interview, Okada’s iPhone rang with a Japanese earthquake warning. Category 2, he said, nothing to worry about.

Cambodia, South Korea
Okada said he has also bought land in Siem Reap, Cambodia, and has held talks with South Korean officials about a $3 billion casino project near Incheon Airport (IIACZ).

For Okada, the growing number of governments in the region that plan to introduce casinos offers a chance to diversify away from Japan, where Universal’s operating profit peaked in 2000. Wynn Resorts sees the trend more as a risk.

“If current efforts to legalize gaming in other Asian countries are successful, our Wynn Macau resort will face additional regional competition,” the company said in its annual report released last week.

Wynn lost out to Sheldon Adelson’s Las Vegas Sands Corp. (LVS) and Kuala Lumpur-based Genting Bhd. (GENT) when Singapore granted its first gaming licenses in 2005 and 2006. Global anti-graft watchdog Transparency International ranks Singapore the fifth- least corrupt nation in the world, behind New Zealand, Denmark, Finland and Sweden.

The Philippines ranks 129th. Cambodia, 164th.

Outstripped
Ten years after Macau began offering new casino licenses, the Chinese territory’s $34 billion annual gambling revenue is more than four times that of Las Vegas. A turf war between triad mobsters in the run-up to the deregulation saw casinos raked with automatic gunfire, gangland killings and the attempted car- bombing of the police chief. Now the enclave has cleaned up its act, said Okada.

“It’s no longer that dim, dirty, dark and sketchy place that’s scary at night,” he said.

The territory, the only place under Chinese rule where casinos are legal, now accounts for more than 70 percent of the group’s revenue. Okada was booted off the board at Wynn Macau Feb. 24. He’s still on Wynn Resorts’ board because he can’t be removed without a shareholder vote.

Wynn married Hissom on April 29, 2011, at Wynn Encore in Las Vegas. He divorced his first wife, Elaine, in 2009, giving half his 20 percent stake in the company in her settlement.

University Grant
In a conference call to explain the decision to oust Okada, Wynn Resorts executives, including compliance committee head Robert Miller, said they needed to limit the company’s risk of losing its gaming licenses. Okada was given ample notice of the board’s concern and was asked to choose between the Philippines and Wynn Resorts, Miller said, according to a transcript of the call.

In January, Okada turned the spotlight on Wynn, suing to force more disclosure on a $135 million donation to the University of Macau that he said hasn’t been sufficiently explained.

Wynn Resorts needs land to build a second Macau casino- hotel on the increasingly popular Cotai Strip, where it is one of only two operators in the territory yet to set up business. Wynn Resorts rose 4.3 percent yesterday after it filed a statement suggesting it had been awarded a concession there. It later retracted the filing. Las Vegas Sands will open a new casino-hotel on Cotai in April. Hong Kong tycoon Francis Lui’s Galaxy Resorts opened there in May.

No Details
Wei Zhao, the university’s rector, in a Feb. 29 interview, declined to give a detailed breakdown of how the money would be spent.

The U.S. Securities and Exchange Commission last month requested information on the donation, Wynn Resorts said in its annual report. Okada’s court action was an attempt to distract attention from his own conduct, Wynn said.

Wynn’s court documents cited 36 occasions between 2008 and June 2011 in which Universal allegedly made a total of about $110,000 in payments at Wynn Resorts in Macau and Las Vegas benefiting Philippine gaming officials. Cristino Naguiat, who took over from Genuino, stayed at a $6,000 a night apartment usually reserved for high rollers, the report said.

Villa 81, one of four for VIP guests at Wynn Macau, sprawls over almost 7,000 square feet, with three master bedrooms, a sound-proof media room with 100-inch television, and bathrooms with mother-of-pearl walls. One time, Universal picked up a $50,523.22 tab for Naguiat’s party, Wynn alleges.

Inaccurate Picture
Wynn’s figures fail to distinguish between business and regulatory guests, highlight the total amount rather than per- person expenses over the three-year period and fail to take account of Universal’s own costs tagged onto the rooms, Okada said. Universal was also reimbursed for some expenses, he said.

Universal keeps track of hospitality its executives receive and seeks to provide a reciprocal amount in return, he said. Universal estimates Philippines regulators spent about $47,375 entertaining its officials since July 2010, according to a document provided by Okada.

There was nothing inappropriate in the Macau trip, Naguiat said in a Feb. 21 phone interview. “It is industry practice that if there are casino executives in town, we offer cars, security and rooms as a courtesy, as a form of reciprocity,” he said. “In the past month, Francis Liu of Galaxy and Lawrence Ho of Melco also visited and we offered the same.”

Okada said he is gathering evidence to prove Wynn’s facts are wrong, clear his name, and win back the shareholding. Wynn Resorts’ board canceled the stock at a weekend meeting, effectively preventing Okada from seeking an injunction, the company’s lead counsel Kim Sinatra said on the conference call.

10-Year Note
Wynn Resorts will pay Okada $1.9 billion for his stake though a 10-year promissory note, the maximum term permissible under the company’s articles of incorporation. Because of a 2006 shareholder agreement restricting Okada from selling the shares without Wynn’s consent, they weren’t deemed freely tradable and so were priced at a discount, Wynn Resorts Chief Financial Officer Matt Maddox said on the call.

With hindsight, Okada said he now suspects Wynn may have harbored a desire to get rid of him as early as 2002, when he unilaterally approved the articles of incorporation for the company before its initial public offering.

Wynn couldn’t afford to get rid of him until their expansion into Macau, Okada said.

“He saw his chance when Macau proved to be a success, and started to feel like he was on top of the world around mid- 2010,” Okada said.

Okada said he wasn’t aware of the 2002 amendment that included a clause giving the board powers to declare a person unsuitable, forcibly redeem their shares at a price they would determine.

“Mr. Okada has previously authorized and acknowledged these fundamental protective measures and has participated in board meetings at which the documents containing these provisions were discussed,” Wynn spokesman Kranhold said.

Articles of incorporation are generally overlooked in Japan as nobody thinks they’re important, Okada said.

“We should have been helping each other over the hard times, in a relationship based on trust,” he said. “But he was a cunning man.”

Wynn's Food Fight

It's premature to assess how the Okada/Wynn lawsuit will effect the financial viability of the Wynn/Kraft/Foxborough proposal, yet reports abound. Several are included below --

Japan tycoon bribed Pagcor execs - US lawsuit
By Delon Porcalla (The Philippine Star)
Las Vegas-based Wynn Resorts said in a lawsuit that Okada, Japan's pachinko king and a director of Wynn, went behind the company's back to build a stake in Asian gaming for his own Universal Entertainment group. Wynn also accused Okada of spending more ...

Japanese gambling tycoon bribed Filipinos: US lawsuit
WASHINGTON -- Japanese gambling tycoon Kazuo Okada was accused Tuesday in a U.S. lawsuit of paying off Philippine regulators and cheating his powerful Las Vegas partner.

Japanese gambling tycoon bribed PAGCOR officials: US suit
GMA News
WASHINGTON - Japanese gambling tycoon Kazuo Okada was accused Tuesday in a US lawsuit of paying off Philippine regulators and cheating his powerful Las Vegas partner. The lawsuit named former Philippine Amusement and Gaming Corporation (PAGCOR) ...

US suit tags Pagcor execs
Inquirer.net
By Daxim L. Lucas
The chairman of state-owned Philippine Amusement and Gaming Corp. (Pagcor) on Wednesday denied allegations made by an owner of US-based casino giant Wynn Resorts that he had received undue perks and favors from a Japanese businessman.

Wynn Redeems Okada’s Stake After Bribery Probe

Wynn Resorts Redeems Okada’s Stake After Freeh Bribery Probe
Bloomberg
By Dan Hart and Yi Tian
(Updates with analyst’s comment in fourth paragraph.)

Feb. 19 (Bloomberg) -- Wynn Resorts Ltd. bought out its largest shareholder at a 31 percent discount and asked him to quit the board after a probe by the casino operator uncovered allegedly improper payments to Philippine gambling officials.

Former Nevada Governor Robert Miller and Louis Freeh, the ex-director of the Federal Bureau of Investigation, investigated claims that Kazuo Okada violated U.S. anti-corruption laws and uncovered cash payments and gifts valued at about $110,000 to gambling regulators, Las Vegas-based Wynn Resorts said today in a statement.

The move escalates a dispute between Chairman and Chief Executive Officer Stephen Wynn and Okada, who helped bankroll the company starting 12 years ago. Okada was stripped of his vice-chairman role last year after alleging improprieties in a Macau university donation that’s the subject of a lawsuit and a U.S. regulatory inquiry. Freeh’s probe puts Okada’s activities in the Philippines under the microscope as well.

“Shareholders definitely would prefer none of this to have occurred,” Christopher Jones, a senior gaming analyst at Telsey Advisory Group in New York, said in a telephone interview. “However, if there is actual fact that Mr. Okada did engage in illegal activity, then Mr. Wynn has certainly done the right thing in the eyes of the shareholders.” Jones doesn’t have a rating on Wynn shares.

Okada Stake

Wynn Resorts said it redeemed the 24 million shares held by Aruze USA Inc., a slot-machine company controlled by Okada’s Universal Entertainment Corp., and issued a 10-year $1.9 billion promissory note for the stock. At the Feb. 17 closing price of $112.69 in New York, a stake that size -- about 20 percent of the shares in Las Vegas-based Wynn -- would be worth $2.76 billion.

Last month, Okada sued Wynn Resorts in state court in Clark County, Nevada, to force the company to produce spending records. That case is pending. Okada opposed Wynn Resorts’ HK$1 billion ($129 million) pledge in July 2011 to the University of Macau Development Foundation.

Wynn Resorts has said the dispute stemmed from Okada’s decision to compete by pursuing projects in the Philippines. Okada was removed as vice chairman after admonishments from the board over the plan, Wynn Resorts said. The company said today that it will recommend that he be dropped from the board of Wynn Macau Ltd. as well.

Lawsuit Filed

The company said it filed its own lawsuit today in Clark County against Okada, Aruze USA and Universal Entertainment for breach of fiduciary duty and related offenses. The filing couldn’t be confirmed independently through electronic court records.

Okada couldn’t be reached at his headquarters in Tokyo outside of business hours for comment on the redemption announcement. Gidon Caine, an attorney for Okada, didn’t return a voice-mail seeking comment.

The U.S. Securities and Exchange Commission has requested information about Wynn’s donation to the university foundation. Wynn was asked in an informal inquiry by the SEC’s Salt Lake City office on Feb. 8 to preserve information about the commitment, the company said in a Feb. 13 regulatory filing.

The Macau pledge was consistent with Wynn’s practice of supporting institutions in markets where it operates, the company said. Wynn Resorts said that it will comply with the SEC request and that the stated objection of Okada, who cast the lone dissenting vote among Wynn and Wynn Macau directors, concerned the length of time over which the donation would occur, not its propriety.

‘Fair Value’

Wynn Resorts said today that, to protect the company’s gambling licenses, it can redeem shares for “fair value” from a person found “unsuitable” under its articles of incorporation. An independent financial consultant helped calculate the fair value, and Okada’s stake was redeemed at a discount because of restrictions on the shares, Wynn said in the statement.

“Mr. Okada probably doesn’t have a lot of options but to follow through on litigation as well and to defend his position,” said Jones, the analyst at Telsey. “I will not expect for the legal headlines to cease with this move by Wynn.”

The earlier case is Okada v. Wynn Resorts Ltd., A-12- 654522-B, District Court, Clark County, Nevada (Las Vegas).

--Editors: Andrew Dunn, Anthony Palazzo


Wynn Resorts buys out biggest stakeholder Okada, asks him to resign after payments probe
By Associated Press

NEW YORK — Wynn Resorts Ltd. is looking to sever ties with its biggest stakeholder and one-time ally.

The Las Vegas casino operator said Sunday that it forcibly bought back all the shares controlled by Kazuo Okada after finding the Japanese tycoon made improper payments to overseas gambling regulators. The company also filed a lawsuit against Okada for breach of fiduciary duty and asked him resign from its board.

The announcement marked the latest deterioration of Okada’s relationship with Steve Wynn, founder of Wynn Resorts.

Okada is the founder of casino game maker Universal Entertainment Corp., which held an almost 20 percent stake in Wynn Resorts through its privately held subsidiary Aruze USA Inc.

Aruze’s 24 million shares were worth about $2.7 billion based on Friday’s closing price and were acquired for the discounted price of about $1.9 billion.

The actions by Wynn Resorts stem from a separate casino resort project Okada is undertaking in the Philippines.

After a year-long investigation, Wynn Resorts said it found more than three dozen instances over a three-year period in which Okada and his associates engaged in “improper activities for their own benefit.”

That included cash payments and gifts totaling about $110,000 to foreign gaming regulators, the company said. Wynn Resorts said the actions were in violation of U.S. anti-corruption law.

The investigation, which was led by a former FBI director Louis Freeh, also found Okada and his associates consciously took actions to conceal “the nature and amount of these payments,” Wynn said.

Based on the report, Wynn Resorts said its board found that Okada is “unsuitable.” The company’s articles of incorporation provide for redemption at “fair value” of the shares held by unsuitable individuals.

The company issued a 10-year, $1.9 billion promissory note in redemption of the shares. The notes bear an interest rate of 2 percent.

Wynn said it will also immediately recommend that Okada be removed from the board of its Hong Kong subsidiary, Wynn Macau Limited.

An email sent to Aruze seeking comment from Okada was not immediately returned.

Since 2000, Okada has invested $380 million in Wynn Resorts. But last month, Okada filed a lawsuit against the company to seek financial documents regarding Wynn’s $135 million donation to the University of Macau; its 2010 amendment to a shareholders agreement among Okada, company founder Steve Wynn and Wynn’s ex-wife, Elaine Wynn; and the use of $30 million that Okada gave to Wynn Resorts in 2002 to help develop a Macau casino project.

During a conference call with investors earlier this month, Steve Wynn addressed the company’s “sharp disagreement” with Okada over his dealings in the Philippines.

Wynn said that the company had taken “a very strong opinion about not wanting to give the impression that Wynn Resorts was the developer of the land that (Okada) acquired in the Philippines.”

Wynn said that Okada was free to go into business in the country, but that he did so “without the organizational support or financial support of the company that he is an investor in at the moment.”

In Las Vegas, Wynn Resorts Ltd. owns the Wynn Las Vegas and Encore Las Vegas resorts. The company also owns Wynn Macau and Wynn Encore Macau in China.

"gambling promotes corruption and intellectual bankruptcy"

Church Bucks Iloilo Gaming Facility
By TARA YAP

ILOILO CITY, Iloilo, Philippines – The Roman Catholic Church has once again strongly expressed its opposition to gambling, particularly the operation of an e-casino in Iloilo City.
“Gambling destroys our moral values,” said Msgr. Meliton Oso, chairman of the Jaro Archdiocesan Social Action Center (JASAC).

Oso reiterated the Church’s stand even as e-casino JD Feeling Lucky Inc. continues to operate at the Sarabia Manor Hotel and Convention Center. The latter opened the gambling facility last month.

“Gambling promotes corruption and intellectual bankruptcy,” Oso emphasized.

Oso, emphasizing that “gambling promotes corruption and intellectual bankruptcy,” cited the 1993 pastoral letter entitled “Make a New Heart and a New Spirit” of the Catholic Bishops’ Conference of the Philippines (CBCP) condemning all forms of gambling and urging for a moral transformation.

The outspoken priest also expressed concern in the proximity of the e-casino to the UP Visayas city campus.

The e-casino faced controversy last year after it was reported to have been temporarily operating without the knowledge of Iloilo City Mayor Jed Patrick Mabilog.

Jeffrey Celiz, Mabilog’s political liaison officer, reiterated the clarification that the e-casino has a permanent franchise from Philippine Amusement and Gaming Corp. (Pagcor) and a business permit from the city government since December 15, 2011.

He said it also has proper zoning clearances.

The e-casino is owned by Jeffrey Divinagracia, a nephew of Association of Barangay Captains (ABC-Iloilo) president and Iloilo City Council ex-officio member Roberto “Bobby” Divinagracia.
Meanwhile, Oso warned the casino management that any lobbying with the religious sector is futile.

Philippines haven for transnational cyber-crime groups

Philippines now haven for transnational cyber-crime groups—police
By Dona Z. Pazzibugan
Philippine Daily Inquirer

MANILA, Philippines—A top Philippine National Police official said the country has become a “haven” for transnational organized crime syndicates involved in cyber pornography, cyber sex dens, illegal online gambling, credit card fraud and identity theft due to weak laws against cyber crimes and the poor technical know-how of law enforcers.

Chief Superintendent Samuel Pagdilao Jr., director of the PNP Criminal Investigation and Detection Group (CIDG), said cyber-crime mafias, mostly foreigners, have established their base of operations in the Philippines.

Pagdilao said cyber-crime operators have taken advantage of the PNP’s “organizational and technical incapability” to fight cyber crimes.

While cyber-crime syndicates use sophisticated technology, he rued that “law enforcers in the country are lagging behind in terms of training and equipment.”

Pagdilao asked Congress to prioritize passing the proposed cyber-crime prevention law to address the country’s legal inadequacies.

He also asked the PNP to support the organizational and technical capability build-up of the CIDG’s cyber-crime unit.

Pagdilao said foreign mafias have been running cyber-sex dens and cyber-pornography operations in the country.

He said Korean mafias have been behind illegal online gambling and credit card fraud operations in the country.

Pagdilao said their recent arrest here of a Korean hacker wanted by Interpol revealed that “Korean cyber-crime syndicates are operating almost unhampered” in the country.

Shin Un-Sun, 38, was arrested by operatives of the CIDG’s Anti-Transnational and Cyber Crime Division last October 4 in his hideout in Barangay (village) San Juan in Sto. Tomas, Batangas.

He was caught hacking a corporate databank in his laptop at the time.

Pagdilao said the suspect was wanted in the Philippines and in South Korea for large-scale Internet fraud.

CIDG investigators have found that Shin Un-Sun’s group had hacked the servers of the country’s leading telecommunication companies and some private corporations.

Pagdilao withheld the names of the corporations due to pending investigation.

Shin was reportedly jailed in South Korea for three years for hacking the Korean Stock Exchange.

Shin was also accused of hacking the online databank of Hyundai Capital Corp., a Seoul-based financial service company specializing in auto financing, personal loans and home mortgage.

He allegedly blackmailed Hyundai Capital Corp. to pay a huge sum in exchange for his not leaking the account information of 420,000 clients as well as 13,000 passwords from customers’ loan accounts and credit rating information that he had hacked.

Pagdilao said Shin was also able to withdraw large amounts of money from the credit card accounts of hundreds of clients based on data he had stolen from the databank of international and local banks.

Pagdilao said that during their investigation, the suspect owned up to hacking bank and credit card records as well as the e-mails of several defense officials for the past 11 years and to being part of a Korean mafia of hackers.

Shin claimed that he was brought to the Philippines to develop illegal online casino programs that have been in use in the mafia’s illegal operations for years.

Pagdilao said the CIDG has already raided seven of these illegal online casinos operated by Shin Un-Sun’s group.

Pagdilao said the suspect also revealed that Korean mafias have been using Filipinos as “e-mules” for their transnational money laundering and credit card fraud operations.

CHURCH URGES Stop gambling

CHURCH URGES Stop gambling
BY JUDY F. PARTLOW

The Roman Catholic Church has reiterated its stand opposing all forms of gambling, and reminded all Negros Oriental officials of their moral obligation to the people.

“The stand of the church against all forms of gambling, legal or illegal, remains unchanged,” Msgr. Gamaliel Tulabing, vicar general and spokesperson of the Diocese of Dumaguete, said.

There can only be true moral recovery if there is a concerted effort to eradicate all types of gambling, he added.

He lamented that no public consultation was held before the entry of Bingo Milyonaryo, a lottery game operated by the Philippine Charity Sweepstakes Office, unlike the application for the operations of small-time lottery which was quashed after strong objections from various sectors.

Tulabing also challenged members of the Provincial Board to fully enforce Provincial Ordinance No. 4 which regulates the entry and operations of lotto in Negros Oriental.

He also expressed concern over reports that some illegal “swertres” operators are using Bingo Milyonaryo as a front for their unlawful activities.

Meanwhile, he also said the Church has not been remiss in its duties to remind its flock against the ills of gambling as part of their anti-moral corruption advocacy, in reaction to observations that many church-goers are also engaged in betting, legal or otherwise.

Tulabing said that, unlike the Philippine National Police, government officials and government agencies, the church does not have the power to craft and enforce laws on gambling.*JFP

Arroyo knew husband involved in syndicates

Arroyo knew husband involved in syndicates, US cable says
by Jojo Malig, abs-cbnNEWS.com

MANILA, Philippines – Pampanga Rep. Gloria Macapagal-Arroyo knew of her husband's "heavy involvement" in smuggling and illegal gambling syndicates but refused to stop him because he got her elected as President, a US embassy cable published Friday by whistleblower group WikiLeaks alleges.

Some of the Philippines' top business leaders raised the issue before American government officials in 2005 as they feared for the worst for the country, according to cable 05MANILA2670, classified "Confidential" by US embassy Economic Counselor Robert Ludan and sent by then US Chargé d'Affaires Joseph Mussomeli.

Washington Sycip, a founding partner of accounting giant SGV, told US officials that then First Gentleman Jose Miguel "Mike" Arroyo "is heavily involved in the illegal gambling or 'jueteng' networks and closely connected with major smuggling syndicates," according to the embassy memo.

"President Arroyo, according to Sycip, is aware of her husband's misdeeds, but she is unwilling to do anything to curb his activities because he was instrumental in marshaling campaign donations and is now keeping those supporters in line to help her maintain her grip on power," it added.

Cabinet officials were also caught in a bind. Many of their subordinates--Arroyo loyalists who were placed in key government positions--reported directly to the First Gentleman, bypassing chains of command, the cable revealed.

The memo also cited reports claiming that the President's son, Congressman Juan Miguel "Mikey" Arroyo, "is involved in jueteng racketeering."

Sycip, described as a "long-time US embassy contact," saw the former First Gentleman "as one of the worst offenders, with a reputation for corruption seeping down to all levels of society and eroding PGMA's political standing," the cable said.

The memo, again quoting Sycip, said Mike Arroyo's behavior damaged the credibility of the government and affected his wife's ability to crack down on corruption.

The SGV founding partner became "increasingly pessimistic, claiming privately that corruption [under the Arroyo administration was] at its worst, surpassing even the Marcos era."

Sycip said the President also rarely followed the advice given by a special group, of which he was a member, regarding complaints about corruption in her administration.

"President Arroyo is more concerned about her ability to stay in office than developing a strategic approach to policy making, he critiqued," the cable added.

No confidence in Arroyo government

Federation of Filipino-Chinese Chambers of Commerce and Industry (FFCCCI) President Francis Chua echoed Sycip's allegations of the then First Gentleman's involvement in syndicates, according to the June 9, 2005 memo.

Chua described Mike Arroyo as "a major problem with respect to corruption, pointing to his links to 'jueteng' and the many politicians and local officials involved in the illegal gambling racket."

Chua added that the Chinese-Filipino community was losing confidence in the government, in particular the courts.

"The FFCCCI maintains an internal settlement process to resolve disputes among member companies because members have so little trust in the court system. This process is being used more frequently now as an increasing number of FFCCCI members see the courts as unreliable and unpredictable because of corruption," the cable said.

"According to [Chua], the Chinese-Filipino business community encounters corruption on a regular basis in the tax bureau, customs, and other government functions... Corruption, he said, is increasingly undermining the ability of companies to operate efficiently in the RP...According to Chua, almost no business people believe the GRP's claims that its efforts are achieving results," it added.

"Chua said this corruption ... does make it more and more difficult to sustain economic growth," the cable said. "Capital flight is not yet a problem... [but] many of their investments are scaled back, however, from what they would be in a clean market."

US embassy officials also heard similar complaints from then Makati Business Club Director Bill Luz.

"Luz said that people should watch the rumors swirling around the first family carefully," the cable said.

"Regarding Mike Arroyo's involvement, Luz said he senses that the allegations will continue and sooner or later someone will come forward with clear evidence of wrongdoing," it added.

Another cable, 05MANILA2359, had also linked the husband and son of Arroyo to illegal gambling syndicates.

The memo, dated May 23, 2005, said all that it would take then to oust Arroyo from power then was "for one credible witness--like Governor Chavit Singsong [sic] in the Estrada case--to go public."

"However, there is little enthusiasm for a new impeachment process that could constitutionally bump up Vice President Noli De Castro as President, despite a fairly widespread belief in elite circles that the Arroyos are indeed directly linked to jueteng payoffs," it added.

"The likelihood either of stamping out or legalizing jueteng remains low; too many powerful people benefit," said the embassy cable also sent Mussomeli.

In earlier statements to media, the former First Gentleman and his son, Mikey, have denied all allegations of wrongdoing during the previous administration.

Business leaders quoted by the embassy cables, meanwhile, have yet to confirm the confidential statements made public by WikiLeaks.

Korean entertainer sentenced to prison for his Cebu gambling caper

Korean entertainer sentenced to prison for his Cebu gambling caper
By JONATHAN M. HICAP

MANILA, Philippines – A Korean court convicted entertainer Shin Jung Hwan on Friday for gambling in Cebu, Philippines last year and sentenced him to eight months in prison. The Seoul Central District Court handed down the decision in the morning of June 3, with Shin present in the courtroom.

It was a victory for prosecutors who previously urged the court to send Shin to jail. The Korean entertainer was charged with habitual gambling and violation of Korea’s Foreign Exchange Control Act and Passport Act. In sentencing 36-year-old Shin, the judge also considered his past gambling records.

Shin was fined five million won in 2003 and seven million won in 2005 for gambling. He was sued last year for failing to pay gambling debts amounting to 170 million won (P6.8 million).

Shin’s case stemmed from his visit to Cebu last year to gamble. For several days in August and September, Shin spent 210.5 million won (P8.42 million) playing baccarat at a hotel casino in Cebu. Of the total money he spent, he used 10.5 million won (about P420,000) of his own money and then borrowed 200 million won (P8 million) from a casino lender.

Koreans are prohibited by law to gamble in a casino in their country or overseas, with violators meted with imprisonment and fines. Koreans can only play at Kangwon Land in Gangwon Province, the only casino in South Korea that allows citizens to gamble.

Shin was thrust into the spotlight last year when he failed to return to South Korea to tape his shows. It turned out that he got stuck in Cebu for failing to pay his gambling debts and even allegedly used his passport as collateral.

After leaving Cebu, Shin went to Hong Kong, Macau, Nepal and Japan to evade investigation by Korean police and did not return to South Korea for five months.

The court took note that Shin eluded Korean laws when he hid in different countries starting September before coming back to Korea last January 19. He was arrested at the airport upon his arrival. Shin was eventually indicted last April 26 for habitual gambling and other charges.

In sentencing Shin to eight months in prison, the judge also considered the entertainer’s current medical condition and age. Shin is walking on crutches after undergoing leg surgery in February, following his return to Korea.

During his trial last May 18, Shin admitted to all the charges pertaining to habitual gambling but pleaded for leniency.

After the sentence was announced, Shin said he is deeply sorry for his actions

Crime and banishment

Crime and banishment
By Conrado Banal III Philippine Daily Inquirer

Hardly anybody knew that high-profile lawyer Lorna Patajo-Kapunan also represented billionaire Stanley Ho, the Macau casino tycoon who once attempted to operate a “floating” (i.e. boat) casino in Manila.

Kapunan also represented a doctor by the name of Hayden Kho in that high-profile case about lewd videos, and a basketball superstar named James Yap in a messy marital spat with a certain television celebrity called Kris Aquino, who shares the same surname as our leader Benigno Simeon (aka BS).

Anyway, regarding her Stanley Ho connection, hardly anybody in the business community knew that, only last year, Kapunan found herself as one of the defendants in a multimillion-dollar securities fraud case in New York.

Reportedly, huge hedge funds accused a company named Elixir Gaming Technologies of making misleading (read this as “bloated”) statements on its prospects, which of course led the hedge funds to invest in the company.

Elixir Gaming Technologies, a slot machine distribution company, was actually listed on the American stock exchange. Eventually, after the funds invested in Elixir, the share price of the company fell by more than 90 percent.

The hedge funds were asking the court in the United States to award “compensatory damages plus interest.”

Kapunan was one of the directors of Elixir, together with Lawrence Ho, one of the sons of Stanley Ho.

In the court case, the complainants claimed that she personally met with the representatives of the hedge funds to convince them to invest in Elixir.

Now, in the United States, cases on securities fraud have not been taken lightly in the past 80 or so years, or since the stock market crash prior to the Great Depression.

In that country, they actually litigate thousands upon thousands of securities fraud cases, a number of which had something to do with bloated forecasts for profits of listed companies.

How come we do not see a lot of those cases here? Don’t tell me all the listed companies in the Philippines are honest in their reports.

Kapunan: $25 million fraud case

Kapunan snagged in $25-m fraud case in New York

ANTI-CORRUPTION advocate Lorna Patajo-Kapunan has found herself at the receiving end of a $25-million securities fraud case now being heard by the New York District Court.
Kapunan, a long-time counsel of Macau gaming tycoon Stanley Ho and his gambling interests in the Philippines, is being accused along with fellow directors of a US-listed slot machine company, Elixir Gaming Technology, of making numerous glowing misrepresentations about its business prospects.

Those alleged financial misrepresentation eventually led two hedge funds, Prime Mover Capital Partners and Strata Fund, to invest and lose heavily in Elixir, according to the civil complaint.

Kapunan herself was alleged to have accompanied fellow Elixir officials to San Francisco in September 2007 to meet and convince the hedge funds about Elixir’s switch in business focus from a mere casino equipment supplier to a “business participation” strategy.

Elixir’s new strategy involved the company buying slot machines and placing those machines in various casinos in the region under a revenue-sharing scheme.

Elixir claimed that each gaming machine was supposed to bring in an average “net win” of $125 a day to the company and its shareholders, “based,” according to the complaint, “on extensive investigation and operational data obtained from Pagcor.”

“Defendants, including, in particular, Patajo-Kapunan, also boasted, falsely, that because of the influence of Ho and his family, Melco [the parent company of Elixir] and Elixir enjoyed a particularly close relationship with Pagcor that would greatly facilitate the company’s entry into the Philippine market,” the complaint said.

Elixir and its management was particularly cited for issuing a press release in September 2007 claiming that the slot machine company had “delivered agreements for the placement of...500 [gaming machines] at the Manila Prince Hotel,” the Malate hotel of Don Emilio Yap that to this day has remained unopened despite a costly renovation.

The long and the short of the complaint was that Elixir issued forward-looking financial reports that “overstated the number of slot machines under contract or actually placed in the casinos; overstated the financial results of the slot machines that had been placed previously; and falsely stated that each machine was equipped with computer software capable of tracking the revenue generated by each slot machine, when no such software had been installed,” said hedge fund counsel Daniel Osborn.

Elixir issued a short statement in reaction to the New York case, saying it “intends to respond to the complaint in a time and manner consistent with applicable federal and state law.”

“The company intends to vigorously defend itself against these allegations and remains laser focused on driving continued improvements in our core operations,” the statement said.

Kapunan, whose law firm was voted by the Bishops-Businessmen’s Conference as the only law firm deserving of the Institutional Spirituality Quotient, was unavailable for comment.

According to available public records, Kapunan accepted a directorship in another Ho company in Hong Kong in 2000, when her then law partner, Senator Raul Roco, was denouncing the gambling tycoon for the BW scandal that precipitated the downfall of the Estrada administration.

In pursuit of Gambling Addicts

Las Vegas gambling falls; RP’s can grow
Could it be possible that the reason why Pagcor’s earnings substantially dropped during the nine-year Arroyo presidency was due to massive corruption? — PERRY DIAZ

Las Vegas gambling falls; RP’s can grow

By AMADO P. MACASAET
MALAYA

Cristino "Bong" Naguiat
BECAUSE the biggest gamblers in the world are Asians, notably the Chinese, gaming operations in Las Vegas were down to $6 billion in winnings last year. Those of Macao were recorded at $23 billion.

Cristino “Bong” Naguiat, chairman and chief executive officer of Philippine Amusement and Gaming Corp., told Malaya Business Insight in an exclusive interview that the Chinese find Atlantic City and Las Vegas too far for gaming.

They prefer places closer to home, Naguiat said.

[Studies have shown that proximity increases Gambling Addiction]

Radio station threatened after illegal gambling program

GenSan radio station gets threats

GENERAL SANTOS CITY, Philippines—The Radyo Mo Nationwide (RMN) station here has received fresh threats following commentaries by its reporters and anchors on the proliferation of the illegal gambling game "Last Two Digits."