Posted on: February 16, 2024, 01:10h.
Last updated on: February 16, 2024, 01:10h.
Two companies formerly controlled by fallen junket king Alvin Chau could be booted from the Hong Kong Stock Exchange, the city’s securities regulator (SFC) has said. That’s over concerns about a US$116 million sale of assets in Russia.
Trading was halted this week on shares in the LET Group and Summit Ascent. The LET Group, formerly known as the Suncity Group, changed its name to distance itself from its founder and ex-CEO who now languishes in prison in Macau.
Chau was convicted of illegal gambling and criminal association in January 2023 and is serving an 18-year sentence.
The LET Group is the parent company of Summit Ascent, which indirectly controlled the Tigre de Cystal Casino in Russia’s Far East Primorye region through its 77.5% ownership of a company called Oriental Regent.
Tigre De Crystal Sale
While the SFC did not give direct details of the asset sale in question, last month GGRAsia reported that Oriental had sold its interest in Tigre de Crystal to Russian entity Dalnevostochniy Aktiv LLC for US$116 million.
The SFC said it had contacted both companies with no response. The regulator added that it was concerned that the sale could leave the LET Group and Summit Ascent without sufficient assets to remain listed in Hong Kong. There were “serious concerns” about the companies’ conduct and their management, the SFC said.
As the Suncity Group, LET was once the biggest junket operator in the world, responsible for an estimated 25% of VIP market revenue in the world’s biggest gambling hub. In 2014, when Macau hit peak revenue, that would have equated to US$11 billion.
But when Beijing began to turn the screws on the junket industry from 2014 onwards, the company branched out into land-based casino operations, first in Russia and then Vietnam, where it manages, the Hoiana resort. It also launched online gambling platforms that illegally targeted Macau and the Chinese mainland from the Philippines and Cambodia.
Chau Downfall
As Beijing’s campaign against illegal cross-border gambling intensified, the Chinese government ran out of patience with Chau and the junket industry, which it also blamed for money laundering and capital flight.
Authorities in mainland China issued a warrant for Chau’s arrest late 2021, and he was detained in Macau shortly after. Rather than extradite him, Macau prosecutors issued their own charges, and he was prosecuted in the gambling hub, which has an independent judiciary.
As well being found guilty of illegal gambling, he was convicted of defrauding Macau’s government out of US$1.1 billion in taxes by providing illegal high stakes “under-the-counter” bets for Suncity’s VIP clients.
Post-Chau, the LET Group has struggled, largely because of reforms to Macau’s junket industry and the impact of Covid on its operations and Vietnam. It was forced to sell its Russian interests because of sanctions related to the conflict in Ukraine.
