[Content provided by Maucau's Gaming Watch]
The Macau junket system, however, has drawn scrutiny from the international press and from various regulatory agencies. Recently, financial concerns have dogged Macau’s junkets, including reports that a sub-junket operator absconded with over U.S. $1 billion. Another report disclosed that a major junket operator told investors “that 30 percent of the outstanding debt owed to its agents was over a year old.”
The operation of VIP Rooms in Macau casinos had long been dominated by Asian Organized Crime (AOC), commonly referred to as “triads.” With the evolution of gaming in Macau, the same AOC figures are allegedly still working the VIP Operations; only now they do it behind a façade of “legitimate” public corporations, complex corporate structures, financial guarantees, and third-party assignments. Public media and intelligence sources have affiliated all but one of the seven VIP Room Operator groups of interest with reputed AOC figures.
Steve Vickers, the former head of the Hong Kong Police Criminal Intelligence Bureau who currently heads a risk management firm that does due diligence for casino companies in Macau, has commented repeatedly on the problem of the “almost total control of junket operators by triad societies” (SOURCE). He was later quoted by the Associated Press in July 2013 as saying: “You won't find the triad names listed as the junket operators, but they are behind it, because who is it that can reach into China and enforce the debts, move the money? Only one kind of person can do that” (SOURCE). Wynn Resorts, for its part, has stated on numerous occasions that it has a robust due diligence system in place. Below is a sampling of some public statements made by company officials.
- “We’ve never been investigated by anyone and have no risk of any kind whatsoever.” - Wynn Resorts Chairman, Steve Wynn, quoted by the Wall Street Journal, May 17, 2011
- Wynn Resorts Ltd. has an “extensive internal investigation process” […] “We have former FBI agents and policemen from Hong Kong and China–a whole staff of people to check things up and have access to intelligence and things that us normal people wouldn’t necessarily know about.” - Wynn Resorts Chairman, Steve Wynn, quoted by the Wall Street Journal, May 17, 2011
- “[W]e have to make sure that our reputation is pristine and our product will speak for itself.” - Wynn Resorts CFO, Matt Maddox, Conference Call, January 21, 2012
- “We have 14 full investigative staff that are assigned to conduct a background check. We background our employees. We background our junkets. We background our vendors.” - Wynn Resorts General Counsel, Kim Sinatra, Testimony October 17, 2013
- “We then have two specialized committees in Macau. The first is the junket committee. And that junket committee vets and approves the backgrounding and compliance efforts of our junket operators.” - Wynn Resorts General Counsel, Kim Sinatra, Testimony October 17, 2013
Wynn officials have been adamant that the company has avoided organized crime ties in Macau. Wynn officials have also pointed to due diligence procedures, including a “junket committee” that “vets and approves the backgrounding and compliance efforts of our junket operators.” During testimony before the Massachusetts Gaming Commission on October 17, 2013, an officer for Wynn Resorts stated that “at Wynn, we conduct background checks using our own investigators on junket operators and the five percent shareholders. We update our junket investigation semiannually and copies of those reports are given to our internal compliance committee, to the DICJ and to our Nevada regulators.”
However, as part of the Massachusetts Gaming Commission’s review of Wynn Macau’s junket operators, details from Wynn Macau’s own corporate security reports emerged. The Massachusetts Gaming Commission report disclosed that “Several of these reports identified persons of questionable reputation having some type of association within the Junkets operating out of several VIP rooms at Wynn Macau.”
In one particular case, Massachusetts investigators found an example of a “licensed Promoter” at the Wynn Macau who “is a ‘close associate’ of an individual (‘individual’) identified as an ‘alleged’ senior member of a specific triad group.” During testimony before the Massachusetts Gaming Commission the instance was fleshed out in greater details. A Wynn Resorts executive identified an individual named “David Wong” as the subject of interest who was reportedly the “common-law husband” of a junket operator at the Wynn Macau.
It is impossible to gage the validity of Wynn Resorts’ proclamations about their due diligence procedures and their approach to junket associations without having knowledge of Wynn Macau’s junkets. And, unfortunately, regulatory agencies in Macau and Nevada have provided precious little information on the junkets to investors or to the general public. Wynn Resorts does not disclose details of its junkets in its public filings.
To fill this void, MacauGamingWatch.com has begun detailed public records research into Wynn Macau’s VIP room and junket operators, and we will lay out our findings. In particular, we will examine the associations of Wynn Macau’s junkets – basic due diligence that a company like Wynn Resorts, with its staff of 14 investigators, could easily accomplish. A.G. Burnett of the NGCB has stated that “Nevada licensees are required to conduct due diligence with those VIP room operators because they're essentially what we would deem lessees, tenants to the gaming operation, and thus we require them through their gaming compliance programs to conduct due diligence on those entities.” We will also explore how Hong Kong and Macau’s legal systems deal with the concept of triads and triad membership, and look at the testimony of other subject matter experts in this field.