Wednesday, December 7, 2016

What a mysterious death tells you about the future of Macau

Lai Man Wai, the first woman to head Macau’s customs service, was found dead in a public convenience near her home. File photo

Almost a year has passed since the first woman to head Macau’s customs service was found slumped in a pool of blood inside a public toilet with a plastic bag pulled over her head, her wrists and throat slashed and an empty bottle of sleeping pills by her side. Despite their best efforts, doctors at the only public hospital in the city that has out-Vegased Las Vegas to become the most lucrative gaming destination on the planet could not save 56-year-old mother of two Lai Man Wa, who had been in the top job only a matter of months.

Had events not taken such a tragic turn, at the point when Lai was declared dead by medics at the city’s Hospital Conde San Januario, she should have been in a top-level meeting with senior mainland officials in nearby Zhuhai discussing the integrity of the Macau Special Administrative Region’s borders with mainland China.

It was a meeting which no one – including the driver who had dropped his “perfectly normal” boss off at her home in Taipa Island less than two hours before her body was discovered – had any reason to think she would not be attending. For Beijing, the issue of Macau’s borders and the apparent ease with which gigantic amounts of illicit cash had been able to flow out of the nation to the extent that it posed a clear and present danger to the stability of the financial system couldn’t be more important.

Senior Macau officials quickly – very quickly – classified Lai’s death as suicide by asphyxiation, firmly denying accusations of a cover up. But the lack of a detailed explanation of her demise – aside from a blanket statement that she was not under investigation by anti-corruption agencies – sparked widespread speculation.

Why did she choose to die in the very public way she did and why then? Given the circumstances, did she really take her own life?

Eleven months on from that grim discovery inside a Taipa Island public convenience near her home in the shadow of the glitzy gaming towers of the Cotai Strip, Lai’s death may have slipped out of the headlines, but among the conspiratorial cognoscenti of casino town, one theory continues to hold water.

It is a theory which also plays into the wider narrative of a city that today finds itself having to grapple with the reality that all revolutions – and make no mistake, what Macau has undergone in the last decade and a half is a gaming revolution the pace and transformative nature of which would make a Bolshevik blush – end up having to deal with the difficult business of the morning after.

That piece of difficult business is deciding how to take a gaming revolution that appears to have become so used to being on a winning streak it hasn’t really given much thought about what to do when the chips are down.

In other words, for the first time since gaming market competition was opened up in 2002, the licences of the three main casino concessionaires, and the three sub-concessionaires, are up for renewal starting in 2020 with Stanley Ho Hung-sun’s SJM.

But back to the grisly demise of a customs chief. It’s a story which, like very much else in the murky workings of the former Portuguese enclave, will never be officially confirmed or denied.

However, This Week in Asia understands from several sources that the 56-year-old customs chief was either being paid, leaned on, or strong-armed – perhaps a combination of all three – to turn a blind eye to a hugely lucrative racket.

The racket involved plane loads of dirty mainland cash being flown into Macau International Airport, filtered through the city’s casinos and then flown out to gaming destinations across Asia in flagrant breach of China’s strict monetary controls.

Thanks to President Xi Jinping’s ( 習近平 ) anti-corruption drive and Beijing’s ongoing push to clean-up, better regulate and ultimately diversify the former Portuguese enclave’s economy – so the theory goes – the heat was on the racket, big time.

Either Lai couldn’t take that heat and saw suicide as the only way out, or the diminutive customs chief was shut-up to protect people higher up the dirty cash food chain – and in a way that sent a clear message to anyone who needed to listen.

It is widely acknowledged in intelligence circles that Macau International Airport and its environs are a weak link in the city’s border security chain.

“Everyone knows that the airport is a blind spot when it comes to who and what is coming and going,” a source with long-standing links to Macau law enforcement said.

“The truth is the sort of corrupt transgressions that had long gone unchecked were no longer going to be tolerated, something or someone had to give,” the source added.

Whatever the exact details behind the grim and untimely death of the customs chief, her end and the official silence that followed it are yet another signal that Macau has reached a post-casino liberalisation watershed moment.

With its fellow special administrative region, Hong Kong, the tiny 30.5 sq km territory – population just over 650,000 – forms a key component – along with the jewel in China’s reunification crown, Taiwan – of Beijing’s plans not only to reunify the country but also to integrate a resurgent and confident Chinese nation with the rest of the world.

The city, which in recent weeks has seen the opening of two landmark US properties built for a combined total cost of US$7.2 billion – Wynn Palace and Sands China’s, The Parisian on the former swamp out of which has risen the Far East equivalent of the Las Vegas strip – has reached its first critical juncture since the 40-year casino monopoly of legendary gaming tycoon Stanley Ho Hung-sun was broken up in 2002.

Fourteen years after America’s gaming behemoths, Las Vegas Sands, Wynn and MGM rode into town with deep pockets and big plans to transform a down-and-dirty casino backwater into a gleaming oriental gaming centre in a fifth of the time it took the mighty Vegas to perform the same trick, Macau is going to have to decide how – and crucially who – takes it to the next level.

The smart money is on a “steady as she goes” approach to the first renewal of the three main gaming concessions granted to Stanley Ho’s SJM, Steve Wynn’s Wynn Resorts and Galaxy Entertainment owned by Hong Kong tycoon Lui Chee-wo.

Under a complex and byzantine licensing system in too came Sheldon Adelson’s Las Vegas Sands, as a sub-concession under Galaxy, MGM Resorts International likewise under SJM and Melco Crown Entertainment under Wynn Resorts.

Any cards the Macau government has are being played close to the proverbial chest, but a mid-term review officials commissioned to find out how the city’s gaming concessionaires were measuring up to their contractual obligations, published in May this year, gave all six gaming operators pass marks.

The commissioning of that report was the direct result of Xi’s landmark intervention in December 2015. While in the city to lead celebrations to mark the 15th anniversary of its return to Chinese sovereignty, Xi issued a no-nonsense call for the Macau government to put its gaming house in order and re-engineer its economic model from VIP-junket led gaming to a diversified, mass market gaming model.

What followed changed the game in the city, particularly for the much maligned and opaque casino junket operators – the often dubious, organised-crime-linked businesses that bring big-spending gamblers, most notably from the mainland, to casinos.

Indeed, a key concern laid out in the report was the operations of the shady junket industry. It also called for further action to be taken against junket operators in order to identify whether they were in breach of recent legislative revisions to Macau’s gambling laws.

Undoubtedly politics – domestic, national and international – will play a major ongoing part in the great game that will shape the short-, medium- and long-term shape of Macau.

Not only does Macau need to go through Legislative Assembly elections and select a new Chief Executive to replace the incumbent Fernando Chui Sai-on, next year a key meeting of the Communist Party will deliver personnel changes at the very top of the Beijing leadership.

All of this comes before a final decision is made on the casino concession renewals.

Throw into the mix a controversial confidential report commissioned by Sands China which surfaced last year claiming that China feared that casinos in Macau owned by the billionaire gambling magnate and Republican party funder Sheldon Adelson were used by US intelligence agents to entrap and blackmail Chinese officials and you have quite a cocktail.

The report – which Sands described as “a collection of meaningless speculation” – did not say that Sands was complicit in US intelligence activity, only that Chinese officials believed it.

At last week’s opening of The Parisian resort on the Cotai Strip, Adelson was predictably bullish about the future as the emphasis on VIP junkets wanes and, if the analysts are to be believed, the mass market model begins to bed in.

However, in the longer term, if the mass market push fails to deliver the bottom line figures required to give a return on what has been massive investment by the US - and other – concessionaires damaging uncertainty could result.

A veteran Macau gaming insider said: “Don’t forget, what might be considered ‘normal market rules’ don’t apply. It is in China’s interests for Macau to work and if that means controlling the numbers who visit the casinos, then so be it.’’

Macau lawyer Carlos Lobo, who has worked for many years in government and the private sector and has an intimate professional knowledge of the gaming industry from both perspectives said.

“My view is that now - in 2019 - is not the time to make any big changes. I think what we will see is an extension for two years of the existing concession [to SJM].

“The aim of the government is a better regulated gaming industry, a more diversified economy and a multi-skilled labour force which will allow Macau to perform the role Beijing has always wanted, that is a key platform for China to build and develop its relationships with the Portuguese-speaking world and by extension the world’s developing countries, most importantly Angola, Brazil and Portugal.

The stakes couldn’t be higher.

SCMP By Niall Fraser


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