Ho's battle over casino empire is not his first

PUBLISHED : Saturday, 29 January, 2011, 12:00am
UPDATED : Saturday, 29 January, 2011, 12:00am

A new ruling order for Macau's biggest casino empire follows the high-profile ousting of the founding shareholder, known as the 'God of Gambling'. The acrimonious deal is reportedly worth some HK$400 million. Sounds familiar? It took place back in 1982.

The casino firm in question was Sociedade de Turismo e Diversoes de Macau (STDM), the monopoly franchise founded in 1962.

The ousted founding shareholder was lifelong Macau and Las Vegas high-roller Yip Hon (aka 'God of Gambling').

And gaming magnate Stanley Ho Hung-sun's privately held company Lanceford was in the thick of it.

Yip's departure from STDM three decades ago helped pave the way for Ho, 18 years Yip's junior, to consolidate his hold on the casino monopoly and to earn the slightly more diminutive nickname 'King of Gambling'.

Today, Ho's Lanceford, incorporated in Hong Kong in 1981, is again at the centre of a battle for control of STDM. But this time around the fight is more personal, and the ante has been raised significantly.

Lawyers for Ho, 89, this week filed a lawsuit accusing five of his children, two of his four wives and his long-time banker of 'improperly and/or illegally' seizing control of Lanceford by diluting his stake in the firm to 0.02 per cent from 100 per cent.

Lanceford holds a controlling 31.6 per cent stake in STDM, which in turn owns 56 per cent of casino operator SJM Holdings.

As bystanders to the intra-family dispute, STDM's other substantial shareholders could well tip the balance in favour of one party or another - if any of them decide to enter the fray. They include the Henry Fok Ying Tung Foundation with a 27 per cent stake, the family of New World Development chairman Cheng Yu-tung with 10 per cent and Ho's estranged sister Winnie Ho Yuen-ki with 7 per cent.

So far, they have been wary of taking sides.

'Whom should I help?' Cheng asked reporters yesterday after a Melbourne Enterprises shareholders' meeting. 'If I support this [party], others will be unhappy. I will not get involved in this.'

Cheng said he had not met any of Ho's wives recently.

'No one has approached me. I guess every one of them is busy,' he said.

Ho is suing daughters Daisy, Pansy, Maisy and Josie; eldest surviving son Lawrence; their mother Lucina Laam King-ying; Ho's third wife Ina Chan Un Chan; and his long-serving lieutenant and banker Patrick Huen Wing-ming, according to the High Court writ filed by lawyer Gordon Oldham, of Oldham Li and Nie, on Wednesday.

As it stands, control of Ho's stake in STDM has been handed to the families of second wife Laam and third wife Chan. Fourth wife Angela Leong On-kei has an 8 per cent stake in SJM Holdings, but she and the children of Ho's deceased first wife Clementina Leitao Ho appear to be cut out of the picture at the STDM level.

Ho has practice in fighting for control of STDM.

Founded in 1961 by Ho, Yip Hon, racing car aficionado Teddy Yip and Beijing loyalist tycoon Henry Fok Ying-tung, STDM won Macau's casino monopoly in 1962 in a bid bankrolled by Fok.

Over the following decades, Ho would gradually wrest control of the firm away from his original partners. After their falling out in the early 1980s, Yip Hon cashed out. Cheng was brought in as a shareholder.

Yip Hon then attempted to compete against Ho by launching the casino cruise ship Orient Princess, which anchored in Victoria Harbour and sailed on nightly gambling cruises in international waters in an attempt to lure local punters away from Ho's Macau casinos.

Ho initially fought against allowing casino cruises from Hong Kong, but later retaliated by successfully launching his own casino ship operation. Yip Hon died in 1997.

Disagreements also emerged with Henry Fok, whose stake in STDM at one point rivalled Ho's. Fok gradually distanced himself from STDM's day-to-day affairs beginning in the 1980s. Fok attempted to sell his 27 per cent stake in STDM in 1986 for HK$600 million but was resisted 'by one of the major company shareholders', he later said.

He ultimately transferred the stake in 2002 to his charity, the Henry Fok Ying Tung Foundation, after citing disagreements over strategy and complaining publicly about irregular dividend payments made by Ho.

Fok died in 2006. His foundation's STDM stake is looked after today by younger son Ian Fok Chun-wan, while elder son Timothy Fok Tsun-ting sits on SJM's board of directors.

But Ho's most bitter and highest profile disputes over STDM were with his estranged sister, Winnie Ho Yuen-ki.

She worked for STDM for 25 years until she was fired in 2002, and Winnie and her brother have since filed more than three dozen lawsuits against each other in Macau and Hong Kong courts over the years.

STDM no longer has a monopoly in Macau. However, in 1982, when Ho and Cheng teamed up to buy out Yip Hon, STDM's monopoly casino revenue totalled HK$1.4 billion - or about HK$4 billion in today's dollars (if calculated using a GDP deflator).

Today, SJM must compete against five other gaming operators in Macau, yet the company booked HK$34 billion in casino revenue last year.

The stakes are higher than ever. And the winner takes all.