Macau casino magnate Stanley Ho Hung-sun has accused family members of 'fraudulently misappropriating' his shares in the private Hong Kong company that ultimately controls the bulk of his wealth - including his entire remaining stake in gaming firm SJM Holdings.
Lawyers acting for the 89-year-old billionaire said he 'discovered much to his horror' that his 100 per cent ownership of locally registered Lanceford Company Limited was last month slashed to less than 1 per cent, while control of the holding company was handed over to his third wife, Ina Chan Un-chan, and the children of his second wife.
'Stanley Ho is of the opinion that this was fraudulently misappropriated by members of his family and we have been instructed to vigorously pursue and protect his interests and pursue those who are involved in this,' Gordon Oldham, senior partner at Oldham, Li and Nie Lawyers, told the South China Morning Post yesterday. 'To say that he is hopping mad about this whole incident is an understatement.'
Lanceford controls Ho's 31.655 per cent stake in private Macau holding company Sociedade de Turismo e Diversoes de Macau (STDM). STDM in turn holds a 55.7 per cent in Hong Kong-listed casino operator SJM.
Lanceford's resulting 17.63 per cent indirect stake in SJM was worth HK$13.3 billion based on yesterday's closing share price. Lanceford holds minor stakes in shipping and property firm Shun Tak Holdings and rival casino investor Melco International Development, according to interim reports filed by those companies.
Lanceford 'holds much more than just [Ho's] interests in SJM. It holds a lot of other assets', Oldham said. 'It is safe to say Lanceford represents the bulk of his wealth.'
Ho - ranked by Forbes magazine earlier this month as Hong Kong's 13th richest man with a net worth of US$3.1 billion - appears to have lost control of most of his fortune following a massive issue of new shares in Lanceford last month.
Before 2009, Lanceford had three directors: Ho, his second wife Lucina Laam King-ying and his long-time lieutenant and banker Patrick Huen Wing-ming.
Ho fell at home in July 2009, leading to surgery to remove a blood clot from his brain followed by a long spell in hospital. Over the next 18 months family members repeatedly said Ho was recovering, but he made only two high-profile public appearances during this time and was carefully assisted when moving about.
In November 2009, Lanceford appointed two additional directors - Ho's daughters Pansy and Daisy.
Throughout this time Lanceford had a registered share capital of 10,000 shares, but only two shares were issued, both of them controlled by Stanley Ho, according to companies registry filings.
One month ago, on December 27, Lanceford allotted 9,998 new shares representing 99.98 per cent of its enlarged share capital to two British Virgin Islands companies - Action Winner Holdings and Ranillo Investments. This is according to Lanceford's companies registry filings and an SJM stock exchange announcement yesterday.
Action Winner is wholly owned by Ho's third wife, Ina Chan, and now controls 50.55 per cent of Lanceford, public relations firm Brunswick Group said in a statement yesterday on behalf of Lanceford.
Ranillo owns the remaining 49.45 per cent of Lanceford. Ho and Laam's five children - Pansy, Daisy, Maisy, Lawrence and Josie - each owns 20 per cent of Ranillo. Action Winner, Ranillo and their shareholders declined to comment yesterday on the allegations made by Stanley Ho's lawyers, according to Joseph Lo, a director at Brunswick.
It is unclear under what circumstances Lanceford voted to issue the new shares. In a meeting last Friday, Oldham said Ho told him his original intention was to divide his assets equally among the families of his four wives. Ho could not be reached directly for comment yesterday.
Oldham said: 'Efforts by Dr Ho to communicate with family members who own the two companies in order to seek clarification about actions taken by them have not proven fruitful. As a result Dr Ho wishes to take vigorous action against them.'
Ho only learned of the shareholding change earlier this month, Oldham said. On January 5, Ho drafted a letter to Daisy Ho demanding an explanation, according to a copy of the letter seen by the Post. There was no response, Oldham said.
On January 18, Lanceford sent a letter to SJM chief executive Ambrose So Shu-fai, apparently replying to an inquiry from the gaming firm. The letter, a copy of which was seen by the Post, informed SJM of the changes in shareholding that gave Action Winner and Ranillo control of Lanceford. This letter was signed by Daisy Ho and Stanley Ho.
'Stanley Ho is not saying that is not his signature,' Oldham said. 'Obviously he signed something, but it wasn't explained what the effect of that would be. Certainly he would never sign what this purports to be.'
Days before the vote that diluted Stanley Ho's shares, on December 23, Lanceford changed its corporate secretary and the location of its registered filings - including minutes of board meetings - to the offices of local law firm King & Wood. Companies registry filings still list Ho as a director of Lanceford and a holder of two shares in the firm, or a 0.02 per cent stake. Oldham said lawyers from his firm tried to access Lanceford's register of filings but were denied.
Oldham's firm yesterday sent letters to Lanceford's directors and shareholders and STDM's board of directors outlining Ho's accusations of what 'appears likely to involve fraud and/or forgery and/or breach of duty'.
Stanley Ho has 16 children via four 'wives', one of whom is dead. Last month he transferred a direct 7 per cent stake in SJM held in his personal capacity to his fourth wife, Angela Leong On-kei. Weeks before that, Ho transferred an 11.55 per cent stake in Shun Tak to a company controlled by Laam and his five children with her, Hanika Realty. Hanika became Shun Tak's biggest single shareholder with an effective 18.4 per cent stake.
In announcing the change in control yesterday, SJM said Stanley Ho 'no longer has an attributable interest' in shares of the gaming outfit he founded in 1962. The transfer 'has no effect on the overall ownership of members of Dr Ho's families in the company and ... there will be no change in management or strategic direction', SJM said.