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Stanley Ho's Luck Turns Sour

By Bertil Lintner

Republican politicians in New Jersey and a faith-based antigambling coalition in New York State are demanding an investigation into his alleged links with “members of China’s Communist Party, organized crime and the regime of dictator Kim Jong-il in North Korea.” A 308-page dossier compiled by the coalition also states that Singapore regulators in March 2006 forced the “Malaysian company Genting to sever its ties with him” before being allowed to open a casino in the city-state.

But to most people in Macau, he is affectionately known as “Tio Stanley,” or “Uncle Stanley.” For without the now 85-year-old Ho Hung-sun, or Stanley Ho, as he is known to most non-Chinese, the former Portuguese colony would not be the booming metropolis it is today. In 1962, when his company, Sociedade de Turismo e Diversoes de Macau (STDM), was granted a monopoly on all gambling activities in Macau, the enclave could be reached only by an old-fashioned ferry, which took three to four hours to sail across the Pearl River estuary from Hong Kong. Then hydrofoils were introduced, followed by jetfoils and helicopters. The old scruffy gambling dens in the Hotel Central and elsewhere, where croupiers wore singlets and slippers, gave way to new, glitzy casinos complete with roulette, slot machines, blackjack and baccarat. Luxury accommodation was added, and, at Mr. Ho’s Lisboa Hotel, half-naked dancers at the revue-style Crazy Paris Show entertained gamblers who wanted to see something different from the casino next door.

In 2002, however, Mr. Ho lost his monopoly and licenses were granted to foreign operators as well. But that only enhanced Macau’s boom. In 2002, there were 11 casinos with 339 gaming tables and 808 slot machines; now there are 25 casinos with 2,970 gaming tables and 7,349 slot machines. In 2006, gaming revenues rose to $7.2 billion, up threefold since before Mr. Ho’s monopoly ended. The territory’s GDP grew by 17% last year, a figure that may be even higher this year, as the 3,000-room Venetian Macau, run by Las Vegas operator Sands, is opening its doors in a new casino strip built on reclaimed land between Taipa and Coloane islands. Sands already operates a casino in Macau, and so does Wynn Resorts Limited, led by Las Vegas tycoon Steve Wynn. MGM Mirage, also from Las Vegas, has made a deal with Stanley Ho’s daughter, Pansy Ho, to build another casino, and Australian tycoon James Packer has entered into a business arrangement with Pansy Ho’s younger brother, Lawrence Ho.

The influx of foreign companies has been a boon for Macau, but it has also led to unprecedented scrutiny by the United States of the enclave’s gambling industry, and that is what is affecting Stanley Ho, who before 2002 attracted little attention from outside the region. Criticizing MGM’s deal with Pansy Ho—who was said to be acting independently of her father—the New York antigambling coalition pointed out that Stanley Ho “showed up at the ground-breaking for MGM Paradise and was photographed prominently next to MGM Mirage CEO Terri Lanni … that the chairman of a U.S.-based, heavily regulated, publicly held gaming company would pose for photographs with an organized-crime associate demonstrates that this is Stanley Ho’s deal.”

But what does it mean to be an “organized-crime associate” in Macau? Chinese organized-crime gangs, known as triads, have been active in the former Portuguese colony as long as anyone can remember, and, although the STDM enjoyed a monopoly on gambling, they run related businesses such as the management of VIP rooms at the casinos—where the stakes are much higher than at the ordinary gaming tables—as well as junket tours, loan sharking, night clubs with hostesses, and occasionally the sale of recreational drugs.

Mr. Ho has always vehemently denied that he has any relationship with the triads, but, in August 1992, U.S. Senate Committee hearings named him as an “entertainment industry participant not known to be involved in organized crime,” but linked to “former associates” who were. This was most likely a reference to his now-deceased business partner Yip Hon, who was mentioned in the report and who helped Mr. Ho set up the STDM in 1962 together with Fok Ying-tung, better known as Henry Fok, a local entrepreneur who made a fortune breaking the Western trade embargo on China in the aftermath of the Korean War. Yip Hon was a member of the Hong Men secret society, while Henry Fok, a Hong Kong native, is not known to have had such links. But Mr. Fok, who passed away last year at the age of 83 in a Beijing hospital, was widely believed to be the real broker behind the STDM, while the flamboyant, cosmopolitan ballroom-dancer Mr. Ho acted as his main front man. (Mr. Ho has never commented publicly on the matter.)

Mr. Ho’s alleged links to underworld figures first became a problem when he tried to expand his interests in Australia’s lucrative gambling industry beyond his then stake in Hudson Conway’s Wrest Point casino in Hobart, Tasmania, and stakes in the same company’s casinos in Launceston, also in Tasmania, and in Darwin in the Northern Territory. In 1992, Mr. Ho tried and failed to buy a 50% stake in Perth’s Burswood casino in Western Australia. A year later, he tendered—equally unsuccessfully—in Sydney for the Pyrmont Bay casino, which later became Star City. Mr. Ho did not show his frustrations openly, but another executive of his Shun Tak Group of companies spoke at an Australian business lunch in 1995 and warned that “racist policies” could be damaging to Australia’s foreign-investment potential.

The now defunct New South Wales licensing board, however, saw it in a different light. Its report on Mr. Ho is stamped “never to be released,” but it was reported in the Australian press at the time that he was deemed “an unsuitable person to hold a casino license in Australia.”

In 1996, Mr. Ho faced similar problems in Canada when he applied for casino licenses in Vancouver and Niagara Falls in partnership with his daughters, Daisy and Pansy, who are Canadian passport holders. The Hos’ bids were not approved by the government of British Columbia.

The exact reason is not known as the Canadian province has strict privacy laws, but, the New York antigambling coalition asserts, the refusal came “following criminal checks.” Four years later, a report by Canada’s Security Intelligence Service and the Royal Canadian Mounted Police triggered an investigation by authorities in the Philippines into a bid by Mr. Ho to obtain a license for a floating restaurant and casino.

According to the New York coalition, Mr. Ho was asked to appear before the Philippine “House of Representatives Committee to answer questions relating to his ties to triad groups (and) money laundering … but he flatly refused to cooperate with officials.”

In 2002 the State of Nevada Gaming Regulators rejected a proposed joint venture between Mr. Ho and MGM Mirage. The New York coalition claims this was based “on [Mr.] Ho’s long established record of [being] an associate of organized crime.” Hence the deal in Macau with Pansy, who is not listed as such an associate.

One of the few names that has been mentioned in connection with Mr. Ho’s alleged criminal links is Wong Sing-wa, the head of the Macau- and Hong Kong-based Talented Dragon investment firm who in the 1990s acquired an agreement with STDM to run a VIP room in the Mandarin Hotel in the territory. He was also, in 1990, appointed North Korea’s unofficial representative in Macau. Mr. Wong’s D.P.R.K.-Macau Travel Agency was authorized to issue visas for North Korea and he worked closely with Zokwang Trading, Pyongyang’s then main commercial arm in Macau, which fled the territory in late 2005, when U.S. authorities sanctioned its banker, Banco Delta Asia, for laundering money on behalf of the North Korean regime.

In the 1980s, Messrs. Ho and Wong invested jointly in the Yanggakdo Hotel in Pyongyang, which opened in 1995—with a casino, a massage parlor and a night club in the basement, beside a Chinese eatery appropriately named the Macau Restaurant. It is not known, however, how lucrative those businesses are in North Korea, where foreign tourists and businessmen—the only people allowed into the Yanggakdo’s basement facilities—are few and far between.

In early 1998, a Lisbon-based weekly newspaper, the Independent, protested Mr. Wong’s presence in a delegation from Macau that was received by then Portuguese President Jorge Sampaio. The paper cited a Macau official as saying that Mr. Wong had “no criminal record, but we have registered information that links him to organized crime and gambling in Macau.”

However, most allegations leveled against Mr. Ho and his supposed connections to Chinese organized crime fail to take into consideration that it would be almost impossible to run a gambling enterprise in a place like Macau without some kind of understanding with the triads. Casinos invariably attract criminals, who see opportunities for loan-sharking, extortion, prostitution and drug peddling—or exactly what the triads are doing in Macau. Casinos are also well-known vehicles for laundering the proceeds of criminal activities. Before 2002, regular visitors to Macau’s triad-controlled VIP rooms, which were not subject to the same regulations as public casinos, sometimes brought from across the Pearl River estuary suitcases containing several millions of Hong Kong dollars, which the managers willingly, but for a commission, converted into tokens—and then into checks, which could be declared as gambling winnings and deposited in any bank.

But it is also clear that the nature of the activities of triads has changed since Macau reverted to Chinese rule in December 1999. In the years leading up to the handover, Macau was plagued by a vicious turf war between rival triad gangs. The fighting claimed nearly 100 lives, and the murders—often gangland shootings in broad daylight—had disastrous consequences for the territory’s economy. Many tourists stayed away, and to make things worse, Portuguese Brigadier Manuel Monge, then under-secretary for security, made the mistake of trying to turn the deteriorating law and order situation into a joke. While addressing the press in 1997, he said that “our triad gunmen are excellent marksmen,” implying that there was no need to worry because they “would not miss their targets and hit innocent bystanders.” This particularly insensitive remark did not allay people’s fears and, ironically, a year later Mr. Monge’s own driver was gunned down. By the end of 1999, no one was joking about the safety in the streets of Macau; even locals were afraid to go out after dark.

But all that changed when a heavily armed convoy from the People’s Liberation Army rolled into Macau in the morning of Dec. 20, 1999, the first day of Chinese sovereignty over the territory. More than a year before the hand-over, Macau’s most notorious—and outlandish—triad boss, Wan Kuok-koi, alias “Broken-Tooth Koi,” the 43-year old leader of the 14K gang, had been arrested and, on Nov. 23, 1999, sentenced to 15 years’ imprisonment. On the same day, another, much less publicized verdict was also announced by the Provincial Higher People’s Court in Guangdong across the border in China. Ye Cheng-jian, known in Cantonese as Yin Sing-kin and nicknamed “Cunning Kin,” and two of his associates were sentenced to death and promptly executed for triad-related offenses. “Cunning Kin” was considered number two in another triad gang, the Big Circle Boys, which then was led in Macau by a shadowy figure known as the “Four-Eyed Bull,” a nickname he had earned because of his thick glasses.

The arrest and conviction of Broken-Tooth Koi in Macau, and the execution of Cunning Kin and his accomplices in China sent shivers through Macau’s underworld. Clearly, the Chinese authorities wanted to send a strong message to Macau’s organized criminals: If you want to stay in business, then keep a much lower profile and don’t disturb the peace. Since then, no one has broken that rule and Macau today must be one of the safest cities in Asia.

According to veteran Macau journalist Harald Bruning, the triads are still active in the territory, and while they could not care less about the Portuguese overlords, they dare not challenge the Chinese authorities. And, strictly speaking, it is not illegal to manage VIP rooms, offer junket tours, and lend money to gamblers in need. In fact, the rules have been liberalized, enabling the triads to operate more legitimately. Under the Portuguese, only banks were authorized to offer credit to customers; now the junket tours operators can do it too, not in cash, but in gambling chips.

Mr. Ho may be connected with these groups, but does it make him a criminal? Hardly, but he must now also be prepared to have his businesses scrutinized by the American media, lobby groups and even U.S. politicians as he no longer is the only game in town. And what have been accepted practices in Macau for decades may not be tolerated elsewhere.

This article first appeared in the Far Eastern Economic Review, May 2007

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