Authorities in Taiwan have charged a subsidiary of Melco Crown Entertainment in connection with the alleged illegal funneling of hundreds of millions of dollars between the island nation and Macau.
The Taipei District Prosecutors Office indictment said the Taipei branch of Hong Kong-based MCE International transferred more than NT$5.4 billion (US$180 million) in deliberate violation of foreign exchange controls and financial oversight.
The funds allegedly were channeled on behalf of high-rollers looking to gamble at Melco Crown’s City of Dreams and Altira casinos, according to news reports, which said the transfers took place between July 2009 and January 2013, when police raided the offices of MCE and other companies and NT$3 billion in MCE funds were frozen.
“The illegal conduct of the defendant MCE International and the other defendants is suspected to have harmed this country’s financial order,” the Prosecutors Office said.
The indictment names four present and former employees, including the office’s current “responsible official,” Wang Yen-sheng, his predecessor, Sung Hou-shuan, and a Taiwanese husband-and-wife management team who “set up” the Bo Ying VIP room at City of Dreams, according to a report by GamblingCompliance.
Nasdaq-listed Melco Crown said at the time of its second-quarter earnings release that it had yet to receive the “formal indictment document” and said it “will defend vigorously any indictment brought against us, as based on Taiwan legal advice received, we believe our operations in Taiwan are in compliance with Taiwan laws”.
The company said the charges would not have an “immediate material impact on our business operations or financial position”.
The legal troubles added to a broad Melco sell-off that saw the stock (MPEL) fall to an 11-month low on Friday in the wake of Q2 earnings that missed analysts’ estimates. EBITDA was down 11% year on year, mainly on lower VIP gambling volume and below-average luck, the company said.
VIP revenues historically have accounted for two-thirds of Macau’s world-leading casino market, but they have been falling market-wide this year, and analysts are pointing increasingly to an anti-corruption drive on the Chinese mainland that is accelerating under President Xi Jinping as the cause.
The campaign has cast an unwelcome spotlight on Macau as a hotspot for money-laundering and capital flight from the mainland, and junket operators, banks, pawnshops, UnionPay and other medium are coming under heavier scrutiny for their roles in allowing mainland gamblers to circumvent official controls on the amount of yuan that can legally be taken out of the country.
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